This so-called financial independence seems increasingly interesting, doesn’t it? As we explained, it’s not impossible to get there, but you won’t get there any old way either. You need to adopt some actions and strategies that will prevent you from falling into the vicious cycle of earning money and spending it all.
Check out below what you can do to take the first steps towards financial independence and not have to work to survive!
1. Diagnose your financial life
You must know precisely what your financial position is before you make any decisions. Take some time to scrutinize your finances carefully, working out how much comes in each month taking account of each of the bills and debts you hold.
It is essential to know how much money you have already spent and to see clearly what you spend, so that you can also see where you can save. This is also necessary to know what debts you have, when they will be settled and how much money you have left over every month to spend as you wish.
Without the knowledge of your finances, it is hard to make goals, see how much you can actually save and find out the drains that could be undermining your finances. It also makes you more realistic about your own circumstances, or if you must earn more money.
2. Cut unnecessary costs
Next, you need to learn how to save money . Start rethinking your lifestyle and see where you can cut back on your expenses. There is always something or other that can be put aside for the sake of your financial health.
You don’t have to stop going out with friends and doing what you like. However, if you already have enough clothes , for example, there’s no reason to buy a new dress or t-shirt, do you agree?
All of this helps you save a little at the end of the month. And, of course, if you have any debt, try to get rid of it as soon as possible!
3. Make a financial plan
Financial education is something that, unfortunately, is not part of the lives of most peoples. Therefore, it is very common for people to have debts and have difficulty paying bills or saving money. But if you believe in the importance of financial planning, you won’t be one of them!
Calculate your monthly expenses , that is, how much you need to get through the month. To keep track, one tip is to write everything down and use a personal finance app to help you.
Technology helps you keep track of where your money goes, because even a cup of coffee at the bakery should be included in your spending list. This way, you avoid going over budget.
4. Set goals for your life
Have you ever stopped to think about what you want to do in the next few years? While some people want to visit other countries, others dream of owning a car and a house. Whatever your priority is, it should be seen as a goal. This will help you save money, focus your efforts and stay focused on your goals .
But don’t forget that each goal you set needs to be realistic and consistent with what you can achieve at that moment, and celebrate whenever you achieve it. It’s the small steps that will help you achieve financial independence.
As challenging as it may be to reduce your expenses, by focusing on your goals, you will be able to save money for the future and achieve your dream of financial independence.
5. Learn to celebrate goals achieved
You’ve probably heard that every long journey begins with the first step, right? Anyone who has reached the halfway point was once at the beginning, where you are now. There’s nothing better than celebrating each small step you’ve taken to get even more motivated.
Building wealth takes time. It also depends on how much you can save each month and the type of investment you make. Even if it is a small income, it is already a big profit for you. After all, it was money that you earned without having to make any effort.
Appreciate each of these achievements because, as long as you are seeing positive numbers, it means that things are going well. Also celebrate every time you manage to save more, when you pay off a debt and everything else that benefits your assets.
6. Invest in qualification
If you want to build wealth, you need to look for better jobs with higher salaries. Since where there’s a will, there’s no way, you should invest in your professional training to get better opportunities in the job market .
After all, companies value people who have a degree in the field they want to work in much more. Therefore, look for a good educational institution that offers the undergraduate course you would like to take.
Here, it is worth mentioning that the course fee should not be seen as an expense. College needs to be seen as an investment that will bring financial returns and help you reap good rewards in the future.
7. Make an emergency fund
As you can see, financial independence requires a lot of preparation and organization. Part of this preparation is creating an emergency fund, which is nothing more than a type of savings account that is sufficient to cover your expenses for up to 6 months.
Don’t think this is an exaggeration. This is the attitude that will prevent you from ending up in debt and tarnishing your name, if you become unemployed or something unexpected happens along the way.
With an emergency fund, you don’t need to panic for fear of not being able to pay your bills or having to give up what you love to do.
8. Discover your investor profile
The investor profile is a classification that assesses your willingness to deal with risks in the financial market . Raising it is important to prevent you from making investments that expose your assets to risks beyond what you are willing to bear.
If you prioritize safety, putting the lion’s share of your capital into stocks might not be a good option since they are exposed to a lot of risk owing to their volatility.
However, if you are ready to go for risks in order to gain more profitability, price changes shouldn’t influence your choices.
In order to find out your profile, it is advisable to undergo a test named “suitability”, which takes into account your expectations, behavior, personality and financial awareness. The outcome usually comes in three categories: conservative, moderate and bold , each having their own set of preferences for security and potential earnings.
9. Learn to invest
Finally, a very important step is to understand how the different types of investment work. People who have never had any contact with the financial market are often lost when it comes to investing. But remember that financial independence and education go hand in hand.
There are several types of fixed income products that yield more than savings . In addition to these, there are other types of investments, each of which is more suited to a specific investor profile.
In the beginning, the earnings are low. Over time, the returns tend to improve, since the more money you have saved, the higher the earnings. The goal is to earn a kind of salary every month from the money invested.
10. Reevaluate your plans periodically
Remember that it is important to reevaluate your plans periodically. After all, our opinions change over time, as do new goals and needs. Life changes, so your plans for achieving financial independence need to adapt to these realities.
Get into the habit of looking at your goals, re-diagnosing your financial life and re-planning everything if necessary. Analyze whether you are achieving good results and moving in the direction you expected.
Don’t be afraid to change, learn new things, and analyze trends, because that way you can adapt and take advantage of the best opportunities that arise. Your planning will stay up to date according to what brings the most advantages and what you want for yourself.