Becoming financially independent seems, to most, just a dream. In today’s world, it seems like you never have enough money to live, let alone to save and invest in something nice. But does it have to be like that?
Usually, people complain about money, yet there are surely a few expenses that they could cut and make it easier for them to move towards financial independence. Whether the money goes on the latest trends or just a momentarily desire, wasting cash here and there will do you no favor.
In our previous article, you have seen that achieving financial independence is not impossible. Today, we have a few more tips for you in this regard.
Don’t Celebrate Everything with Money
Did you get a bonus at work, and now you want to celebrate? Nobody says you’re not allowed to be happy for it but celebrating with money is certainly not recommended. More often than not, people seek urgent gratification for their successes. It’s nice to celebrate with those around you or buy something nice as a reward, but your wallet budget won’t be very “happy” about it.
This is one of the first things you should take into consideration because it is one of the reasons why so many people fail to gain financial independence. The more money you spend right now, the less you’ll be able to enjoy yourself later. You need to change your mindset and stop yourself whenever you’re about to party after a success.
Saving the money instead will bring you more happiness in the future. So, don’t worry, you are saving your enthusiasm for later.
Get More Money
One solution to become financially independent would be, of course, to gain more cash. That sounds easier said than done, especially if you already have a job that you enjoy, and you don’t want to quit.
If you want to save hundreds of thousands of dollars, it could take you over twenty years to get to where you want. That’s not really a pleasant idea, especially if you want an early retirement. Earning more money would help you get there faster and with fewer obstacles.
In order to do this, you can start considering a few things to do aside from your job. For instance, you might have some skills that could bring you cash. Did you ever hear the saying “If you’re good at something, don’t do it for free”? This is one situation when this saying applies.
Let’s say that you know a foreign language. You can offer classes to people who want to learn that language. If you’re an IT genius, train other people to become geniuses too or get a part-time job in the industry. There are many similar situations when your skills could have monetary value, so take advantage of this and you’ll have a smoother journey towards financial independence.
If you don’t know what you’re good at, though, you should consider asking those around you for advice. Ask them what they think you’re good at, and what they would give you money for. This could help you a lot.
On the other hand, if you don’t think you have any particular skill that could earn you more cash, take a part-time job. Sure, the thought of working more might terrify you, but you’ll be the one who’ll be happy in the end.
Spend Cash on Stuff that Increases in Value
If you spend your money on stuff that depreciates over time, then you’re not really doing yourself a favor. Why do you think all the successful people in this world are so rich? They know how to spend their money, and don’t throw it away on anything just because they can.
It’s not difficult to look all around you and see that you’ve spent money on things that don’t really produce any more cash. This really makes you think if the investment was worth it.
Usually, whatever you end up buying loses its monetary value. So, you should really start investing in something that brings you benefits in the long run. For example, you can make some home improvements, or invest in real estate.
Limit Your Money
Whenever you go out, you might be tempted to either buy that cool pair of shoes in a store or buy one more drink as your buddies’ pressure you. If you tend to carry all of your money with you, you’ll fall into the bad spending trap once again.
A solution to this would be to take a limited amount of cash with you. For example, you can do this by taking just $40-50 in your wallet or by having a card with a limited amount. Since you know you don’t have enough money to spend anyway, you won’t waste any coin.
Stop Paying Monthly
Do you have auto insurance that you pay on a monthly basis? Okay, maybe it’s time to stop doing that because it has a big influence on your savings. This works for many other subscription-style payments, but this one is a good example.
Generally, auto insurance will require you to pay monthly, or pay the entire year or 6 months upfront. At first, making monthly payments seems like a better and cheaper option. Still, you’re actually better off paying it at once. You’ll get rid of responsibility, and you’ll have enough money to save for other stuff. Not to mention that you can also get a discount. Also, the total premium will be lower.
It’s better to get this out of the way instead of committing to a long-term payment – so, you may want to consider it.
Don’t Support Unproductive Relatives
Do you have relatives, such as children, for whom you make regular payments for rent or anything of the sort? It’s your child, of course, but if we’re talking about a grown-up that has a job, yet you’re still providing them with cash, this is a problem for you. Furthermore, if they are spending too much and they’re always in need of money, you’re probably dealing with a financial junkie.
Ideally, you should do something to make the children understand they should take their life in their own hands, as you won’t always be there for them to spoil them. If they have a career, maybe it’s time to stop giving them free rent and help them become financially independent as well. If they’re in financial hardship, it’s not your fault – it’s theirs, so they should own up to it.
Check Your House’s Area
It’s common knowledge that some areas are simply more expensive to live in compared to others. Living expenses can get really high in some instances, not leaving any room for house owners to get some independence. Luckily, this is something you can fix.
If your area is a rather elite one, moving out to a simpler area will give you more opportunities to cut costs and save money. You could keep the living expenses low while your income will increase, so it’s worth considering.
Do Free Stuff
Who said you need money to have some fun? You don’t have to go to a fancy restaurant and eat the most expensive food in order to enjoy a nice evening out. Actually, there are many fun activities that you can do for free. As usual, Google is always there to help you find those activities/places.
You must have some parks or other natural areas where you could have a blast. Look your area up on Google, and there must be some options popping up.
Becoming financially independent is not everything. You must also learn how to protect that independence and the freedom that comes with it. There are a few ways to do this, and one of them is by obtaining some sort of insurance where your cash is kept in a savings account – this is cash that you can use in case of emergencies. You can also make a stretch of unemployment. This will prevent you from meddling with your retirement savings too early.
Aside from that, you have options through disability insurance or liability coverage. Liability coverage is the choice you should make against lawsuits. On the other hand, disability insurance helps you balance your money when some sort of disability doesn’t allow you to work anymore.
The Bottom Line
Anyone who wants to become financially independent needs to work really hard to get there and be aware that it’s a change that won’t happen in an instant. Before you start working towards independence, you must monitor your income source and spending habits. Also, cut expenses wherever you can, and then move towards more complex stuff. You can get an additional job, limit the amount of available cash when you go somewhere, and so on.
If your journey towards becoming financially independent hasn’t been an easy one, we hope that our comprehensive posts have shed some light on the matter.