These 12 Habits Will Help You ReachFinancial Freedom
Matt Danielsson
Achieving financial freedom is agoal for most people. Yet, too many of them fail to reach that goal. Thefollowing are twelve key habits that help pave the way.
1. Set life goals.
A general desire for “financialfreedom” is too vague of a goal. What does it mean to you? Write down how muchyou should have in your bank account, what the lifestyle entails and at whatage this should be achieved. The more specific your goals, the higher thelikelihood of achieving them. Then, count backwards to the current age andestablish financial mileposts at regular intervals. Write it all down neatly,and put the goal sheet at the very beginning of your financial binder.
2. Make a budget.
Making a monthly household budget,and sticking to it, is the best way to guarantee all bills are paid and savingsare on track. It is also a monthly routine that reinforces your goals andbolsters resolve against the temptation to splurge.
3. Pay off credit cards in full.
Credit cards and similarhigh-interest consumer loans are toxic to wealth-building. Make it a point topay off the full balance each month. Student loans, mortgages and similar loanstypically have much lower interest rates, making them less of an emergency topay off.
4. Create automatic savings.
Pay yourself first. Enroll in youremployer’s retirement plan and make full use of any matching contributionbenefit. It is also wise to have an automatic withdrawal for an emergency fundthat can be tapped for unexpected expenses and an automatic contribution to abrokerage account or similar account. Ideally, the money should be pulled thesame day you receive your paycheck so it never even touches your hands,avoiding temptation entirely. However, keep in mind that the recommended amountto save is highly debated; and in some cases, the feasibility of such a fund isalso in question.
5. Ignore the Joneses.
A braggart neighbor showing off anew car or his latest smartphone is no reason to do the same. Smile politely,nod, and take comfort knowing your reward is coming tenfold in the future.
6. Watch the credit.
A person’s credit score determineswhat rate is offered when buying a new car or refinancing a home. It alsoimpacts seemingly unrelated things, such as car insurance and life insurancepremiums. The reasoning is a person with reckless financial habits is alsolikely to be reckless in other aspects of life such as driving and drinking.This is why it is important to get a credit report at regular intervals to makesure there are no erroneous black marks ruining your good name.
7. Negotiate.
Many Americans are hesitant tonegotiate for goods and services, worrying it makes them seem cheap. Overcomethis cultural handicap and you could save thousands each year. Smallbusinesses, in particular, tend to be open to negotiation, where buying in bulkor repeat business can open the door to good discounts.
8. Continuous education.
Review all applicable changes inthe tax laws each year to ensure all adjustments and deductions are maximized.Keep up with financial news and developments in the stock market, and do nothesitate to adjust your investment portfolio accordingly. Knowledge is also thebest defense against those who prey on unsophisticated investors to turn aquick buck.
9. Proper maintenance.
Taking good care of property makeseverything from cars and lawn mowers to shoes and clothes last longer. Sincethe cost of maintenance is a fraction of the cost of replacement, it is aninvestment not to be missed.
10. Live below your means.
Mastering a frugal lifestyle byhaving a mindset of living life to the fullest with less is not so hard. Infact, many wealthy individuals developed a habit of living below their meansbefore rising to affluence. Now, this isn’t a challenge to adopt a minimalistlifestyle nor a call to action to head to the dumpster with things you’vehoarded over the years. Just making small adjustments by distinguishing betweenthings you need rather than things you want is a financially helpful andhealthy habit to put into practice.
11. Get a financial advisor.
Once you’ve gotten to a point whereyou are able to discern if you’ve amassed a decent amount of wealth, be itliquid investments, or assets that are tangible but aren’t as readily availableto convert to cash, getting a financial advisor to educate and help you makedecisions is highly suggested.
12. Exercise and eat right.
The principle of proper maintenancealso applies to the body. Some companies have limited sick days, making it anotable loss of income once those days are used up. Obesity and ailments makeinsurance premiums skyrocket, and poor health may force earlier retirement withlower monthly income.
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