Financial freedom may sound like an unattainable goal, but you can reach it. The key to getting to this point financially is recognizing habits that can prevent financial freedom. So whether you're tired of working a 9-to-5 job, or you're looking for more flexibility in life, here are seven habits that prevent financial freedom.
1 Spending More than You Earn
Unfortunately, if you spend more money than you earn, you might never reach financial freedom. Financial freedom refers to having a large enough nest egg that you don't have to rely on income from a job. But if you want to reach this point in life, you'll need to curb your spending and give more attention to saving. This is how you build your nest egg and generate enough income to do what you want in life.
2 Choosing the Wrong Type of Savings Account
Reaching financial freedom involves choosing the right type of savings vehicles. Unfortunately, regular savings accounts don't earn a lot of interest, typically less than 0.06% APY So if you want to take your money to another level, you need to explore other options, namely high yielding options such as money market accounts and certificate of deposits.
3 Being Afraid to Invest Your Money
Dabbling in different investments can be intimidating, and like most people, you may fear losing your money. But the stock market can offer a much higher return than any savings accounts. Work with a financial planner to explore your investment options. He might recommend bonds, the stock market, mutual funds, as well as high-yield savings accounts. You can also consider other investments like real estate.
4 Delaying Retirement Planning
Financial freedom might not happen in your early adult years, but it can happen later in life if you plan well. If you want to be independent of a job and retire comfortably, you need to start saving for retirement as soon as possible. If offered to join your employers 401(k) plan, jump at this opportunity and contribute at least the minimum required to qualify for a match program. Also, look into other retirement options, such as an individual retirement account.
5 Acquiring Too Much Debt
The more debt you have, the harder it is 'not' to rely on income from a job. Whether you're buying a house, a car or using a credit card, do not finance more than you can afford, and do your best to pay off debt as soon as possible. Living beneath your means can help you avoid debt and keep your expenses affordable.
6 Not Diversifying Your Income
Another income source can provide the extra cash you need to reach financial freedom. This is especially important if income earned from your regular job is only enough to cover your monthly living expenses. With a side business or a part-time job, all this income can go toward building your nest egg.
7 Negative Thinking
You're not going to reach financial freedom if you're filling your head with negative thoughts, or if you let naysayers discourage you from reaching your goals. Any big financial goal takes time, so you shouldn't expect immediate results, nor give up when you experience setbacks.
Financial freedom is attainable, but you'll need to work hard to reach this goal. What other habits can prevent financial freedom?
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