Money is something that is necessary in our world. Unless you want to start trading cows and chickens for the latest technology, we need a currency to value both the work we do and the items we own. However, as necessary as it is, it’s also something that we stress over, break up over and may even hurt others over. It also prevents us from attaining our dreams; we need money to study, we need money to start a business and we need money to travel and see the world.
We can’t always life from paycheck to paycheck, barely scraping by enough money to buy groceries and pay our bills while also looking after our children. Fortunately, it doesn’t take much effort to obtain financial freedom—even if you don’t make a six-figure salary. Managing your money is all about smart shopping, clever planning and discipline. If you’re capable of those three qualities, then you can achieve financial freedom within a mere week. Even if you don’t think you possess those three qualities, it’s easier than you think to pick them up.
Master Your Budget
If your money just comes in and goes out without any form of tracking, then you need to get yourself an app to track your budget. This article by Tomsguide.com has a fantastic list of budgeting and finance apps that can help you keep track of your budget, expenses and income. However, just having an app isn’t going to do you much good if you don’t change your habits.
First of all, you need to separate the types of expenses you spend money on. The best way to sort these are into needs and wants. Needs are expenses that you have to pay for. This includes rent, utility bills, groceries and insurance payments. These are essentially things you have to pay for in order to live your life. Keep in mind that you can reduce the payments for these essentials in a number of different ways. For example, if you don’t use your phone very much then you can downgrade to a different phone plan, or you could switch energy providers if there are better deals elsewhere.
Needs, Wants and Likes
Next are your wants. These are luxury items that aren’t necessary to your daily life, but they are required if you want to feel great about yourself and have fun. For instance, it could be a home laptop, it could be a large television, a subscription to Netflix or anything similar. You could even split this category into wants and likes, wants being things that will help improve your life such as a new office chair, and likes being luxury items such as the latest phones, expensive food or video games.
Then you want to save for emergencies. We all encounter nasty things in life and we all have emergencies that need to be taken care of, so make sure you put aside some funds in order to pay for those sudden expenses. It could be car repairs, it could be an accident, or it could medical bills. Whatever the reason, it’s never a bad idea to save money for the sake of emergencies—you just have to discipline yourself to never touch this money.
Know Where to Save Money
It’s important that you differentiate between frugal living to obtain financial freedom and cheap living to save pennies. Living cheaply isn’t always desirable; if you were given the choice of buying cheap and unfulfilling food or moderately priced meals that are filled with nutritional, you should always pick the moderately priced meal because it offers better value for your money. Eating cheap food that is filled with artificial flavourings and chemicals isn’t the best way to plan your diet. In other words, know where to save money and where to cut back (food being an area where you don’t cut back too much).
You should also learn to save money on the purchases that are classed as wants. For instance, if you want to buy a new laptop for work or a keyboard to replace your current one, then consider looking at websites such as DontPayFull.com in order to look for coupons and discounts at your favourite stores. Shopping smart is one of the key ways to achieve financial freedom, so always look for deals and don’t overspend when you could be saving.
Recycle Your Goods
No, this doesn’t mean recycling plastic bottles and paper (although you should be doing that too) but it means to reuse and repurpose your items and electronics. For instance, if one of your tech gadgets has broken, then chances are you can repair it for a fraction of the cost of replacing it, or you can sell it on eBay.com for parts. If you have an old games console that you don’t play anymore and don’t see yourself using for a long time, then there’s nothing wrong with selling it and getting some money back. Not only does this free up space and declutter your home, you also get some money back from your purchase, and chances are you’ve had your fun with it already.