5 Steps to Financial Freedom

We write a lot about saving money, making money and spending it or investing it wisely. It’s easy to get stuck in the weeds and forget the ultimate goal. So here’s a reminder: The goal is to achieve financial freedom — the ability to live comfortably, fulfill your goals and live without anxiety about the future.

To that end, here are five steps that you can develop into habits to reach financial freedom:

1. When spending, ask yourself why

Before plunking down a fat stack of cash or swiping that card, stop for a moment and think. Are you getting something you need or a tool that helps you achieve your goals, or are you buying a status symbol that serves little purpose but to compete with the friends or neighbors? How much do you need it? How much will you enjoy it? How much does it improve your quality of life? This line of questioning will help you resist or delay spending money that you could instead save or invest for your longer-term goals.

If you’ve decided to make a purchase, commit to memory some of these easy ways of getting the best possible price:

2. Invest a portion of your savings for growth

Invest a portion of your savings so that it can outpace rising prices. That said, don’t try to pick stocks or time the market. For most of us mere mortals, that is folly. Instead, find a low-cost mutual fund, like the Vanguard Index Fund, which spreads your money across a broad swath of companies to track the market as a whole. By doing it this way, you won’t drive yourself crazy trying to manage individual stocks or take an unreasonable risk on any one asset. You can select funds for the degree of risk (and potential profit) you are comfortable taking and then adjust your risk downward as you get closer to retirement.

Here are a couple of good articles on investing safely for the long term:

3. Pay down debt

Money that costs you money needs to be tackled with determination and strategy. If you have a credit card or other balance that carries a very high interest rate, pay it down as aggressively as you can, while keeping up with minimum payments on other debt. If the rates on your various cards and other debt are roughly the same, you can try another approach that some people find very motivating: They “snowball” debt by paying off the lowest balance first (while always keeping up with minimum payments on other debt) and then taking the amount that had been used for that now-closed account and applying it to pay down the next-lowest balance debt, and so on. Here are some more ideas on tackling debt:

4. Carve away expenses

Most of us have regular expenses that we can eliminate or reduce simply by slowing down long enough to think about it. A place to start is to make a budget — made easier by budget software that allows you to track your spending and your goals. We recommend our partner PowerWallet, but there are many alternatives. Then you are in a position to consider where you can cut your costs. Do you really need that fancy cable package, are you even using your gym membership anymore, and is it possible to cut down on a habit, say smoking or triple lattes?

The key is to be somewhat systematic about this task. Once a system is in place, it will be a whole lot easier to keep spending under control.

Here are some more thoughts on the subject:

5. Build an emergency fund

There will be emergencies. You can count on them even if you can’t predict what form they will take. So you want to be sure that you don’t have all of your money tied up in ways that make it hard to get at. For peace of mind, build a cash reserve at your bank or credit union that you can draw on if things go sideways at work, you’re faced with a dental emergency or whatever life throws your way. Ideally, you can pull together enough to cover six months worth of expenses, but of course, you have to start somewhere. A month’s worth is better than nothing. Here is more on how to make it happen:

How to Prepare For and Deal With an Income Emergency

That’s it! Read these tips, take in more details in MoneyTalksNews articles, and start heading for financial freedom.

What steps are you taking towards financial freedom? Share with us in comments below or on our Facebook page.

How to earn $30 in less than 30 seconds

Earn extra money by using Rakuten (formerly known as Ebates) — a site that gets you cash back at more than 2,500 stores. As a bonus for joining Rakuten between now and Aug. 6, 2020, you'll earn $30 when you spend at least $30 shopping online through Rakuten within the first 90 days. Start earning cash back and claim a free $30 bonus today.

Read Next
10 Food Staples That Are Easy and Cheap to Make Yourself
10 Food Staples That Are Easy and Cheap to Make Yourself

Making any of these key foods yourself will improve meals — and your budget.

9 Houseplants That Remove Toxins From Your Indoor Air
9 Houseplants That Remove Toxins From Your Indoor Air

These plants may also do everything from reduce the amount of dust in your home to improve your productivity.

11 Expenses That Quietly Drain Your Wallet
11 Expenses That Quietly Drain Your Wallet

It’s scandalously easy to overspend in these areas of your life.

5 Secrets to Keeping Your Brain Sharp as You Age
5 Secrets to Keeping Your Brain Sharp as You Age

Forget young at heart — science says these tricks will keep you young in mind.

8 Things I Always Buy at Target
8 Things I Always Buy at Target

I grew up shopping at the original Target store and am a lifelong fan. Here are my favorite purchases.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
Will I Get My Ex-Husband’s Social Security When He Dies?
Will I Get My Ex-Husband’s Social Security When He Dies?

Two factors determine how much money is coming to you.

10 States Where COVID-19 Threatens Seniors the Most
10 States Where COVID-19 Threatens Seniors the Most

No state is immune from the coronavirus. But statistics show that some places are especially dangerous for older residents.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You probably don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

5 Household Disinfectants That Can Destroy the Coronavirus
5 Household Disinfectants That Can Destroy the Coronavirus

You likely already have some of these products at home.

22 Things You Should Always Buy at a Dollar Store
22 Things You Should Always Buy at a Dollar Store

The dollar store has great bargains on these purchases.

6 Reasons I Will Never Trust Suze Orman
6 Reasons I Will Never Trust Suze Orman

Beware: The self-proclaimed personal finance expert has a track record that suggests more sizzle than steak.

America’s Most Reliable Appliance Brand Is a Surprise
America’s Most Reliable Appliance Brand Is a Surprise

Have you heard of this appliance manufacturer?

The Top 11 Jobs That Employers Want Retirees to Do
The Top 11 Jobs That Employers Want Retirees to Do

Tired of age discrimination? Businesses are clamoring for older workers to fill certain roles.

9 Things That Are Cheaper Due to the Coronavirus
9 Things That Are Cheaper Due to the Coronavirus

The pandemic has a silver lining.

This Type of Social Security Benefit Is Often Overlooked
This Type of Social Security Benefit Is Often Overlooked

The Social Security Administration is not helping certain people get money to which they are entitled, a report says.

9 Everyday Problems You Can Solve With Vaseline
9 Everyday Problems You Can Solve With Vaseline

Forget expensive specialty products. Good ol’ petroleum jelly can address many common annoyances.

19 Purchases That Buyers Almost Always Regret
19 Purchases That Buyers Almost Always Regret

Think twice before buying these things.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

8 of the Worst Things to Buy at a Dollar Store
8 of the Worst Things to Buy at a Dollar Store

Not everything sold at dollar stores is a great bargain or a safe purchase. Here’s our list of products to avoid.

Getting These 2 Shots Could Reduce Your Risk of Dementia
Getting These 2 Shots Could Reduce Your Risk of Dementia

These vaccines may lower the risk of Alzheimer’s disease by up to 40%.

41 Things You Should Never Buy
41 Things You Should Never Buy

Some purchases are just plain dumb. Give yourself — and your budget — a break. Don’t spend money on this stuff.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.