4 Weeks to Financial Freedom: The Road to Financial Independence

Financial freedom is a goal of most people. Freedom from stress and worry about money.  Freedom to have choices in life.  Yet, for some reason, it seems to elude many of us. You've likely tried your hand at many different approaches, yet none have been able to give you the anticipated results.

The good news is that financial freedom can be achieved. By making certain adjustments to your life, you'll find yourself starting to make progress. It isn’t about working harder or putting in longer hours.  Read on for 4 simple steps you can take right now to change your situation.

Following these steps will put you on the road to financial freedom:

1.     Eliminate the word “credit” from your vocabulary. Having a good credit score is important. It can affect your employment, the rates you get on your car insurance, and what mortgage rate you will be offered. But living in a credit culture that encourages buying things you can’t afford on credit creates stress, debt, and is detrimental to your financial health.

·      If you’re seeking financial independence, start by only buying things on credit (other than a house or a car) that you are able to pay off in full when the bill arrives.

·      You probably have a few credit cards in your wallet. Get rid of them! If that makes you nervous, only keep one for emergencies until you have built up your emergency fund. Just ensure the card is out of your wallet and off shopping sites and apps like Starbucks, and you only use it for true emergencies, like your dog needing surgery.

·      If you're unable to purchase something with cash, it probably means you can't afford it. Living within your means is the first step to financial health.

·      Avoid borrowing for wants – clothes, furniture, vacations, that new iPhone. Those are usually the purchases that add up quickly and you’ll suddenly find yourself with a pile of debt.

·      If you have debt, tally up what you owe, how much extra you can put toward it and still be able to save, and make a concrete plan to pay it off.

2.     Treat needs and wants differently. How many of the things you spend money on can be considered necessities? If you're honest with yourself, you may realize you are focusing more on your wants rather than your needs.

·      Making a list of the things you require for survival is a necessary step in getting your finances in shape.

·      Evaluate everything that didn’t make the list.  Are there things that can be eliminated like subscriptions you no longer use?  Can you lower your cell phone or cable bill, or cut a couple of streaming services?  Are there things you can do differently so that they are less expensive?

·      Create a spending plan with a set amount of money that you transfer to a separate account so that you have some money to spend as you like each month. Once the money is gone though, it’s gone.  That cute purse that’s been calling your name will have to wait until next month.

3.     Evaluate your skill set. Are you working in a field that you love and that maximizes your skills? 

·      Are you being paid well for your skills and experience at your current job? Or can you earn more by making a job change or switching to another field?

·      Can you transfer to another department at your current place of employment? Or is a promotion in your current department possible with an upgrade to your skills?  If not, it might be time to look at a company that offers more growth opportunities.

4.     Save money at all costs. Even if it's a dollar at a time, automatically have money transferred from your checking account each month to a separate savings account, ideally not at the same bank as your checking account.

• Saving for your emergency fund should be your #1 savings priority (along with your other non-monthly needs), if you don’t yet have 3-6 months of living expenses saved.  Contrary to what you may have heard, it’s important to hold off on paying debt until you have at least one month of expenses saved to avoid having to use credit cards in an emergency. 

·      Make sure to also save for all those “non-monthly” expenses that catch you by surprise – car maintenance, new tires, pet illness, house maintenance, kid’s school expenses, a downpayment for a new car, doctor, dentist, and eye care copays and out-of-pocket costs, and insurance deductibles to name a few. Make sure all your needs are accounted for and you are saving toward them before putting money aside for wants like Christmas, birthdays, and vacations.

·      Continue to save while you are paying off your debt.  It’s important to do both.

It’s much easier than you think to make some simple financial adjustments that will improve your financial health. The hardest part is making the decision to do something to change your financial situation and taking the first step.

Give yourself four weeks of this routine and then assess how it’s going. I’ll bet you’ll feel encouraged by the positive results!