A great recession is looming and economists are predicting things will get worse. What will you do to gain financial independence?

  1. The best advice is that old adage: “save early and save often”. Set up a monthly automatic transfer from your current account into your savings account. Start small and reinvest the compound interest.
  2. Spend less money than you earn and buy only what you actually need. Too many of us live from month to month. This can lead to credit card debt, high interest rate loans and more.
  3. Keep track of your spending and income with a budget, which is the process of measuring your income, subtracting your expenses and deciding how to divert the difference to your goals. Decide what you can cut down on or exclude – recurring expenses, such as gym memberships, magazine subscriptions, getting your hair and nails done twice a month all add up.
  4. Eliminating your debt is one of the most effective things you can do to have money to save and invest. In addition, the less your expenses, the easier it is to cover your living costs.
  5. Downsize. It may mean selling your home and moving to a smaller one or to an area with lower living costs.
  6. Invest frugally. When you’re able to add money to your savings or investments, watch out for fees, deadlines or penalty rules.
  7. Buy assets that generate income. Whether you invest in stocks, property, collectibles or cash investments, all have up and down markets. Focus on assets that will make money over the long haul and don’t forget to study the tax implications of any investment you make.
  8. Things happen in life that we can’t always control. Make sure your financial planning is flexible enough to withstand both positive and negative changes without derailing your hopes for financial independence.
  9. Have a second income. Visit http://www.makingsenseofcents.com/2015/05/75-ways-to-make-extra-money.html and adapt these ideas on how to add to your income.
  10. Evaluate the excess on your home, car and health insurance to see if those amounts should be built into an emergency fund. The more effective you are in dealing with financial emergencies, the faster your savings and investments can grow.

Not everyone inherits a fortune. Financial independence takes work and discipline, but small steps can yield big rewards over time.

 

Sources
www.forbes.com
www.nytimes.com