About 157 million people (61%) of the American population live paycheck to paycheck. The problem isn’t low income but poor money management skills. To attain financial freedom and have total control over your earnings and expenditure, you must change your attitude towards money and cut your expenses. The following are three key strategies you can use to enable you to realize your financial independence.
Monitor and Regulate your Expenditure
Your delayed attainment of financial independence is the lack of a solid finance management plan. Your monthly expenditures equal or even exceed your paycheck. In other words, you spend money as soon as it reaches your bank account with no particular plan or goal tied to your expenditures. If you lost your income source, your entire life would crumble.
To put a stop to such unhealthy money-spending habits, you have to monitor your monthly expenses. Monitor and regulate your spending on subscriptions, groceries, living expenses, gym membership, monthly rent, car payments, and other costs. Make sure you limit the amount you spend on unnecessary things. The most responsible way to control your earnings is by tying your expenditures to a goal. Decide on what you’ll spend the money on monthly, and bid goodbye to the unhealthy paycheck to paycheck lifestyle.
Tie Your Expenditures to a Budget
A mistake people who live paycheck to paycheck lifestyle make is not having a budget. Once they feel like grabbing a bottle of beer or going out with friends or family, they grab their credit card and drive out. When they go shopping, they never take time to plan what to buy and how much to spend on the purchases. That way, they always find themselves buying a lot of things they don’t need month-in-month-out.
Once your employer loads money into your bank account, give it time. Have a moment of self-evaluation to know where and how you spend money improperly. Now, come up with a budget of how much you’ll spend the whole of the month, and the amount you wish to save. If you plan to start a business, come up with a plan on how you’ll save each month and how long to attain such a goal.
Build an Opportunity Gap
Once you’ve laid down a spending plan and perfected a monthly budget, you’ll know whether your finances will take you throughout the month. Once you understand how valuable your income is to your lifestyle, you can devise plans to increase your revenue, reduce your expenditure or negotiate better deals.
You can easily adjust if you’ve understood your financial health and mastered a healthy spending lifestyle. Decide how much you’ll keep in your emergency financial kit, annual trips, holiday gifts, and monthly upkeep. Once you keep aside enough for these small but necessary expenditures, you won’t have to take from your other budgets. That way, you’ll live within your means and never make the financial mistakes you’ve made previously.
These three strategies will help you regain financial independence if implemented correctly. They can help you out of debt, save money fast, achieve your savings goal, and boost your credit score. Understand how each strategy works and come up with unique tips to hack each of them. You might need financial advice or debt consolidation services to help you stabilize your financial healthy.