Easy Steps To Become Financially Independent
In the Western culture, kids are allowed and/or required to be more independent when they reach the age of 18 or 21. During this time, they have the liberty to move out and have a life of their own, while in the Eastern culture, it’s quite different. Kids are not really allowed to leave the comforts of their parents’ homes if they don’t get wed – giving their parents more control over their lives. Neither of these cultures is wrong, both are exercising what they see fit to their lives, as Westerners are more individualistic but Easterners value their strong family ties more.
In both situations, kids are always left in the middle. They don’t know how to be independent if they still have parents who are willing to catch them. On the other hand, living alone without someone to ask for help can also be a challenge. Good thing there is the internet that is willing to give us a guide when we need one. Let’s examine and collate the basic information on building a financially-free future.
Cut credit cards
Rachel Green of the famous sitcom FRIENDS is a good example of this tip. When we chose to live a life without training wheels from our parents, we have to remember that it includes the training wheels the world is giving us- credit cards. It can mess up with our budgeting by only having an abstract idea of the money. It also provides convenience on spending on our splurges, which we should really learn how to control. The first step to financial freedom is being able to pay in cash and in debt so we won’t get tangled with bills and interests.
Make an emergency fund
Health emergencies and unexpected spending are the culprits of our money. We spend most of our salary thinking that we’re just going to earn it in the next month. There won’t be a problem if this is always the case. But what if a medical issue or an accident happens? What then?
Because we don’t have the extra money, we tend to borrow from our friends or even at banks. Borrowing money may aid a relief but it will come back even worse. Make sure to have an emergency fund so if things happen, we are already geared up. We can set aside 10% of what we make for emergencies and we have to make sure we won’t use it before it hits $1,000. For people who can afford more than 10%, the better.
Where is the money coming from and going to?
Knowing this premise will help us be more mindful of what we spend. If we only have one source of income, from our 8-hour job, that means we have to live by the rules. We can’t go out spending it like we have an unlimited supply of it. Then, assess where the money is going to. In short, know where we spend our money on. Add all those up and subtract it from the monthly income and see what is left. Remember not to use credit cards on these processes so it won’t create chaos. If we are spending more than we are earning, it’s either we get a second job or we cut our monthly spending. Always remember to live a lifestyle based on what we are earning so won’t get buried by our debts.
Read financial books
It always helps hearing words from professionals. That is why reading financial and self-help books can drastically change the way we view money. Books like Rich Dad Poor Dad, The Millionaire Next Door, and The Richest Man in Babylon are one of the best-selling money books. There are also a lot of videos online that we can make as a point of reference.
Reading and learning from people’s experience can give us gauge on what the journey really looks like. Just like in school, it’s not enough to have a dedication to learning but also to go to professionals who have a lot of say on this matter. Because at the end of the day, we are just a bunch of people who at some point, really did not know how to live a life without our parents’ help.
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