Getting on the path toward financial freedom is something anyone can do. While it does take time, attention, and diligence, getting a grip on your finances and making wiser choices can help you get past a paycheck-to-paycheck existence, ensuring you can achieve financial freedom. If you aren’t sure how to begin, here are five ways to launch the journey and make real progress and have financial freedom in 2022.
1. Aggressive Budgeting
If getting financial freedom is your goal, you need to budget aggressively. This goes beyond allocating funds to handle your minimum debt payments and other expenses. It involves being a ruthless cost-cutter who prioritizes their spending based on their values and goals and puts every extra cent captured toward debt repayment or savings.
However, you don’t have to make yourself miserable to go this route. Instead, you simply want to avoid all expenses that don’t bring you legitimate value, allowing you to focus more money on debt repayment and saving.
2. Boost Your Income
Increasing your income is a straightforward way to put yourself on the path toward financial freedom. When your income rises, you can direct more money toward debt repayment, saving, and investing, allowing you to reach your target sooner.
Exactly how you pursue this could depend on your current education level and skill set. In some cases, returning to college to get on a different career path could be worth considering. In others, actively pursuing new responsibilities at work and striving to exceed expectations at every step could let you secure a promotion.
One of the biggest must-dos in this situation is avoiding lifestyle inflation. When you earn more money, it’s easy to assume that increases in your spending don’t matter as much. In reality, by keeping your lifestyle in check, you’ll make progress faster, making it easier to achieve your financial goals.
3. Invest More Than the Minimum
When it comes to investing, many people set aside 10 percent for their retirement and assume that’s enough. However, if financial freedom is your goal, then you need to take it further.
Along with maximizing your retirement savings, open a brokerage account and invest more there. Brokerage accounts don’t have the same limitations as retirement-oriented accounts, allowing you to set aside far more.
While there isn’t a specific target you need to hit, aiming for around 20 percent of your income isn’t a bad idea. If you have more money that you can direct toward investing after that, feel free to do so. As long as you’re investing wisely, any extra cash you commit will simply help you achieve financial freedom faster.
4. Focus on Your Health
While focusing on your health might not seem like a path toward financial freedom, it can play a surprisingly big role. When you keep your physical and mental health in peak condition, you may have fewer medical needs, allowing you to spend less on healthcare.
Plus, happy, healthy individuals are more productive and better equipped to handle stress. That can help you succeed professionally, making it easier to secure promotions and increase your earnings.
5. Don’t Overlook Financial Protection
For many people, a single financial emergency can significantly derail their plans. Make sure you have the right protections in place whenever possible. Along with medical insurance, you may want to explore healthcare supplements, long-term disability, and similar kinds of optional coverage. That way, if the unexpected happens, you’ll have a financial safety net.
Precisely what you’ll need and the coverage amount you’ll require depends on your situation. If you have a family and a limited amount in savings, you may need more coverage, particularly if you’re the primary earner. If you’re single and have ample amounts of savings in an emergency fund, you may be able to scale back a bit.
Consider how losing your income source, high medical costs, or similar issues might impact you. Then, look into plans and policies that offer you some level of protection. That way, a single incident won’t keep you from heading down the path toward financial freedom.
Can you think of any other ways someone can get financial freedom in 2022? Have you tried any of the approaches above and want to tell others about your experience? Share your thoughts in the comments below.
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Tamila McDonald has worked as a Financial Advisor for the military for past 13 years. She has taught Personal Financial classes on every subject from credit, to life insurance, as well as all other aspects of financial management. Mrs. McDonald is an AFCPE Accredited Financial Counselor and has helped her clients to meet their short-term and long-term financial goals.