While it’s widely agreed that money can’t give you everything in life, it is an essential factor for a good life. In fact, most people will grab a chance to have tons of money in their name without hesitation. Experienced finance figures have mentioned time and time again that building sufficient wealth isn’t out of reach as long as you can commit to the course.
Of course, you have to know exactly what you want to achieve before you start. Only then will you be in a position to come up with an actionable roadmap to achieve the goal. Nevertheless, there are things that you might be doing regularly that will push away the possibility of financial freedom.
Living without an emergency fund
When you build your emergency fund, you can stop relying on credit every time you are faced with an emergency expense. The safety net should be sufficient to help you cover about six months of expenses without relying on an external income. The fund should be held in an account that is easy to liquidate when the need arises and you should avoid investment options that pose an extreme risk to the fund.
If you’ve been experiencing some difficulty to start saving for the fund, consider cutting back on some expenses like gas, eat outs and other recurrent expenses. While this may sound like a tall order especially when you are surviving from paycheck to paycheck, you will be at peace knowing that there’s something stashed away for a rainy day.
Being prepared for these kinds of situations, which are quite common, requires extra effort to comprehend where the money comes from and how easily it makes its way back. Luckily, with a Financial Literacy Class, you will find yourself comfortable while analyzing your incomes and expenses so you can get the most out of them.
Living beyond your means
When you are constantly spending money beyond what you’ve budgeted for and relying on plastic money to meet the expenses, financial freedom will remain a dream that is out of reach. To be financially free, you need to take firm control of your money and thoughts. Basically, a budget will help you govern your expenses and follow a predetermined spending plan.
The moment you understand the total amount of money trickling into your account as well as the amount that leaves, you’ve made the first step towards financial mastery. By adjusting your spending habits, it’s possible to save significant amounts of money.
Ignoring retirement savings
When you are young and energetic, you may think that contributing towards your retirement can be pushed away. But as time goes and your energy levels dwindle, you realize that you need some money to cover your expenses when you can no longer work.
If you can begin now, you won’t have to worry about money issues as you approach the retirement years. The power of compounding effect is awesome and time will come when the interests earned by your retirement fund will exceed your contributions.
If you want to safeguard your future, it’s time to stop depending on the social security fund since you don’t control it’s functioning in time to come.
If you have a formal job, you should start making contributions that take advantage of the percentage contributed by your employer. As time goes, streamline your cash flow to facilitate at least a 15% contribution to the retirement account.
Failing to pay your debts
While saving money diligently is a wise decision, it could be of minimal benefit when you are walking around with expensive debts. Today, most credit cards charge interests that are higher than you would get from an ordinary savings account. This means that your debts will be growing at a higher rate than your earnings.
Before making a decision to save your extra cash, make sure it will earn more than you will be paying for the debts. Normally, a good strategy is settling down your expensive debts first to avoid accumulating huge debts.
Before taking a nation 21 loans for emergency, you need to evaluate your overall financial situation to ensure that it’s affordable. Some online loan providers have good credit products like installment loans that allow you to pay in a long time to keep the monthly payments low.
Failing to create clear goals
When you don’t have any clear goals set, it’s likely that you don’t have a clear picture of where you are going. This can be likened to getting on a road trip without a predetermined destination. Of course, you will enjoy yourself but at the end of the day, you won’t accomplish anything significant.
If you don’t have good financial goals, it is quite difficult to accumulate assets or even retire at a chosen time. You should set a clear financial plan which includes both short-term and long-term goals. These may be things like debt elimination, creating a safety net and saving for retirement.
To make this easy, classify the goals into short-term and long-term objectives and break each item down to make it manageable. Every year, the goals should be adjusted to make sure you are following them well.
Holding on to a low paying job
Most people accept low paying positions right after college in a bid to build experience. However, sticking to a job where you are underemployed is one way of ruining your finances. Basically, your earning potential is capped at a certain level while your expenses increase year after year.
After you gain the necessary experience, you should start looking for better job offers. If this option isn’t viable, you might want to consider taking an additional course that improves your value in the job market.
Wealth is achieved through careful planning and diligent execution of the plan. If you want to make sure that your financial freedom doesn’t suffer from self-sabotage, you need to take charge of your money habits.
At first, it may be daunting to adopt new money habits, the outcome is quite rewarding. Irrespective of your state in life, attaining financial freedom is not out of reach. As long as you are willing to pursue the goal, you can succeed.