What are the 9 steps to achieving financial independence?
This financial independence thing looks more and more interesting, doesn’t it? As we explained, it’s not impossible to get there, but you’re not going to make it anyway. You need to take some actions and strategies that will keep you from getting into the vicious circle of making money and spending it all.
Here’s what to do to take the first steps towards financial independence and not having to work to survive!
1. Diagnose your financial life
First of all, you need to know for sure how your financial situation is going. Take a moment to carefully analyze how your finances are doing, calculating the amount that comes in each month and each of the bills and debts you have.
It’s important to understand how much money is already committed and to have a clear picture of what you’re spending so you can also identify where savings can be made. Also, it is essential to understand what debts are outstanding, when they will expire and the amount that is left over each month for you to use as you see fit.
Without knowing your financial life, it is difficult to set goals, understand how much money can be saved and identify drains that may be compromising your finances. It also helps to be more realistic about your own situation, or whether you need to increase your income.
2. Cut unnecessary costs
Then you must learn to save money. Start rethinking your lifestyle and see where you can cut costs. There is always one thing or two that can be overlooked for the sake of your financial health.
You don’t have to stop hanging out with friends and doing what you love. However, if you already have enough clothes, for example, you don’t have to buy a new dress or shirt, do you agree?
This will all help to save a little at the end of the month. And of course, if you have any debt, try to get rid of it as soon as possible!
3. Make a financial plan
Financial education is something that, unfortunately, is not part of the life of most Brazilians. Therefore, it is very common for people to have debt and difficulty paying bills or saving money. But if you believe in the importance of financial planning, you won’t be one of them!
Make a calculation of what your monthly expenses are, that is, how much you need to spend the month. To maintain control, a tip is to write everything down and have the help of a personal finance application.
Technology helps you keep track of where your money goes, as even the coffee at the bakery must be included in the expense list. This way, you avoid breaking your budget.
4. Set goals for your life
Have you ever stopped to think about what you want to do in the next few years? While some want to visit other countries, others dream of having a car and a house of their own. Whatever your priority, it should be seen as a goal. This will help you save money, focus your efforts and not lose focus on your goals.
But don’t forget that each goal you set needs to be realistic and consistent with what you can do right now, and whenever it’s achieved, celebrate. These are the small steps that will make you reach your financial independence.
As challenging as it is to reduce expenses, with an eye on your goals you will be able to save money for the future and achieve the dream of financial independence.
5. Learn to celebrate goals achieved
You may have heard that every long walk starts with the first step, right? Anyone who has reached the halfway point was once at the beginning, where you are now. There’s nothing better than celebrating each little stretch covered for even more motivation.
Building assets takes time. Also, it depends on how much you can save per month and the type of investments you make. But even though it’s an income of a few Reais, this is already a big profit for you. After all, it was money you earned without having to make any effort.
Value each of these little achievements because as long as you’re seeing positive numbers, it means things are going well. Also, celebrate every time you manage to make bigger savings when you pay off debt and everything else that favours your equity.
6. Invest in qualification
If you want to build wealth, you need to look for better jobs, with higher wages. As wanting is not being able, know that you must bet on your professional training to get better opportunities in the job market.
After all, companies place much more value on people who are trained in the area in which they intend to work. Therefore, look for a good educational institution that offers the degree course you would like to take.
Here, it is worth mentioning that the course fee should not be seen as an expense. The college needs to be seen as an investment that will bring you financial returns and help you reap good results in the future.
7. Make an emergency reservation
As you can see, financial independence depends on a lot of preparation and organization. Part of this preparation is to create an emergency reserve, which is nothing more than a kind of savings sufficient to cover your expenses for up to 6 months.
Don’t think this is an exaggeration. This is the attitude that will prevent you from getting into debt and dirtying your name, in case you run out of work or something unforeseen comes along the way.
With an emergency reserve, you don’t have to despair for fear of not being able to pay the tickets or having to give up what you love to do.
Finally, a very important step is to know how the different types of investments work. Those who have never had contact with the financial market are often lost when investing. But know that financial independence and education go hand in hand.
There are several types of fixed-income products that yield more than savings. In addition to them, there are other types of investment, each of which is better suited to an investor’s profile.
In the beginning, earnings are low. Over time, earnings tend to improve, as the more money you have saved, the greater the earnings. The objective is to get a kind of salary every month from the money invested.
9. Re-evaluate your plans periodically
Remember that it is important to periodically re-evaluate your plans. After all, we change our minds over time, as well as new goals and needs. Life gets different, so your plans to achieve financial independence need to fit that reality.
Get into the habit of looking at your goals, re-diagnosing your financial life, and re-planning everything if necessary. Analyze if you are achieving good results and walking as you expected.
Don’t be afraid to change, learn about new things, and analyze trends, because that way you can adapt and take advantage of better opportunities that are arising. Your planning is kept up to date according to what brings you the most benefits and according to what you want for yourself.
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