1. Set Life Goals
A general desire for "financial freedom" is too vague of a goal. What does it mean to you? Write down how much you should have in your bank account, what the lifestyle entails and at what age this should be achieved. The more specific your goals, the higher the likelihood of achieving them. Then, count backwards to the current age and establish financial mileposts at regular intervals. Write it all down neatly, and put the goal sheet at the very beginning of your financial binder.
2. Make a Budget
Making a monthly household budget, and sticking to it, is the best way to ensure all bills are paid and savings are on track. It is also a monthly routine that reinforces your goals and bolsters resolve against the temptation to splurge.
3. Pay Off Credit Cards in Full
Credit cards and similar high-interest consumer loans are toxic to wealth-building. Make it a point to pay off the full balance each month.. student loans, mortgages and similar loans typically have much lower interest rates, making them less of an emergency to pay off.
4. Create Automatic Savings
Pay yourself first. Enroll in your employer's retirement plan and make full use of any matching-contribution benefit. It is also wise to have an automatic withdrawal for an emergency fund that can be tapped for unexpected expenses and an automatic contribution to a brokerage account or similar account. Ideally, the money should be pulled the same day you receive your paycheck so it never even touches your hands, avoiding temptation entirely.
5. Ignore the Joneses
A braggart neighbor showing off a new car or his latest smartphone is no reason to do the same. Smile politely, nod, and take comfort knowing your reward is coming tenfold in the future.
6. Watch the Credit
A person's credit score determines what rate is offered when buying a new car or refinancing a home. It also impacts seemingly unrelated things, such as car insurance and life insurance premiums. The reasoning is a person with reckless financial habits is also likely to be reckless in other aspects of life such as driving and drinking. This is why it is important to get a credit report at regular intervals to ensure there are no erroneous black marks ruining your good name.
7. Live Below Your Means
Mastering a frugal lifestyle by having a mindset of living life to the fullest with less is not so hard. In fact, many wealthy individuals developed a habit of living below their means before rising to affluence.
8. Get a Financial Adviser
Once you've gotten to a point where you are able to discern if you've amassed a decent amount of wealth, be it liquid investments, or assets that are tangible but aren't as readily available to convert to cash, getting a financial advisor to educate and help you make decisions is highly suggested.
Check out our blog article about what to ask a Financial Adviser here:
8 things to keep in mind when speaking with a financial adviser