Personal Finance

Vision is one of the five senses that we all have, but we also have a vision for our futures. This metaphorical vision may be of you enjoying financial freedom and independence, a goal worthy to pursue right now. If you want to build a strong financial future that can comfortably support you in all that you want to do, follow these five expert tips. This list will show you how to lay a strong financial foundation on which to build.

1. Square Away Your Debt

One thing you definitely do not want is a bill collector hammering on your door or tying up your phone line. Prevent this by taking care of debt early. This can mean paying bills regularly so they do not leave a blemish on your credit score, or paying them off in one lump sum so that they do not come back to haunt you later on. Keep in mind that having a small amount of debt that you pay back monthly is a good idea in some cases. It can build your ‘good credit’ as well as establish you as a borrower who always makes prompt payments. Paying off the debt entirely can reduce the amount you pay in interest over time, but it is worth doing some research into specific terms.

2. Invest in Property With a Land Trust

Owning lots of property is a great way to ensure that you will have a comfortable future. However, on an especially desirable property, a trust can be tricky. It might be wise to hire a professional to help you through a trust quagmire. Having an advisor on your side is helpful when you have questions about a trust. You could ask your professional, “How much does it cost to set up a land trust?” The answer can vary region to region, but it is usually something that you want to look into, especially if you own many pieces of land.

3. Spend Less Than You Make

This seems like one of the most common-sense tips for money management, but a lot of people just do not follow it. Learn how to properly manage your finances and watch your accounts grow as if by magic. Part of regulating the amount that you spend is devising a budget and actually sticking to it. It can be as broad as having a certain amount of dollars available to you, or as intricate as having a certain amount allotted to things like groceries or entertainment. The form of the budget does not matter as much as whether or not it works and it is something you can stick to.

4. Create an Actionable, Long-Term Plan

It can be so easy to get caught up with expenses we face in the near future that we lose sight of planning for a strong future. It is important to have a financial plan and start saving as early as you can. Even if it is only a few dollars a week or month, you will quickly see how fast that can grow into a sizable bounty. Stay organized and on track by choosing a financial planner to help you out with large financial decisions.

5. Do Not Become Discouraged

For many people, it will be months or even years of putting their lifestyle on pause until they can clear most of their debt and even begin work on achieving their financial goals. The important thing is to stay motivated. Nothing is going to happen overnight. Consider sharing your goals with friends or family to make yourself personally accountable for accomplishing them. When you think of experiences you would like to have or things you would like to own, is it not better to work toward actually including them in your future than just thinking of them as a dream?

Working toward building a stronger financial future is not something that will happen overnight. It will likely take a lot of sacrifice, but a comfortable future is attainable for almost everyone. Establish a budget and start saving early in life to build a very strong financial future for yourself and your family.

If you’re reading this, you’re always worried about money. When you think of your expenses and responsibilities, you cannot sleep. You wonder whether what you have will be enough. Financial security is a state of mind. When you have financial security, you’re confident that your earnings will cover all your expenses. The following are some of the roadblocks that prevent you from achieving financial security.

1. Bad Personal Finance Habits

You receive your monthly paycheck and rush to the mall to buy the latest items on sale. You don’t really need those items because you have similar ones back home, but since it’s a sale, you don’t want to miss out. Bad spending habits are the number one roadblock to attaining financial freedom.

Why do you feel the need to spend money on things that won’t add any value? If you already own a bag, do you really need another? Even if it’s a designer bag? When you feel the sudden urge to spend money, control yourself. Don’t buy the item. Tell yourself that you’re going to buy it after a week. If the item is really important, you’ll remember to purchase it. However, if it isn’t, you’ll forget and end up saving more money.

2. Lingering Legal Problems

Let’s say you’re injured in a hit and run car crash. The need to find a lawyer for your accident becomes very important. The same goes for any other situation where legal representation is required. Unfortunately, civil court cases can take years to resolve. Too many people get caught up in their quest for justice that they don’t realize how much they’re spending.

Avoid lawsuits as much as possible because they have the potential to bankrupt you. If possible, settle the matter out of court. You’ll save thousands of dollars in legal fees.

3. Housing Expenses

The average American spends 31% of their income on housing. That’s a lot of money if you add the other expenses. Paying rent or mortgage sets you back financially. Think about how much money you’d save if you didn’t spend three-tenths of your income on housing.

If you want to lower your housing expenses, find a roommate. That way, you’ll use 15% of your income on rent. If you are paying your mortgage, rent out the other rooms. Then, use that rent money for housing expenses. That way, you’ll save 30% more.

4. Missed Opportunities

You’ve just received your bonus, and you’re thinking about what to do with the money. Assume that you’re saving for a house or car, you’ll want to put that money in the savings account. But think about the rate of return. If you invest that money in the securities market, it will triple in two years. All factors show that the stock is going to increase in value.

However, since you don’t know anything about investing, you play it safe and save your money. You’re more content with your money doubling in 10 years. The cost of a foregone alternative is what we refer to as opportunity cost. This simple and often misunderstood concept has left many with regrets.

5. Vehicle Expenses

Owning a car is a major life achievement. It allows you to go from point A to B without worries. However, buying a car too early will cost you. What do we mean by too early? If you used up a large chunk of your savings on the car, that’s too early. A car is going to cost you to maintain. Think about gas money, insurance, and service charges.

To minimize your car maintenance costs, don’t drive it every time. Use it only when necessary. You can walk to the grocery store or carpool to work. Alternatively, you can rent out your vehicle or convert it into a taxi. That way, you earn from it.

The above are some of the major obstacles that impede your financial freedom. You wonder why you still need your job after working for over a decade, it’s because of the above reasons. Change your behaviors and stay committed to the cause. That’s the only way you’ll achieve financial security.