Everyone wants to be financially free and independent. But such does not just happen. There are things you need to do intentionally. Maybe you may say it is too late to start on such. But it is never too late to start on something that leads to freedom.
This article is about the steps to that financial freedom and independence. It shall cover; putting in place a savings plan, dealing with debt, and using your savings to invest. Let us now look at the steps:
1. Put in place a savings plan.
Financial saving is about putting some funds aside for future needs. It is the starting point for those who do not have a good financial background to their financial freedom and independence.
This is paying yourself first. It is unfair to oneself to start paying everyone else after getting a salary or earning money except oneself. How do you do that? You start by paying rent, tithes, paying debts, utilities and other things until your monthly earnings are depleted. So, saving at least 10% on every income you get is a great starting point. This is affordable for everyone since it is proportionate to your income. There can be no excuse.
What are you waiting for? Start right away. Open a savings account by joining a savings and credit cooperative or use a bank. Avoid withdrawing those funds until a certain given period.
2. Deal with debt
We all want to use debt at a given period. However, there is good and bad debt. I term bad debt as that, which does not generate income for you. Good debt is that which is used for productive purposes like starting some income generating projects.
Bad debt adds liability to you. Note that I am not using these terms as per the accounting terminology. So, an asset that is a liability is one like a car or house for personal residence. Why term these items like this since they are known as assets? They are a liability because they take cash out of your pocket.
Over indebtedness should be avoided at all costs. If possible, reduce and do away with debt. The savings plan mentioned above shall take you to financial freedom and independence when followed consistently.
3. Use your savings to invest.
Investment is better than savings. However, you need to first have some funds before you can invest. Unfortunately, that is where most of us must start from. There are several ways in which you can invest your funds. The ways may include, business, buying financial assets, investing in financial stocks, property, etc.
Investing helps you build your wealth, thus giving you your financial freedom and independence. It is a way of growing your finances.
The above three steps shall help you start on your journey to financial freedom. Just follow them. Start by setting up a savings plan and follow it consistently. Do not wait long because there will never be a favourable time. Work on your debt by following a repayment plan. Then invest your funds so you can grow your finances. Those three steps shall indeed put you on the right track to financial freedom and independence.