What does it mean to be financially free? In reality, this term means different things to different people. In our teens, it meant being able to do things without the help of our parents. In retirement years, it means having enough funds to afford a secure living. But what about as an adult? Financial freedom in 2019 simply means you don’t have to stress about finances. You’re “free” from financial worry, so to speak.
With so many Australians living paycheck to paycheck, financial freedom might feel like nothing more than a pipe dream. Money really does make the world go around. If you don’t have enough of it, you might feel left behind.
It’s time to change your financial mindset. Don’t beat yourself up about not having a big enough savings account or not being able to prepare for the future. This negativity will get you nowhere. What you can do is turn those thoughts into real-life actions that make a difference.
Are you fed up with the status quo? Are you tired of just accepting your financial situation and doing nothing to fix it? If so, it’s time to break the cycle and find your own financial freedom in 2019. In this not-so-ordinary guide, we’ll talk about unique ways to recharge your mindset about money this year.
1. Define Your Own Financial Freedom
Remember what we said before about the definition of financial freedom? In reality, there is no definition. It’s up to you to decide what financial freedom means in your life. It might mean living debt-free. It might mean saving for retirement. All of these are valid goals.
However, it’s easy to get sucked into the trendiest financial freedom mindset. Things like FIRE (Financial Independence, Retire Early) might lead you to believe you’re doing something wrong if you’re not saving every penny to put towards early retirement. Yet, this isn’t really the case.
As long as you’re no longer stressed about money, you’ve reached financial freedom. According to the CoreData/Financial Mindfulness Financial Stress Survey of over 1000 people, over 30% of Australians reported feeling financial stress. This spans across socio-economic groups and isn’t limited to any one background. It’s time to define your own financial freedom so you can reach your money goals. Why does being financially free mean to you?
2. Open New Bank Accounts
You often hear that more bank accounts are a bad thing. This thinking usually comes from the thought that you should pool all of your money together and avoid opening new lines of credit. While it’s true you should stay away from lines of credit when you’re working on your financial freedom, there is a lot to be gained from separating your finances into different accounts.
When your savings is mixed in with your personal spending, it’s a recipe for disaster. Your emergency fund should be separate from your other savings, your retirement should be separate from your lunch money, and so on.
But what about inflation and interest rates? While in the past it made sense to put as much money into a single savings account as possible to maximize your interest earnings, this rarely matters now. Unless you’re using a high-interest, long-term savings account, you’ll only be receiving a fraction of a percent in interest. Separating your money is a smart way to keep your savings safe from accidental spending.
3. Make Savings Automatic
Saving is hard. When you get a paycheck, you don’t want to part with that hard earned cash. You think you’ll just leave it safely in your regular account, and you definitely won’t spend it on anything…until you do.
Cut yourself some slack. Make your savings automatic so you don’t have to think about it. You can schedule regular deposits into your savings accounts through an online banking scheduler. Even better, you can talk to your employer about depositing a portion of your paycheck into a separate savings account. When you never see that money in the first place, it’s much easier to save. Soon, this will feel like second nature.
4. Educate Yourself About Your Finances
How much (or how little) do you know about your own finances? If those bank account and savings terms are confusing you, you’re not alone. Financial literacy is a learned skill and one that’s not commonly taught in schools. The more you know, the better equipped you’ll be to manage your own money decisions.
The good news is it’s easy to learn more about financial literacy, and it doesn’t mean you have to go back to school. Start by reading financial wellness blogs. These down-to-Earth blog posts won’t make saving complicated. From there, expand out. Listening to podcasts, visiting local seminars, and even just searching terms you don’t know will go a long way.
Before you know it, you’ll be a financial guru in your own right. Once you’re more educated, you’ll feel so much more confident about financial decisions.
5. Switch Service Providers
Did you know you’re probably overspending on things like cell service, cable, and internet? Nobody likes to deal with these services, so they know they can get away with raising rates. Many times they lure you in with a good introduction deal, but this quickly ends and the rates go up.
You could just accept the higher rates as a new monthly expense, or you could do something about it. A quick call to your provider to let them know you can’t pay usually does the trick. Many are willing to offer that same promotional package as long as you say you plan to switch to another provider.
In the case that they can’t offer the promotional package again, consider actually making the switch. We’re seeing more and more pay-as-you-go services, especially with phone and internet. These providers know you’re tired of paying for more than you use, so they’re a great alternative. This might seem like small savings, but it’s always worth cutting down a large bill.
6. Start a Side Hustle
Side hustles aren’t just trendy, they’re a legitimate way to bring in more money each month. While we all wish we could rely on our full-time income to pay all of our bills and leave money left over, this isn’t always the case. Who doesn’t need a boost in income from time to time?
You can start a side hustle anywhere, with any skills. From the gig economy offering positions like driving for Uber or delivering food on the go to selling crafts online, there’s something for everyone. If you have a marketable skill, you can sell it online or even in person.
Many people are finding success as freelancers and contract workers. In America, freelancers are expected to make up the majority of workers by 2027. Australia is not far behind. If you’re a graphic design expert, for instance, you can make good money helping business owners create graphics and logos. If you’re a writer, you can do online content writing. The list is endless. You really can make money doing just about anything online. Better yet, you can do it on your own time.
7. Do a Spending Freeze
Do you feel out of control with your spending? If so, you’re not alone. You don’t have to flounder on this path indefinitely. Try a spending freeze. With a spending freeze, you’re forced to stop spending frivolously. That means no more buying coffee on the way to work and no more spending cash on things you don’t need. You’ll learn to shop your own belongings and be a critical spender.
How do you do a spending freeze? While there are many spending freeze guides online, it’s very simple. First, create a list of things you need. These are things like food, shelter, transportation, and other necessities you’ll need to pay for. Next, set a limit. Start with a week or two to see if you can make it through the no-spend challenge for that long.
Finally, stop your spending. You’ll quickly realize you didn’t need many of those so-called “must-haves” in the first place that you’d been spending so much money on. Instead, you can put this money towards your savings, emergency fund, or even your debt. Your finances will successfully be reset, and you’re on the right track to financial freedom.
8. Use a Financial Advisor
Finally, the last way to reach financial freedom is to use all of your resources. This means talking to a financial advisor who can help you with all of these steps above and more. When you’re struggling with money, it’s easy to feel like you’re in it alone. In fact, you don’t have to overcome these challenges by yourself.
A financial advisor can help you along the way. From creating a debt payoff plan to helping you monitor your own spending, this guidance is invaluable. Empower yourself to make better decisions for your future.
Debt Busters has over a decade of experience assisting Australians with their own finances. Let’s define financial freedom on your own terms and make a real impact on your savings. Contact our advisors today on 1300 368 322 to start your customized journey to financial independence.