Living with financial trouble is one of the most stressful situations you can find yourself in. It feels oppressive and you don’t know if you’ll ever see the light at the end of the tunnel. But you can get out of the situation you’re in. Here are the 7 steps you need to find financial freedom.
1. Take an Honest Look at Your Finances and Identify the Problems
Sometimes facing the facts isn’t easy. I’ve been there and know how that feels. But ignoring things won’t make them go away, especially when it comes to financial problems. The first step to finding freedom is taking a look at your finances and identifying the problems. Once you know what the problems are, you can begin working to correct them.
2. Scale Back Your Spending
One problem you may have identified in your finances is that you have a spending problem. This could mean that you spend more of your income than you can afford or you have a problem with abusing credit cards. However this problem is showing up, the solution is to cut back on your spending. This doesn’t mean you can’t ever spend again, but you may want to think about what you can truly afford.
3. Up Your Earning Potential
It could be that you’re not making enough money to pay your bills. If that’s the case, you may need to up your earning potential. That’s certainly easier said than done though, right? But most of us can earn more than we’re currently making if we brainstorm a bit. Think of some things you’re naturally talented at and how you might use those to bring in income.
4. Transfer Credit Cards onto the One with the Lowest Interest Rate
If you have credit cards then it’s good to be smart about your interest rate. It’s a good idea to go for the credit cards that offer you the lowest interest rate. Read the fine print, though. You want to make sure that there are no hidden clauses. If credit cards are part of your problem, come up with a plan to deal with that. Maybe you could cut your credit card usage down or completely out.
5. Start Saving Money for Emergencies
It’s important to have an emergency fund. An emergency fund should be used for things like car repairs, unexpected medical expenses and things of that nature. Anything that comes up that you didn’t plan on and is an immediate cost to you can fall into the emergency category. I know it’s hard to save for emergencies, but you can do it. Even if you just put $10 aside from each paycheck, you’re making an effort that’ll eventually add up.
6. Set up a Timeline of Financial Goals You Want to Achieve
It’s good to have financial goals. They can be whatever you want them to be. You know what you need to work on financially better than anyone. You may want to pay a credit card off, pay your student loans down or start shopping smarter. The important thing is that you’re working toward some financial goals.
7. Talk to a Financial Counselor
Sometimes it can be helpful to talk to a financial counselor. They can offer you an expert opinion on your individual situation. They’ll have suggestions you can use to be more financially savvy. If seeing a financial counselor isn’t possible then you can always read up on personal finance. The point is you’re making an effort to learn to handle your finances in a better way.
These are 7 steps to financial freedom. Are you in a difficult financial spot? What lessons can you share from your experiences?