A 4-step guide to improve your financial future and achieve financial freedom

  1. Track your expenses.
  2. Budget
  3. Save
  4. Invest
Photo by Visual Stories || Micheile on Unsplash

Achieving financial freedom should be a goal for everyone. Planning your financial future means that you are in charge of your financial situation having enough savings, investments, and cash so you can live comfortably. You don’t have to worry about tomorrow when you achieve financial freedom and you aren’t burdened with a pile of debt.

Being financially free means that you don’t live paycheck to paycheck and you can follow your dream career and do what you love. The path to financial freedom means that you are in control of your finances and you are responsible for how you spend your money.

1. Track your expenses

Tracking your expenses means identifying and eliminating wasteful spending habits in your financial life, being in control of your finances, and promoting healthy financial habits like budgeting, saving, and investing.

Some ways to keep track of your expenses are:

  • keep a record of your receipts
  • using a banking app
  • checking your bank statements
  • setting up direct debits

The plan is to spend less than you earn at the end of each month and to have extra money left so you can start investing in something that will create an extra income like opening a business, investing in index funds, or real estate.

2. Budget

Keeping a budget will allow you to create a spending plan for your money and guarantee that you will be out of debt at the end of each month. Budgeting is one of the best things that will improve your financial situation:

  • stop overspending
  • achieving your financial goals
  • save money
  • put you in control of your financial situation

Setting up a budget and carefully spending money will help you to achieve your financial goals faster and have money aside for emergencies.

Build your budget plan and automate as much as possible so the money you allocated every month, will get there with minimal effort.

3. Save

The first rule of saving is to pay yourself first. Put aside a minimum of 10% of your gross income every month. If you can’t save that amount of money start with less, something like 2% a month. In the beginning, you want to create the habit of saving money every month.

You want to make sure before starting to invest, you build an emergency fund that can cover between 3 and 6 months of your living expenses.

It will prevent you to borrow money in case you lose your job, dental emergency, or have car trouble.

Having money aside for emergencies will keep your stress level down, keep you from making bad financial decisions or spending money on things that you really don’t need.

4. Invest

After you eliminate wasteful spending habits, create a plan for your money, and have some money aside for emergencies, is time for you to decide how you want to increase your income.

Now is the time for investing.

Investing means allocating your financial resources with the expectation of generating profit. You can do this by investing in the stock market, building your own business, learning a new skill, or investing in real estate.

Before you start to invest your money you need to decide what type of investor you are and how much risk you are willing to take on. Answering these two questions is the building block of creating a strategy to achieve your financial freedom.

Invest in yourself first. Pay your debt, track your expenses and create an emergency fund.

Learn how to invest and create a strategy to achieve your financial goals. By doing so you will gain confidence and secure your financial future.