Financial freedom is a dream for many US households. But not everyone is lucky to bring financial stability in life, especially when you live in the USA. When we talk about resilience, it includes many things that play a crucial role in positively changing lives. So, it sounds like a nice theory, but it isn’t easy to reach this status. At first I need to understand the primary root because it’s a life-changing art. Thus, let’s start with this:
What is financial freedom?
“Everyone has a different relationship with money.”
(Shelly Director of Central Advice)
If you shout the word financial freedom in a room, you will get multiple answers. But with economic freedom, we don’t mean a situation where you are rich. In simple terms, it means a situation when your income/savings is more than the expenses. So, if you have better control over your finances, you are financially stable. Moreover, it’s about taking management of your money-related matters. In this way, you will not feel burdened with a debt pile. Financial freedom comes with many benefits. Here we are stating a few:
- It saves time
- As a result of planning, you have a better strategy for future
- If you are stable, then you don’t need imputed income
- If money matters are sorted, then you can pay attention to future
- Helps to increase investment opportunities
We mentioned many positive points, but there are many others. So, you should seriously consider this life-changing art due to these top qualities.
Levels of financial freedom:
We want to give you a full context before teaching about financial stability. So, here are different levels of money stability:
|Not living paycheck to paycheck.||You build an emergency fund.|
|You have money to quit your job||Your savings is stable|
|Financially happy and still manage to save||You earn enough to enjoy and save money|
|Get time freedom||You can give time to the activities you love the most|
|Has enough amount for retirement||People adjust their living standard to retire earlier|
|Enough to retire well||You have enough assets and passive income sources to retire well|
|You are capable of a dream retirement||You enjoy the real joys of life like traveling and spending time with friends.|
|Plenty of money||Wealth is more, and you can’t finish it during your lifetime.|
The main idea is to save 50% to 75% of your income early. In this way, you can achieve financial stability in life.
How can US families achieve financial stability in life?
If you want to retire at an early age, focus on your money management skills. According to a survey, around 65% of Americans live paycheck to paycheck. It’s hard to achieve stability, but you can surely do this with the right guide. So, take help of these:
Understand where you stand now:
You can’t achieve financial stability without knowing the current situation. It helps form better strategies and gives a good starting point by directing your thoughts. For example, here are the avenues where you need to think first:
- Assess the current debt situation
- Know about the savings reserve
- Compile a list of loans like student, car, credit cards, and other debts
- Include the money that you borrowed from friends and family
After compiling debt, do the savings assessment. It is essential to include everything from stocks, savings, and retirement plans. Apart from this, add the monthly payments, salary, and side hustle income. You can take the assistance of a paystub maker to keep a good record of income.
Write down financial goals:
After the first step, now you are aware of your standing ground. So, it’s a perfect time to list down the financial goals. Your goals could be of any type like:
- You want to escape the 9-5 job
- Want to save for kids, wedding, or retirement
- If you have traveling goals
- Or want to achieve financial freedom
The goals could be of any type, whether long-term or short. But it’s always so exciting to make small steps towards your goals. Above all, while drafting the plans, don’t overlook the SMART rule.
Pay off high-interest debts:
Debts with high-interest rates could cause a severe dent in your financial situation. So, take a wise decision and pay off the debts with a high-interest rate. Mainly there are the following two types of interest rates:
- The first one is the snowball, where you start paying loans from the smaller amount first and then move on to the bigger one.
- The second method is the avalanche method, in which you pay off high debts first and then move on to the smaller ones.
Both above methods work efficiently and help in easing the pile of debt. But it’s your call to decide which will work best in your favor. It shows that getting rid of debt is one of the crucial milestones toward financial stability.
Find additional income sources:
If you are living paycheck-paycheck, then it’s because your income sources are less than the spending. So, the main hack is to multiply income. Mainly, there are two ways to add additional income to the circle:
You don’t actively work in passive income but still earn money. You can make passive income or investment opportunities by selling digital assets, eBooks, investing in stocks, or becoming an affiliate marketer.
Other tips for living a financially stable life:
It’s essential to see what works best for you according to your needs. But it’s all about money management skills, and you can make it more interesting by following these tips:
- Look for the investment opportunities
- Take part in retirement plans from an early age
- Make a budget and try to follow that
- Watch your credit score because it can create problems in the future
- Try to upgrade yourself continuously
- Buy less stuff because it can help you to get richer
- Invest in experiences rather than things because they stay with your whole life
- Live below your means because it’s a golden rule to save money
Still, if you think that things are overwhelming and you can’t stabilize yourself financially, then seek professional advice. But keep in mind, you will have to spend money on this, so only do this when you are serious about financial planning.
Financial freedom is all about when you take hold of your life. However, after following the above tips, you will be closer to financial stability. So, don’t hesitate to upgrade yourself because it’s time.