Eight crucial budgeting habits for financial independence

Jun 21, 2019, 10:38 AM by Nuvision Credit Union 

Successful Couple

If you want to be financially successful, you need to adopt some good money habits. There are certain things successful people all do regularly. By knowing them, you’ll have an easier time reaching your goals. Here are eight of the top things you should be doing to get you on the road to financial freedom:

Minimize expenses

Reducing expenses requires a lot of self-control, but it really does pay off. Spending less now means you have more money to save or invest and build future wealth.

Take a good look at your budget and ruthlessly cut everything that that doesn’t need to be there. Choose money-saving alternatives to things you frequently spend money on, like eating at home instead of eating out, or making your own coffee instead of buying it. Whenever possible, don’t pay full price. Use coupons and look for sales.

By paying close attention to where your money is going, you’ll be maximizing the income you already have.

Stay alert for opportunities

Opportunities will arise to increase your earnings, but they won’t just be handed to you. You’ll have to recognize and act on them. If you are deserving of a raise, don’t wait for the company to give one to you. That may never happen. Instead, speak up and make a case for yourself. Nothing will change unless you make it.

Invest in yourself

One of the most effective ways to accomplish financial independence is increasing your income. Sometimes, this can’t be done at your day job. You need to put in extra work.

Your most valuable assets are your time and your skillset. If you have a marketable skill—like programming, writing, design, or some other specialized knowledge—work to develop it further. The more you know, the higher your earning potential.

You should also consider starting some kind of a side hustle. There’s a variety of ways to make money outside of work, like selling things online, working as a freelancer, or blogging. If you work at it enough, it could even turn into a full-time gig.

Pay yourself first

You’ve probably heard this before, but the importance really can’t be stressed enough. Too many people don’t save anything, and many of those do save only do it as an afterthought once everything else has already been spent.

Budget for savings just like you would any other expense, and save as much as you can. Financial independence is really more about your habits than the amount. You could easily make six figures and be in debt because you spend it all, rather than being frugal and saving.

Set short-term and long-term goals

The power of goals is incredible. Just by writing down your goal, you make yourself more likely to achieve it. Goalsetting can keep you on course, and prevent you from abandoning the pursuit.

Setting short term goals, like monthly and yearly savings amounts, helps you reach the longer-term goals, like five or ten-year plans. Just be sure to stick to whatever you decide.

Get rid of any debt

If you have debt, paying it off is the first step you need to take towards financial freedom. It’s difficult to build wealth and savings when you are constantly paying towards a credit card bill. It’ll take a lot of work, but if you put in enough effort, it’s definitely doable.

Put your money to work

Putting money away in savings already gets you ahead of the game, but learning how to make smart investments can get you even further. It’ll enable you to earn money while you sleep, without having to put in much work.

The stock market can be a good long-term investment, so can collectibles and certain properties. You’ll just have to do your research before you buy, and be sure the value will increase over time.

Don’t worry about falling behind

When the neighbors get a new luxury car, and you hear about your friend from college buying a house, it can seem like everybody is getting ahead so much faster than you are. But, that’s usually not the reality of the situation. Chances are, the people who seem ahead couldn’t afford the purchase either and will end up hurting in the long run.

Don’t try to out-do friends and those around you; just purchase what you can afford. Stick to your goals. The money you don’t spend now, and the debt you choose not to take on, will go a long way in the future when you have a full savings account.

The information contained within this article is for informational purposes and should not be considered financial advice. Everyone’s financial situations are unique and you should consult a financial advisor for assistance with your particular situation and goals.