financialtreat – will explain about Wanting to Be Financially Independent, Check out these Easy Tips that you will get in the following article. let’s look at this article carefully!
Money is one of the important aspects of life. Some people have a goal for Mandiri Cecara Keuangan even from a young age. In realizing the plan, make sure you have managed with personal finance from now on.
This information will help you to be Financially Independent. Because you can achieve it, then of course you can do it by following the tips guide that we will explain in the review below. Then how to be curious about how to do it, let’s take a good look at these tips.
Want to Be Financially Independent, Check Out These Easy Tips
Here are some tips you should know:
1. Set Goals and Create a Financial Self-Definition
Being financially independent is different for everyone. There are people who have the point of view that having a fixed salary, having investments, and sufficient savings can already be regarded as financially independent. There are also those who define being able to work according to their passion and retiring early in a short time is the meaning of being financially independent.
Therefore, set your own version of goals and financially self-definition. After that, determine what things you must achieve to gradually achieve these goals. Of course, also adjust it to your current condition. Then you can do personal finance planning in achieving the intended target.
2. Make Financial Planning
Financial planning must begin as early as possible so that you can be financially independent as soon as possible. The first step in making financial planning is to allocate salaries to certain posts. Usually the posts are 30% used to repay debts, 20% used for investments, and 50% used for routine expenses.
The routine expenditure items are divided into electricity, water, internet payments, weekly shopping or monthly shopping, to paying bpjs kesehatan. You can use envelopes to arrange your regular expenses.
Also make it a habit to record all expenses, so that your personal finances are still monitored. In the future, you can use this note to see whether expenses in certain posts can be more efficient or cut altogether so that existing funds can be put into other posts, for example investments.
3. Prepare an Emergency Fund
This emergency fund is quite important, especially in a pandemic situation like today. There are many people who suddenly get sick and cost a lot of money. A wave of employee dismissals has also occurred a lot during the pandemic. For those who do not have deposits, of course, it will be very difficult to get large enough funds to pay hospital expenses or even just survive.
Then how much exactly is an emergency fund that you have to prepare as this reserve fund? Usually this emergency fund is in the range of 6-12 times your monthly salary. If you already have an emergency fund, you can say that you are already financially independent, you know.
4. Pay Off Debts
If you have debt, then prioritize paying off the debt first. This is because the foundation of being financially independent is to be free from all debts. To pay off debt then you need to adjust it to your ability. If you can’t pay directly in full the debt, then installments are indeed one solution.
Once you are free from debt, then it must be maintained. To be sure, avoid going into debt because it will weaken your financial independence. It’s very dangerous if your monthly salary runs out just to pay off debts.
You also need to avoid buying items that are not too important, for example buying contemporary milk coffee at one of the expensive restaurants, so that the financial plan that has been prepared can run smoothly.
5. Increase Passive Income
You’ve certainly heard of passive income. Passive income is income that a person can get without the need to play an active role in active activities. You can even get this passive income when you are sleeping.
You can get this passive income from various types of activities, for example, investment. Various types of investments include gold and mutual funds. These two types of investments are arguably very suitable for beginners because the risk is arguably quite low. For those who want to retire at a young age, this investment is one way so that you can retire safely because you still have income.
Read more financial independence:
- How to Make a Financial Plan? Let’s Check out the Review!
- The Impact of Financial Dependence on Your Life and How to Overcome It
6. Prepare an Emergency Fund
Emergency funds and savings are two different things. An emergency fund is a fund that is specially allocated to be used during emergencies and urgency. For example, when you are laid off, sick that requires large costs, to family members who die.
The conditions vary, but what is clear is that it requires funds that can be used when they are in urgency. How much emergency fund should be prepared? Generally 3, 6, or 12 times the income received each month. But again, the number must be adjusted to the conditions you experience.
7. Fully Pay Off the Credit Card
Credit cards and other high-interest consumer loans are toxic to wealth building. Make it a point to pay off the full balance every month. Student loans, mortgages, and similar loans usually have much lower interest rates; paying it off is not an emergency. However, paying these low-interest loans on time is still important—and timely repayment will build a good credit rating.
8. Start Investing Now
A bad stock market known as a bear market can make people question the wisdom of investing, but historically there has been no better way to grow your money. The magic of compound interest alone will grow your money exponentially, but you do need a lot of time to achieve meaningful growth.
However, remember that for everyone except professional investors it is a mistake to try the kind of stock taking popularized by billionaires like Warren Buffett . Instead, open an online brokerage account that makes it easy for you to learn how to invest, create a manageable portfolio, and make weekly or monthly contributions to it automatically. We have ranked the best online brokers for beginners to help you get started.
9. Pay Attention to Your Credit Score
Your credit score is a very important number that determines the interest rate offered to you when buying a new car or refinance a house. 1 It also has an impact on the amount you pay for various other basic needs, from car insurance to life insurance premiums.
The reason why credit scores have such a heavy weight is because a person with reckless financial habits is considered to tend to be reckless in other areas of life, such as not taking care of his health or even driving and drinking.
10. Stay Educated on Financial Issues
Review the relevant changes in tax legislation to ensure that all adjustments and deductions are maximized annually. Stay up to date with financial news and developments in the stock market and feel free to customize your investment portfolio.
Knowledge is also the best defense against fraudsters who prey on unsophisticated investors to make quick money.
11. Defend Your Property
Taking good care of the property makes everything from cars and lawn mowers to shoes and clothes last longer. Maintenance costs are a fraction of the cost of reimbursement, so this is an investment that should not be missed.
12. Live Under Your Abilities
Mastering a frugal lifestyle means developing a mindset that focuses on living a good life with less and that’s easier than you think. In fact, before rising to prosperity, many wealthy people develope the habit of living under their abilities.
It is not a challenge to adopt a minimalist lifestyle. This means learning to distinguish between the things you need and the things you want and then making small adjustments that drive huge gains to your financial health.
13. Get a Financial Advisor
Once you reach the point where you have accumulate a decent amount of wealth whether liquid assets (cash or anything else that is easily converte into cash) or fixe assets (property or anything else that is not easily converte into cash) get a financial advisor to help you stay on the right path.
That’s the review of Financially Independent. Hopefully, the information above can solve all your money problems. But it will help you good habits that lead you down the path to the financial freedom you expect.