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Steps To Financial Freedom
By: Richard Pullman
Financial freedom is the power to do what you will with your life without being
forever bound by lack of money and over burdened by debt. This worthwhile goal
can be achieved by anyone through careful planning and persistence. Just follow
these steps:
Pay yourself first
Control your spending
Get free of debt
Build a contingency fund
Become an informed investor
Give
Achieving financial freedom is a gradual process that will happen as you
implement all these simple steps in your life.
Pay yourself first
Every paycheck, keep some of your money for yourself and keep it. It takes money
to make money, so goes the old saying. To achieve financial freedom, you'll need
some seed money that can grow into a substantial nest egg.
Take a percentage or a fixed amount from each paycheck and add it to your seed
money, at least 10%, if possible. This is your investment money. Do not use it
for anything else. Every paycheck be sure to pay yourself first. With time and
persistence you'll soon have the funds to start making profitable investments.
You'll be a lender and not a borrower. Reinvest all profits and dividends to
maximize the growth of your nest egg.
Control your spending
Make sure that your spending is less than your earnings. When you find yourself
in a hole, the first thing to do is STOP DIGGING. You may have to create and
follow a budget.
Creating a budget is easy; following it may be hard. Start our by tracking your
current spending habits. Visit www.financesoftware.net for software that can
help you. Summarize your spending into general categories such as Food,
Clothing, Entertainment, etc. Then you can decide which categories you can cut
and by how much. Continue to track your spending and do your best to stay within
the limits you set for yourself.
Get free of debt
Debt is bad, "the borrower is the slave of the lender", and none of us wants to
be a slave. There are some debts that may be helpful, such as business debts to
increase profits, home mortgages, and car loans. Avoid any other borrowing, even
pay cash for your car if possible.
Increase the size of the payments you're making. Pick the creditor who charges
the highest interest and increase that payment by as much as you can. When that
creditor is paid off, take the payment amount and apply it to the next creditor.
Continue this process until all are paid off. Destroy and close all or most of
your credit card accounts.
Build a contingency fund
Life is full of unexpected surprises; the car breaks down, the furnace fails, we
lose our job, etc.. To prevent these occasional events from derailing your
financial plans, you need funds just for emergencies. This will help you avoid
borrowing or dipping into your seed money.
Every paycheck, take a percentage or a fixed amount of money and put it into
your contingency fund. As the money in this fund grows, you will have the peace
of mind that comes from being better prepared for life's little surprises. For
life's big surprises, buy insurance.
Become an informed investor
In this day and age, there are endless opportunities for investments that can
make or lose you money. In order to make money and not lose money, you'll need
to start educating yourself.
As a start, here are some concepts it will be good for you to know. RETURN is
how much profit you're likely to make on a given investment, usually expressed
as a percentage or a range of percentages. RISK is the possibility of something
bad happening, like losing money. A SCAM is a false investment opportunity
presented by lying thieves trying to steal your money. DIVERSIFICATION is the
strategy of not having all your eggs in one basket to spread and minimize risk.
An INVESTMENT STRATEGY is a long term approach to making money. Visit
www.financesoftware.net for more investment ideas and related software.
Give
Begin to give away some of your money. "For whatsoever a man sows, that shall he
also reap." If you are religious, give to your religion. If you are not, then
give to the poor, or to "save the earth", or whatever noble cause appeals to
you.
Not only does giving help free you from the mental and emotional grip of money,
God Himself will generously respond to more than repay what you have freely and
joyfully given away.
Conclusion
You can make it happen. Establish your strategy and stick to it. Implement all
these steps in your life and your financial freedom will soon come:
Pay yourself first
Control your spending
Get free of debt
Build a contingency fund
Become an informed investor
Give
Now, you're on your way.
Copyright © 2005 Richard Pullman
About the Author:
Richard Pullman is the webmaster for www.financesoftware.net and has a
bachelor's degree in finance and economics. You can contact him at richard@financesoftware.net |
