5 Tips for Achieving Financial Freedom

Income and Investments 5 Tips for Achieving Financial Freedom

Are you looking to make a big splash with your finances this year? Do you want to hit a money goal in the next month or so? The good news is that you can make a huge impact on your finances by changing up a few key things.

5 Keys to Financial Freedom

For the past five years on my podcast, I’ve been interviewing couples who’ve done some incredible things including paying down massive amounts of debt, saving for their biggest dreams, and for some, retiring early!

While every couple and family had their own journey, there were certain habits and patterns that made a huge difference with them achieving their financial goals. Here are five ways to help you become financially free!

Define Your Why

This first step may seem counter-intuitive, but you can’t use numbers as your why. Look, I get it – knocking out debt is a big win. You may be sick and tired of seeing so much of your hard-earned money going towards paying a credit card, student loan, or car.

However, many couples I interviewed told me that what kept them on the path was imagining their lives after the debt was gone. They saw themselves taking more trips, switching careers, and having more time for family and friends. What would you do if you were debt-free? What goals would you chase?

Know Your Numbers

Now that you’ve decided why you’re ready to become financially free, you can start looking at the how. Which means it’s time to start digging into the numbers and building a budget that fits you and your goals.

If you’re interested in financial freedom, here are the key numbers you need to know:

  • Monthly Cashflow: Are you aware of how much money is coming in and out of your accounts each month? Understanding how much you’re spending as well as knowing your net income are crucial to creating a realistic budget.
  • Your Net Worth: This is your big number. After reviewing your bank accounts, investments, and debts, how much money do you have?
  • Your Savings Rate: Whether you’re a high-income earner or not, if financial freedom is your goal, you have to stay on top of your savings rate. How much are you able to sock away and invest? (If you’re in the dump debt phase, what percentage of your income is being used to pay off your loans?)

You can use an app like Mint to track those key numbers quickly and easily, so you have more time to focus on the big picture instead of worrying over every penny.

Automate Your Finances

Once you’ve nailed down what your spending plan is and how much you’re putting towards debt, savings, or investing, it’s time to automate that money! Most of us are busy already so if you want to make sure you’re hitting your goals, go ahead and automate your bills, savings, and investing. It takes about 20 minutes to set everything up and afterward you only have to check it a few minutes every month!

Look for Big Wins with Money

While pinching pennies can snag you some savings, the real wins come with taming your big expenses and making sure you’re optimizing your finances. For your monthly budget, that means focusing on your housing, food, and transportation expenses.

With your overall finances, also take some time to take advantage of all of the tax credits and deductions you’re entitled to at tax time to maximize your tax refund. Staying on top of your taxes and making smart financial moves with your tax refund can help eliminate spending your tax refund on things that won’t help you reach your financial goals faster.

Stay Accountable and Motivated with #RealMoneyTalk

Having someone you can lean on can be really helpful. Accountability is a powerful tool with many couples I interviewed. If you’re married, I’m a big supporter of going on money dates. These are low key dates that you go on to talk about your progress and setbacks.

If you’re single, grab a friend and tackle your goals together. Having an accountability partner can keep you motivated during those rough times and inspire you to try different things to speed up the process.

Your Path to Financial Freedom

If you’re excited about your journey to financial freedom, I’d love to hear from you! What goals are you trying to tackle right now? What’s your big why?

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