You cannot truly be independent without first being financially independent. Even if you pay your own bills and manage your own money, you can still find yourself in precarious situation after precarious situation. Living from paycheck to paycheck, and drowning in debt, is not financial independence. You need to be secure and confident in your money, and to help you become more financially independent and take steps forward towards a future where you may finally be financially secure, you’ll want to follow these great tips.
Address Your Debt
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You cannot ignore your debt. You cannot get away with paying it back with minimal repayments. If you want your debt to actually go away, you need to create a plan and deal with it. Working with an advisor can be a sensible tip, as they are able to create an actionable plan for you with your specific situation in mind, but do know there are always options available even in “worst-case scenarios”.
If you find that your monthly expenses are more than your income, for example, you may want to consider debt consolidation loans as a potential strategy. These loans work to combine your multiple debts into one through a personal loan, so instead of several repayments per month, you only have one.
Start a Saving Plan
In an ideal world, you will have enough saved up to comfortably support yourself for at least three months, though of course, the longer you could theoretically support yourself on your savings alone (without an income), the better off you will be.
To start a savings plan, you first need to work out your budget. Fixed costs like rent and loan repayments should not be counted towards your spending money. From there, try to work out how much your living costs are and what you can put away in a savings account at the start of the month.
Rethink Your Living Situation
If you are struggling to make ends meet, then it’s time to reassess your living situation. If the rent is too high, it can be absolutely impossible to save because too much of your income is being taken every month as standard. Finding roommates or even moving to a more affordable part of town or the state you live in itself can make a huge difference, especially if your work is not specific to where you live now.
Start Passive Incomes
A great way to be financially independent is to earn money passively. Being a landlord is an example of passive income, as you don’t need to actively work in order to collect payments. There are many passive income ideas that you can get started with, and a good place to get started is with your own bank. Opening a savings account that allows you to collect interest is the first step everyone looking to become financially independent should take. From there, however, it’s up to your strengths. From renting things out to selling digital items like stock photographs – the options are wide, and they are out there.
