In this day and age, it is more important than ever to save money and get yourself in a position where you can have the most financial freedom possible. With the economy the way that it is, financial independence can seem like a difficult state to achieve, but it is not impossible by any stretch of the imagination at all. By making better financial decisions, you too can be put on the road to financial success and live a much more comfortable and freer lifestyle.
Eliminate Your Debt More Efficiently
This might seem obvious to you, but you would be surprised by how much it can help you in the long run, financially, to pay off whatever debts you have.
When talking about debt, there are two different kinds. First, you have expensive debt and then inexpensive debt. The difference between the two is the interest rate.
Though it can seem freeing and incredibly satisfying to pay off your small loans first, they are not the ones you will want to pay off first. The loans you will want to take down first are the ones with the highest interest rates and the most expensive debt. It might take some time, but with a bit of discipline and focus you can get that balance to zero.
Believe it or not, your mortgage (should you have one) is considered an inexpensive debt. Even if you have a mortgage with a higher than average interest rate, it is more than likely still lower than any of the rates you have on your credit cards – which are considered expensive debt.
What you want to do is make minimum payments on all of the expensive debts you have, except for the one that has the smallest balance. On this debt, you should work the hardest at paying off. Once you have managed to pay that debt off, add the amount that you were putting down onto to the next minimum payment on your debts, continuing this process until you have managed to eliminate all your expensive debts.
Keep Track of Where Your Money Goes
This is another financial tip that seems rather obvious, but again, you would be surprised how much keeping track can actually help you better manage your finances and have a better handle on your financial situation.
Tracking your spending can help you to figure out the areas in your life where you might be spending too much money, so that way you can cut back and reallocate funds as necessary. One of the best ways to track spending is writing out a cash flow sheet. If that is not an option that you feel would work for you, there are a number of budgeting apps that are more than capable of helping you keep track of your cash flow, such as:
- Mint – This is an app by Intuit, the same people who designed and created TurboTax. With Mint, you can link your credit and debit card reports in order to better track what you are spending.
- Simple – An app with a rather on the nose name, is unsurprisingly easy to use. With Simple you can link your budget to your bank account so that you can have direct influence over what you are spending.
- Mvelopes – This handy little app uses the traditional envelope method of budgeting in technology. To use the system though, you will have to link your bank account to the app.
- GoodBudget – This app is another online budgeting app, but for those who do not wish to link their bank account. Users have the option of either typing in expenses manually, or by uploading a .csv file from the bank.
- America’s Cheapest Family Budget – This app is for those who would prefer to do their money tracking offline. Money that is budgeted monthly is kept in a bank account, while your expenses are kept track of on individual budget category sheets.
Invest More Than You Consume
It can be nice to live a lifestyle that can be considered by many to be lavish, but by doing so you may end up consuming a great deal. Unnecessary expenses can eat into your pocketbook pretty quickly. Sometimes you might want to take a step back and evaluate the purchases that you are making right now. If it is a product that will not help you in the long run and will be used up in a short span of time, you might want to reconsider dropping your money on it. Sometimes it is a good idea to tighten your belt a little bit and stick to essential purchases only, rather than purchasing items that you want, but do not actually need. Think about investing that extra money into an IRA, either Roth or traditional. That way you will be better prepared for retirement when the time comes.