Checklists are great, especially when it comes to finances. By following this personal financial checklist, you will be able to transform your financial life from an absolute mess with little light at the end of the tunnel to a beacon of financial responsibility and prosperity. While some items on the checklist are larger than others and will take some time to check off, others are simple tasks that may seem small but can culminate in a powerful financial transformation. By going through these steps, you will soon see that financial freedom is just a checklist away!
Commit to Spending Less Than You Earn
It may seem simple, but with consumer credit so readily available, it can be difficult for today’s consumers to remain financially disciplined and live within their means. Spending less money than you earn is the key to creating wealth and achieving financial freedom. You can do everything else to a tee, but if you spend more than you earn, you will only set yourself up for financial slavery. This is the one rule that can allow families who earn $50,000 a year to retire millionaires, and not following it can easily cause millionaires to go bankrupt.
Pay Off Consumer Debts
Being in debt is the worst financial position to be in as it keeps you from being financially free. In addition to providing you with financial peace of mind, living debt-free also allows you to accumulate wealth faster. There are many ways to begin paying off your debts, but many people choose to begin by paying off the debt with the highest interest rate first, then the next one, and so on. Others, however, choose to tackle the largest or smallest balances first.
Create a Budget
Creating a budget can be as complicated or as simple as you make it. Regardless of the route you choose, creating a budget and sticking to it will not only allow you to keep your finances in check, but it will also allow you to pay off debts and boost your savings as well. Today, there are plenty of budgeting tools and budgeting software that can help you create and maintain a budget. The important thing is just getting it done and sticking to it.
Have Your Employer Match Your 401(k)
With employee pensions largely fallen by the wayside, it is more difficult now than ever before for working men and women to save for retirement. Therefore, if you are working for an employer that doesn’t offer a 401(k) with company match, you are potentially losing out on free money that can mean the difference between retiring early or working until you have one foot in the grave. If you contribute $300 a month into your 401(k) retirement plan and your employer matches your contribution, it is like being able to double your money every single month. It doesn’t get much better than that!
Begin an Emergency Fund
Having $100,000 saved up for retirement is great, but not if you’re unable to access it when you need to. Therefore, you must start an emergency fund. You never know when unexpected things will happen in life, but creating an emergency fund will ensure you are prepared for whatever surprises may come your way.
Establish Your Career Goals
Following up on the 401(k) point mentioned above, everyone should evaluate their current job or career. Is your current job helping you reach your career goals? If you continue on your current career path, will you be where you want to be in five or 10 years? You should regularly ask yourself these questions and evaluate your current career path.
Evaluate Your Transportation Situation
Despite the fact that most cars depreciate in value by five to 10 percent the moment they are driven off the lot, most middle-class Americans continue to spend far too much of their income on their autos than they should. The fact is, you do not have to always have a car payment. Rather than spending $300 or more per month on new car, save that money and purchase a vehicle free and clear. By doing so, you will save thousands of dollars in interest and free up a significant sum of money.
Start a College Savings Plan
If you are a proud parent, you probably want to start saving for your child’s education. However, this should only be done if your other debts are paid off and you have a nice head start on your retirement savings. If need be, your children will be able to take out student loans with rock-bottom interest rates and flexible repayment plans. However, you will not have the same luxuries if you need to fund your retirement via a Visa card! That being said, a 529 or Education Savings Account are both great options when it comes to college savings plans.
Financial freedom is something that billions of people around the world strive for but very few actually achieve. Thankfully, this financial checklist will point you on the right path and make your dreams of financial freedom all the more attainable.
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