Five Steps You Can Take Towards Financial Freedom (3 Video Links)

What does financial freedom look like for you? Everyone has different definitions of financial freedom. For some, it’s the day that they pay off their credit card debt. For others, it’s the day they can quit their job and live life their own way. This article will outline the five steps you can take towards financial freedom and the steps you can take to get there.

Subscribe to Accounting Accidentally on Substack. Get links to new content on accounting, personal finance, and humor/ short story topics.

Have An Emergency Fund

An emergency fund is three to six months of living expenses that you can fall back on in changing circumstances. It could be a sudden job loss, unexpected repairs in the home or health challenges. Having funds aside can help you overcome these difficult times while staying financially afloat. It can help you achieve financial freedom as you have more room to adjust to life’s unexpected changes.

 

Get A Financial Planner

A financial planner can help you set up and invest in pension funds and advise you on managing your wealth. Financial knowledge is one of the best steps you can take towards freedom. A financial planner can help you understand how to maximize your money and how to grow your pension or investment portfolio to grant you financial independence into the future.

 

Set A Budget

A budget can help you control how much you spend and understand where your money goes each month. The first step in setting a budget is tracking how much you spend each month. Don’t start setting a budget until you’re aware of what you’re spending – setting a budget too low might mean you overspend and lose heart in those first few months. Once you know how much you spend, consider what you can cut back on each month.

 

Distribute Your Finances

Distributing your finances is the best way to protect your personal wealth. Avoid having all your savings or investments in one pot. Spread them between different savings accounts, and diversify your investments as much as possible. This means that if a particular bank collapses or your finances change, you can still keep up with your finances. If you’re unsure where to start, a financial planner can help advise on how to distribute your portfolio better and reduce risk.

 

Get Insured

Insurance can help protect you from unexpected life events, from critical illness coverage to unemployment insurance. Like an emergency fund, insurance can help keep you financially afloat when times get tough. If you run a business, you should also review insurance like business insurance and liability cover. Ensure you are protected from unforeseen life events and can work towards financial freedom. When you change your job or address, keep your insurance policies updated to avoid them being void when needed.

 

Final Thoughts

An emergency fund and the appropriate insurance can keep you financially afloat during life’s changing circumstances. Getting advice from a financial advisor can help you save towards your pension, grow your investment portfolio, and create diverse financial streams. Setting a budget is essential to understanding your finances and identifying areas where you can cut back on expenses.

 

Consult with a licensed financial advisor and an insurance agent on these issues- good luck!

 

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

(amazon author page) amazon.com/author/kenboyd

(email) ken@stltest.net

(website and blog) https://www.accountingaccidentally.com/