What does financial freedom look like to you? Is it traveling around the world, free from financial worries? Or does it mean owning a house of your own?
Whatever your idea of financial freedom may be, it boils down to one question: What motivates you to work day in and day out?
We don’t mean your career — what drives you to achieve your vision of financial freedom? Is it building your credit so you can get secure a better rate on a home loan? Getting out of debt so you can stop feeling anxious all the time? Investing so you can save for retirement?
No matter what your goals may be, these tips from Penny Hoarder can help you reach them.
Improve Your Credit Score
Whether you want a house, a car, or a new credit card, you know your credit needs to be in good shape. Monitoring your credit score is an integral part of this, as it is crucial to financing most big-ticket purchases and could potentially save you thousands of dollars over time.
You can check your score for free from now through April 2021 by visiting AnnualCreditReport.com. Knowing where you stand will help you identify areas of improvement so you can improve your score and get the best offers.
Consolidate Your Credit Card Debt
Debt consolidation is an excellent debt management strategy, especially if you have a bunch of high-interest credit card debt. A personal loan is one way you can pay off outstanding credit card balances, leaving you with a single monthly bill.
You can apply through your bank or credit union, or through AmOne, a website that matches you to one of its lending partners. If you owe less than $50,000 to your credit card providers, AmOne will pair you with a low-interest loan to eliminate your debt.
A lower interest rate means more of your money goes toward the principal, not interest. When that happens, you can get out of debt — and closer to financial freedom — much faster.
Investing For Retirement
Investing can feel like a whole new world if you’re unfamiliar with it. But if you want financial freedom, investing is the surest way to reach it since you can get the biggest return on your money.
It doesn’t cost an arm and a leg to start investing, either. There are tons of platforms like Robinhood where you can purchase shares free of charge while also avoiding commission fees. When you sign up for Robinhood, the service will start you off with a free share to get you started.
Get A Life Insurance Policy
You may not want to imagine it, but have you wondered what would happen to your family if the unexpected were to happen?
Even if you have a healthy savings account, that money will only last so long. If your idea of financial freedom also means giving your children the same, you should prepare with a life insurance policy.
Many life insurance companies are available, and many offer affordable policies (some as low as $16 a month). The sooner you sign up for a life insurance policy, the sooner you can get peace of mind knowing your family is safe from the financial unknown.
Save Your Money In A High-Yield Savings Account
Investing is an excellent way to become financially free, but you can’t underestimate the power of a high-interest savings account, either.
Most savings accounts from big banks have pitiful APYs that do very little for your money. But if you switch to an online bank, you can find a number of savings accounts with competitive returns.
Not only that, but some, like Aspiration, give you 5% cashback and 16 times the average APY on your savings account balance. Online banks offer the convenience and ease that comes with brick-and-mortar banks without the extra fees. That way, you can get the most out of your returns.
Reevaluate Your Other Insurance Policies
If you want to become financially free, you need to find ways to keep more of your money in your wallet. That typically involves cutting out unnecessary spending. But what about those things you can’t do without, like car insurance?
The Penny Hoarder recommends comparison shopping biannually, at least when it comes to car insurance. Doing so gives you an opportunity to find a better rate, potentially saving you hundreds of dollars each year.
- Faber, Kari. “Heres What Financial Freedom Really Means – and 5 Steps to Get There.” The Penny Hoarder, The Penny Hoarder, 18 Jan. 2021, www.thepennyhoarder.com/bank-accounts/financial-freedom-how-to/?aff_sub2=homepage.