Financial freedom–having enough savings in the form of investments, cash, and savings available to pay for the lifestyle you’d like for your family and you is a major desire for many. It is also about building an asset which will enable you to retire or take on any profession you wish to pursue, but not having to be driven by the need to make a certain amount every year.

Unfortunately, a lot of people don’t achieve financial freedom. Even without occasional financial emergencies growing debt from excessive spending is a constant obstacle that hinders them from reaching their objectives. When a crisis of a significant nature–like an earthquake, hurricane, or a pandemic–completely disrupts the plans of everyone involved, further holes in safety nets are made clear.

It happens to every person however these 12 behaviors will help you get on the right track.

The most important takeaways

Set goals for life, big and small in terms of lifestyle, financial, and financial goals. Create an action plan to meet your goals.
Make a budget to cover your financial requirements and follow it.
Make sure you pay off your credit cards in full, and carry as little debt as possible Keep watch on your credit score.
Automate savings by creating an emergency fund and making contributions to the retirement plan offered by your employer.
Take care of your belongings–maintenance is cheaper than replacement–but, most importantly, take care of your health.

1. Set Life Goals

What’s the definition of financial freedom for you? Everyone has a general desire for it, but it’s too broad a definition. You should be precise regarding the amount and timeframe. The more precise your goals more likely you are of achieving them.

Note down these three goals 1)) what your lifestyle demands and 2) the amount you need to have in your account to make that possible; and 3) when is the deadline to save that amount.

Next, subtract backwards from the date of your deadline up to your current age, and set financial mileposts at regular intervals between the two dates. Make sure to write all deadlines and amounts down with care and place the goal sheet at the top of your financial binder.

2. Set a Budget for the Month

The process of creating a monthly budget and following it, is the best way to guarantee that every bill is paid and savings are being managed. It’s also a habit that helps you achieve your goals and boosts your determination against the temptation to splurge.

3. Pay Off Credit Card Debt in Full

Credit cards as well as other consumer loans with high interest are harmful to wealth building. Be sure to pay off the entire amount each month. Mortgages, student loans and similar loans generally have much lower interest rates and paying them off is not an emergency. However, making sure you pay these lower-interest installments in time important–and on-time payments will increase your credit score.

4. Automate Savings

Pay yourself first. Enroll in the retirement plan offered by your employer and use the matching contribution benefits, which is basically free money. It’s also wise to have an automatic withdrawal into an emergency fund that can be tapped for unexpected expenses, and also an automatic contribution into a brokerage account or similar.

Ideally, the money for the emergency fund and the retirement account should be pulled out of your bank account within the same day that you receive your paycheck so that it is never in your hands.

Be aware that the suggested amount to keep in an emergency savings account will depend on your specific situation. In addition, tax-advantaged retirement savings accounts have restrictions which make it difficult to access the cash you have saved should you suddenly need it, so that account should not be your sole emergency fund.

5. Start Investing Now

The bear markets can make investors question the wisdom of investing however historically, there’s been no better method to boost your savings. The power of compound interest will increase your wealth exponentially, however, you’ll need a lot of time to experience meaningful growth.

But, for everyone except professional investors–it would be an error to attempt to do the kind of stock picking that was made famous by billionaires such as Warren Buffett. Instead, sign up for an online brokerage account that allows you to understand how to invest, build a manageable portfolio, and then make weekly or monthly contributions to it on a regular basis. We’ve identified the top brokerages for beginners online to help you get started.

The journey to financial freedom is very difficult in the face of increasing debt, cash emergencies medical concerns, and overspending, but–with diligence and discipline, it’s achievable.

Invest early, retire early – come read our financial independence retire early blog.

6. Be Watchful of Your Credit Score

A credit score can be a very significant number that decides the interest rate that you’re offered when buying a brand-new car or refinancing a home.1 It also influences the amount you pay for a range other essentials including car insurance and Life insurance rates.

The reason credit scores have so much weight is that people with financial saggards is thought to become reckless in different areas of their life, for example, not taking care of their health, or even driving and drinking.

This is why it’s essential to obtain a credit report at regular intervals to make sure that there are no mistakes that ruin your good name. It may also be worth looking into a reputable credit monitoring service to safeguard your personal information.

7. Negotiate for Goods and Services

Many Americans aren’t keen to bargain for their goods and services due to the fear that it can make them appear cheap. Overcome this fear and you could save thousands each year. Smaller businesses, especially, tend to be flexible, and purchasing in bulk or establishing yourself as a customer who is a repeat client could lead to significant discounts.

8. Stay informed on financial issues

Review relevant changes in tax law to ensure that any adjustments and deductions are maximized every year. Keep up with the latest financial news and developments in the market for stocks and make sure to update your portfolio of investments accordingly. Know-how is the best protection against scammers who target investors with little knowledge to make a quick buck.

9. Keep Your Property Clean

Maintaining your property with care will ensure that everything from cars to lawnmowers to clothes and shoes last longer. The cost of maintenance is less than the cost of replacement, therefore it’s an investment not to be missed.

Find out the distinction between what you’re looking for and the things you need.

10. Live below your means

The art of living a thrifty lifestyle is adopting a mentality that’s focused on living a healthy life for less than you think. Before getting rich, many wealthy individuals developed habits of living below their income.

It’s not a problem to lead a minimalist way of life. It simply means learning to discern between the things you need from the things you want–and then making small changes that lead to big positive changes to your financial wellbeing.

11. Get a Financial Advisor

Once you’ve come to the point that you’ve amassed substantial wealth–either or liquid assets (cash or any other item that can be changed into cash) as well as fixed assets (property or any other item that isn’t easily transformed to cash)–get an expert in financial planning to keep you on the right path.

12. Take Care of Your Health

The idea of regular maintenance also applies to your body–and maintaining your physical health has an enormous positive effect upon your overall financial well-being, too.

Insuring your health’s best is easy. It’s about regular visits to doctors and dentists, and heeding guidelines for any health problems you face. Many health issues can be helped–or even prevented–with basic lifestyle changes, including more exercise as well as a more nutritious diet.

Insufficient health care However, poor health maintenance it can have both immediate and lasting negative effects on your financial objectives. Some companies limit sick days. This means the loss of income when the paid days have been used up. In addition, other illnesses related to diet can cause insurance premiums to go up, and poor health may make it necessary to retire early, resulting in reduced income monthly for the rest of your life.

What Is Financial Freedom?

Each person defines financial freedom terms of what they want to achieve. In the majority of cases, it means having the financial cushion (savings or investments as well as cash) to be able to live a certain life-style, as well as a nest egg to fund retirement or freedom to pursue any career without having to pay a certain salary.

What is the 50/30/20 budget Rule?

The 50/30/20 budget rule which was popularized in the Senate by Elizabeth Warren, is a method to ensure financial stability by dividing your after-tax income into 3 categories of spending: 50% for needs 30 percent for things you want, and 20 percent for savings and paying down debt. We have built an easy-to-follow budgeting calculator to help identify and manage your spending and saving, which is the primary step towards financial freedom.

The Bottom Line

These 12 steps aren’t going to solve all your financial issues, but they will help you develop the good practices that can put you on the road towards financial independence. By creating a budget with specific target amounts and dates reinforces your resolve to reach your goal , and protects you against the temptation to overspend. As you make significant progress it will be easier to escape the pressure of escalating credit and the hope of a retirement fund retirement come into play as powerful motivations. Financial freedom is now in your sights.