With every flip of the calendar into the new year, many people decide that this will be the year that they finally get their finances in order. A new year marks the perfect time to get a fresh start and achieve that financial peace that may allude you. Here are five tips to help you to achieve financial freedom in the coming year.
Make it Automatic
One of the best ways to develop financial security is to make it an automatic habit to save money. If you have to consciously put money away each month, you will be more likely to forget to do it. By making it automatic, you reduce the risk that it falls through the cracks.
The cardinal rule of achieving security with your money and your life is to pay yourself first. Before you turn that paycheck loose on bills and non-essential expenses, be sure to pay yourself. Whether this is through a traditional savings account or a retirement account depends on your personal situation. Ideally, you will be saving through a few different avenues that spread out your risk.
There is no getting around the truth that too much debt will only get in the way of your financial security. In order to put yourself in a winning position, you absolutely need to eliminate your debt.
One of the fastest ways to get rid of this burden is to use a debt settlement service. This type of service will work with your creditors to reduce your debt load and make it easier for you to tackle this burden. This includes reducing the overall principal owed, lowering the monthly payments, and changing the interest rate so that it is easier to pay off the balance in a faster amount of time. Many people choose a debt settlement option to avoid having to declare bankruptcy.
Monitor Your Credit Score
Financially savvy individuals make it a habit of staying on top of their credit score. Your personal credit score determines the interest rate that you are offered when purchasing a new vehicle, refinancing a home and more. It also may influence premiums on car insurance or life insurance, making it important that you keep it in check. Credit cards can be hazardous for your credit if you don’t keep up with the payments, however. Be sure that you are able to make your payments in time in order to build yourself positive credit. Many people see credit cards as a safety net when they have an emergency expense or want to buy something they wouldn’t normally be able to purchase outright. You can also look at credit cards as a tool for building credit even if you don’t have any emergency expenses. If you are certain you can make your payments on time reliably, then a credit card is really just a way of showing you are financially dependable.
If you’re a student you can sign up for student credit cards that will help you get discounts to different places and have lower interest rates. If you are able to maintain your payments and not build interest, you can have a great credit score when you are young which will allow you to get loans for things like a car or even a house at a younger age than most.
You can sign up for a monthly service that will monitor this number for you and alert you of potentially damaging changes to your score. A monitoring service will also protect you against credit and identity fraud.
Seek Help from the Professionals
Do not be ashamed to admit that you need help from professionals when it comes to achieving all of your financial goals. A trained financial adviser can help you to make the best decisions with your money. This is particularly important as you begin to accrue wealth.
Seeking help from professionals can allow you to make even more money as well. Once you are at a comfortable place financially, a professional financier can help you begin an investment portfolio. It is great to have investments as they can help secure your financial future. Investments can be made in anything from property to stocks, but getting professional advice can help you make the right investments for your life goals and plans.
Once you begin to have more money on hand, it is not enough to just stay out of debt and pay off your bills. You will want to find ways to ensure that you are making the most out of your money. This is where a trusted professional can step in and help you to make informed decisions about how to direct your money for the greatest benefit.
Live Below Your Means
While it is easier said than done, the most impactful way to achieve financial freedom is to live below your means. This means that you spend less money than you bring in each month. The wealthiest individuals have made it a habit to live below their means consistently so that they are able to sock away money in the process.
The only way to do this successfully is to establish a budget and stick with it. Creating a budget will also provide a written motivation to stay within your means. It is satisfying every month to look back and see that you have made your targets. A budget is also a good way to involve the entire household in achieving the same goals. Budgeting can also help you get a good idea of where excess money is being spent that you may not have noticed. Small things like your morning cup of coffee can have surprisingly high impacts on your budget.
Financial freedom can be really difficult to achieve. These five tips are the cornerstone of proper financial management. Once you have mastered these five principles, you can move on to the complexities of building your wealth and living your best financial life.