Financial Freedom Checklist
Almost everyone wants to attain financial freedom. It is the ultimate dream. However, a lot goes into actually reaching this goal, and not everyone puts in the necessary work. This could be because many do not know where to start in building towards financial freedom.
Financial freedom checklist
There are certain things you have to do to be financially free. Regardless of whether you are on the fence about how to start, already have short-term goals, or working towards a long-term financial plan, you should have these items checked off your ‘checklist’ for financial freedom.
- Evaluate your finances. Analyze your income and expenses and look for areas where you can cut costs and save money. Also, see if there are opportunities to make meaningful investments.
- Grow an emergency fund. If you have not already started an emergency fund, do so as soon as possible. If you already have an emergency fund, grow it.
- Draw up a budget and stick to it. If you want to attain financial freedom, you have to be conscious of your present finances. This includes getting rid of unnecessary expenses and cultivating discipline in your spending habits. You could draw up a monthly budget that only includes your essential expenses and channel the rest of your income towards savings.
- Ensure that your credit score is excellent. While some may argue that you could do without an excellent credit score, if your ultimate goal is financial freedom, there are many ways in which a great credit score will come in handy. Here are a few we have found from research;
- Having a good credit score could result in getting lower rates for home or car insurance. If you have bad credit, you might have to pay more as companies would consider you as riskier than others.
- Having good credit makes a good impression on prospective employers who research on that. It could increase your employment opportunities.
- You also get credit card rewards, points, and bonuses when you have a good credit score.
- Having an excellent credit score comes in handy when you need to apply for a loan. You may even be able to get lesser interest rates.
- Also, having good credit makes it easier to rent or purchase a home. It is definitely part of the criteria prospective landlords would consider before letting you rent their property.
- Have multiple income streams. If you want to be financially independent, be sure not to place all your eggs in one basket. Ensure that you not only build both active and passive income streams but also make investments that have great potential.
- Pay off your debts. To be truly financially free, you have to be free of debts. To achieve this, you have to work out a payment plan for any outstanding debts you have. More importantly, a lot of automatic payment plans ensure you do not miss any of your payments, and you can actively monitor your progress.
- To save up and to pay off your debts, you naturally would need more money. This can be achieved by cutting costs and getting more jobs.
- Create a financial retirement plan. Creating a financial retirement plan is a long-term goal that should definitely be on your checklist for financial freedom. You can find tips on creating a financial retirement plan here. Ensure to save regularly to this effect.
- Monitor your financial progress through periodic checks. Look for ways to get better insurance, find avenues to tighten your budget reasonably, and reshape your financial goals as things change if there is a need to.
- Create relationships with finance professionals. Build a network that includes finance professionals that you can trust and consult regularly for professional advice when you need to make important decisions.
While there are many more details to consider when working towards financial freedom, you must check the points discussed in this article off your checklist. Set clear goals and stick to them. Also, develop good financial habits and maintain these habits through constant practice. Remember that it is never too early to start working towards financial freedom. The more time you have to plan, the better decisions you would make.