With unemployment on the rise this year, achieving financial freedom may not seem like the easiest thing to achieve. However, financial literary may be considered one of the most important aspects of adulthood.
If you are currently struggling to understand personal finance and literacy, don’t panic! Rest assured, you too can be financially free in five easy ways.
1. Create a budget.
At the center of financial freedom is a great budget. Developing a plan for your money with a budget is a great tool to track your monthly spending.
If you’re constantly wondering where your paycheck is going and why you don’t seem to have rollover money, try splitting up your expenses into categories. This will give you some insight on your expenses and then you can make a clear outline for what it will look like in the upcoming month.
There are many different methods for creating a budget. You may decide to split your accounts into wants vs. needs or give every dollar a purpose. Your budgeting method is completely your choice and can be a fun way to start your financial journey.
2. Establish monthly budgeting goals.
To reach your ideal savings amount, consider breaking the amount up into monthly checkpoints. As with any goal, you have to achieve milestones on your journey to reaching it.
Create a savings tracker whether it be using a spreadsheet or creating one in the back of your planner so you can check your progress. Checking off a milestone each month will give you the motivation to continue progressing.
That feeling of achievement may even give you the energy to make additional deposits in your savings account.
3. Deposit spare change.
Let’s face it: saving can sometimes be a daunting task. The thought of saving any amount of money per paycheck may seem next to impossible for some.
Luckily, saving your spare change is an easy and painless way to reach your financial goals. For example, if you spend $10.75 in a store, putting the 0.25 cents into savings will allow you to set money aside without hurting your pockets.
Many banks have programs where you can “round up” your purchases made from your checking account to be transferred into your savings account, so see if your bank offers this.
If not, you can also use the Acorns App to “round up” the purchases from your linked bank account to then be invested in stocks. This app is also great because you can add multiple bank accounts and credit cards which ultimately allows you to grow your savings faster.
4. Take advantage of credit card rewards.
Some of us know the dangers of credit cards all too well. If you’re not careful, one can easily fall into consumer debt at the hands of the high-interest fees associated with credit cards.
However, there is an aspect of credit cards that isn’t highlighted enough, and that is credit card rewards! These include cashback incentives, travel benefits, and discounts. These rewards can save you tons of money per year and earn you money on purchases.
For example, many credit cards offer an interest percentage on a category of your choice or a standard interest rate on all purchases. If you have a 3% cashback bonus on groceries and you spend $70 at the grocery store, you can earn around $2 on that purchase.
This may seem little but remember you would spend this money on groceries anyway so earning money on a recurring expense is a bonus. If you add all the money you would make on recurring expenses throughout the month by using your credit card, you may see a good amount of cashback per month.
But this is in no way to encourage excessive credit card spending or consumer debt. Please beware of the dangers of not paying your credit card bill on time.
5. Start saving for retirement.
Retirement may feel like a distant reality that you don’t have to worry about now.
However, saving for retirement is important and essential to financial freedom. This is because investing in a retirement account through a 401K or Roth IRA account can earn you money through the compound interest accumulated over the years.
Essentially, the earlier you start saving for retirement, the better. It is also common for employers to match some percentage of their employee’s deposits into retirement accounts.
This is free money from your employer toward your retirement so long as you make deposits into your account. If your employers offer this, try to take full advantage of this benefit.
Saving for retirement now can make a huge difference in your future net worth and alleviate some stress when the time comes for retirement.
Try these easy steps to take control of your personal finances today.