On this week’s episode of Tape Talk, Quint talks through six important steps to take towards financial freedom. Listen in to find out how to get and stay on the road to your own financial well-being.
1. What’s the Goal?
Do you have a goal or objective for your finances? If not, what are you working towards? Without a written out goal, it’s almost impossible to develop a plan. The goal of financial freedom is not just to have more. Rather, there should be something specific you’re trying to accomplish that will help you stay focused when the journey gets tough.
2. Know Where It Goes!
Where has your money been going? If you’re running out of money before running out of month it’s very likely you have no idea. It’s time to start tracking where those dollars go every month. It doesn’t have to be complicated but it does need to be a system you can stick to. So, start now, keep track of where every dollar goes so you can start identifying the opportunities for change.
3. Create A Budget
Once you know where your money is going, it’s time to start telling it where you want it to go from now on. A budget is simply a plan for your spending. Instead of letting your money slip away each month you take the responsibility and put in the effort to make your plan a reality.
4. Find and Allocate Extra
Now that you have a budget you can create margin. What’s margin? It’s the extra money you have that doesn’t “have” to be spent. This is the amount you can allocate to debt or savings. Work ruthlessly to find the extra in your budget and begin telling it where to go from now on rather than just letting it slip away.
5. Snowball Your Debt
Sure, it makes mathematical sense to pay down your highest interest rate debts first. However, what may work best mentally is seeing the number of your debts evaporate quicker. To do this you need to use the snowball approach. To do this, pay off the smallest debt first, then use that extra money to add to your next smallest, and so on. Pretty soon your snowball is growing and you’ll be paying significant amounts towards your largest debt.
6. Be Patient
Your personal finances are less exciting than watching grass grow in the desert. However, what distinguishes the people who succeed from those that don’t is often patience and perseverance. The changes you make won’t drastically change your situation overnight. However, with every prudent brick you lay you are creating your own road to financial freedom.