Many people dream about being rich and financially independent. Financial freedom means you have enough money on hand while you also have enough savings and investments. Leading a life of your dreams may seem hard to achieve, but you should try your best. The following step-by-step guide may help you overcome temporary cash issues and become wealthy. You need to be consistent and determined if you want to get rid of current money problems and achieve your financial goals.
Understand Financial Stress
It may seem that you are alone feeling anxiety and frustration because of financial matters. In reality, millions of people are worried about personal finances. You need to understand that you are not alone. We all live in the same world and experience similar situations and economic uncertainties. It may be challenging to deal with this stress as increasing debt, job loss, sudden illness, or unforeseen expenses may unsettle you.
In fact, financial stress is considered one of the most widespread problems these days. The American Psychological Association conducted a study and found out that 72% of American citizens are stressed over money matters. During the present pandemic and new economic crisis, even more, people might feel anxious and less confident when it comes to financial matters. However, you may use this guide to overcome any temporary issues with your money and even become wealthy and reach your long-term monetary goals.
Step 1: Identify the Problem
The first step you need to make is to define what problem you should deal with. What is the current issue that is the cause of your money problems? Temporary financial issues may be a cause of a larger problem. You need to take some time to determine the real issues before you come up with a solution. You may want to write down the major challenges that are connected with money. Don’t mention everything but try to focus on real problems and make this list short and precise. Then you should review this list every several months to check the progress.
Here are some of the most widespread sources of financial problems:
- Unemployment/ job loss. The main reason for money issues can be having no income and having debt. You may take out personal loans or use more credit cards for living costs.
- Sudden illness/ accident. The main reason for money issues can be having no income while you need to pay for medical procedures and cover urgent bills.
- Retirement. The main reason for money issues can be having no income while you still have to pay for everything and live a normal life.
- Divorce. The main reason for money issues can be leftover bills and mortgage payments that you can’t afford to make on your own.
- Big-ticket purchases. If you can’t afford to pay for an expensive item, it’s better to postpone this decision. It’s not a smart idea to use a credit card to purchase a new cell phone or laptop if you don’t have enough income to pay the bills.
Step 2: Craft a Monthly Budget
Having a budget means you can take control of your finances and better understand what you need to do. If you tend to overspend, making a monthly budget will help you manage your personal finances better and reduce debt. This is a rather powerful option for many people and it can help you reach your monetary goals. Once you define your current financial issues and what exactly causes your frustration, here is what you should do to make a monthly budget:
- Consider your net monthly income after taxes.
- Write down your monthly costs. Make sure you mention your rent or mortgage payments, groceries, transportation, eating out, entertainment, etc.
- Set up automatic bill payments so that you don’t forget to pay regularly and on time
- Sign up for alerts and special notifications if your current balance drops below a certain level.
Step 3: Define Financial Priorities
Before you become financially stable again and dream of becoming rich you need to define your present monetary priorities. For instance, if people have taken out 1500 loans from Fit My Money, the priority should be to repay it as soon as possible.
Only after you become debt-free, you will be able to save and invest. If you have one or several credit cards you should also pay them off and keep a low balance or even reduce the number of credit cards you have. Try to be responsible and never obtain even a small loan unless it’s an emergency you can’t cover on your own. Think of the most important things that can help you get back on track with your personal finances.
Step 4: Set Financial Goals
We all dream of becoming wealthy one day. But what does it mean for you? What is your financial independence? You need to think about it and be specific. How many funds would you like to have in your bank account? What lifestyle do you want to have? When do you want to achieve these particular goals?
Create a real picture with a time frame so that you know what exactly you want to achieve. Then you need to create smaller steps and monetary milestones with certain intervals. Making smaller steps will help you be consistent and remain motivated.
Step 5: Begin Investing
Once you get rid of debt and reduce your loan payments, it’s time to think of your long-term money goals. If you want to become rich, you need to start investing now. This is one of the best ways to expand your income and grow money.
You can do this by opening an online brokerage account. This way, you will be able to learn how to invest, make automatic weekly or monthly contributions, and create your portfolio. You may look online for the best online brokers or ask for professional advice.
In conclusion, this guide can help you define your current financial issues and work your way toward solving them and becoming independent. This process may be time-consuming and it certainly demands some effort. Once you reduce debt, lower your spending, boost your income, and start saving more, you will notice a difference.