You’ve heard the statistics. 35% of Americans can’t cover even a $400 emergency expense with cash. Nearly 70% of us worry about our overall financial wellness.
Despite that, you have friends who don’t feel the stress and worry about money so many of us do. What are they doing that we aren’t? How have they achieved financial freedom with their finances?
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While the specifics may vary, financial advisers all recommend the same basic strategies. So let’s look at three of the essential tips for achieving financial independence.
Table of Contents
Essential Tips to Achieving Financial Wellness
1. Pay and Spending
This tip has three parts. First, make sure you are being paid what you are worth. How do other people get paid for the same work inside and outside your company?
If you’re being paid less, look for a new job. Even one or two thousand more a year makes an enormous difference over your lifetime.
The second part of this tip is simple. Spend less than you make. Whether you make a lot, or a little, don’t spend more than you earn.
It’s easier for most people to reduce spending than increase their pay. So start by cutting whatever you can. Little savings here and there make a big difference. Best of all, most of these minor expense cuts don’t involve enormous sacrifices.
Finally, make a budget and stick to it. You won’t know where your money’s going without a budget. You need to know so that you can set savings and retirement goals. Budgets are fundamental to financial well-being.
2. Eliminate Credit Card Debt
Survey the experts, and they all say credit card debt is the single biggest obstacle to gaining financial independence. So whether it’s a big purchase or a small one, we charge it.
And we all say we’ll pay off our credit card balance at the end of the month. Most of us don’t. And that makes that caramel macchiato you get every morning cost more.
Pay cash – or access your pay with a service like payactiv.com – but don’t put your coffee on a card.
3. Save and Invest
You’ve cut back on your expenses, set up a budget, and stopped carrying credit card debt. Congratulations! Now it’s time to gain financial independence.
Set aside at least five percent of your take-home pay for your savings. Do that before you pay your bills. That money will help you set up an emergency, rainy day fund.
Once you have that in place, start investing. The best investments for retirement are often an employee-sponsored 401(K) or an IRA. Then, after you get a retirement program set up, work with a financial advisor and invest in mutual funds.
Financial Wellness: Start Today
Achieving financial wellness starts by making a few changes and following simple rules. Cut expenses, make a budget, eliminate debt, save and invest. It’s not rocket science, but it does take discipline.
That’s the downside. The upside is that you can gain financial independence and stop worrying about money! For more informative and entertaining articles, please look around the rest of our website!