For most of us, there’s no shortcut to true financial independence. Even as early as college, most Americans start a life of debt and increasing pressure to finish school and find a decent job to settle student loans. Soon after, other financial responsibilities will come crawling out of the woodwork – rent, mortgage, credit card bills, car insurance, and the list goes on.
Before you know it, you’re stuck in an endless cycle of debt, jumping from paycheck to paycheck. This is especially true for people in their 20s and early 30s, a time when achieving financial freedom could feel like a pipe dream, given the rising cost of living and a highly competitive job market.
However, there’s no question that being financially healthy is a good thing to aspire for. After all, it sets the important foundation for building wealth and preparing for a comfortable retirement. That said, here are steps you can take to regain control of your finances and, in turn, your life.
Table of Contents
1. Define your financial goals
Having specific and realistic goals is essential to achieving financial independence. You must be planning for a future you set for yourself. With these goals, you’ll be able to focus and avoid spending money on unnecessary things. Do you plan to settle down and buy a house? Take a dream vacation abroad? Or is it simply to pay off your student loan so you can have a more flexible lifestyle? Once you’ve identified your goal, be sure to write it down and follow through.
2. Set milestones and small goals
Life goals are never easy to achieve. Some people would take years to get to where they want. But if you set milestones or small goals that lead to your main goal, you can stay on track and get a sense of fulfillment each time you make progress. For example, if your goal is to buy a house but don’t have enough money saved for a down payment, you can take baby steps such as setting aside a certain amount per month. Stick to it, and before you know it, you’ll have a sizable deposit to get great mortgage deals.
3. Build or expand your career
Entrepreneurs and business owners indeed tend to earn money faster than people with office jobs. But it doesn’t mean it’s the only way to become financially independent. You can stay in your 9 to 5 job for decades and still be able to live the lifestyle you want. But not if you stay stagnant. If your day job is your main source of income, it’s only wise to do your best to grow and step up the corporate ladder. You can do so by being more proactive and efficient at work, showing an eagerness to learn new skills, and taking classes and training to build your leadership skills. It’s also good to communicate your career goals to management so that they can set a path for you.
4. Capitalize on a skill or hobby
Sometimes, you need that extra nudge to get you close to your goals. If you’re not satisfied with your current salary, think of a certain skill, hobby, or talent you can capitalize on. It doesn’t have to be anything trendy or big. In fact, it can be as basic as knowing a second language or being good at spreadsheets. You can do freelance work, make something and sell it, or offer consultancy services on the side for extra income. You can even try your hand at side gigs such as dog walking, ride-sharing, or renting out a room in your house.
5. Optimize your lifestyle
The golden rule of financial independence is to live within your means. And this rule applies regardless of your financial status. In fact, you can consider living below your means. Taking small sacrifices can indeed have a huge impact on your life in the future.
6. Clear your debt
Debt can be one of the biggest hindrances to attaining financial freedom. But debt has become such an integral part of American life that it’s almost impossible to imagine a life without one. However, being debt-free is a surefire way to regain control of your finances. If you can’t pay off your debt right away, you can opt for loan restructuring techniques such as mortgage refinancing or taking out another loan with a lower interest rate to pay off an existing one.
The road to financial independence can be long and challenging, but there are simple things you can do today that will get you much closer to your goal.
About Carson Derrow
