Achieving Financial Freedom at a Young Age

 

5 Tips to Achieving Financial Freedom at a Young Age

 

Financial freedom is a state in which you are not limited by your monetary resources. You have the flexibility to make choices, pursue interests and take risks without worrying about how those decisions will affect your financial future. It is not easy to achieve financial freedom at a young age, but it is possible if you are intentional and strategic about your money. Here are five tips on how to achieve financial freedom sooner rather than later. Financial freedom comes in many different flavors, with some being more attainable than others. However, no matter what your current circumstances may be there are simple steps you can take now that will help put you on the right track for the future.

Commit to saving

If you want to achieve financial freedom, you have to get into the habit of regular savings. The earlier you start saving, the less you will have to save to reach your goals. Most financial advisers suggest that you save at least 10% of your income for retirement. If you are under 30 years old, you might want to increase that to 15% to account for the fact that your retirement is likely further off in the future. In addition to retirement savings, you should also regularly save for emergencies and/or short-term financial goals like saving for a down payment on a house. Regular savings will help protect you from costly financial mistakes and provide you with a financial safety net if things don't go as planned.

 

Track your spending

Tracking your spending is the best way to identify areas of your budget where you can make improvements. You might find that you are spending too much on discretionary expenses, like eating out, and not putting enough away towards savings. If you have a tendency to overspend on certain categories, try to implement some type of system to help you stick to a budget. A budget doesn't have to be complicated. It could be as simple as keeping track of your spending in a paper notebook, or using a free online budgeting tool. A great tool that can help you track your spending, and also help you develop a budget is Mint.com.

 

Don't be afraid to negotiate

Whenever you are purchasing something, you should always try to negotiate the price. Negotiating the price of things like a car or a house, or securing a lower rate on your insurance, can save you thousands of dollars. If you have a steady income and a clean credit history, you should also try to negotiate a higher salary at work. You don't have to be pushy or obnoxious; you simply want to let your prospective employer know that you have alternatives and that you are willing to walk away from the offer if they can't meet your terms. Besides the financial benefits, negotiating is a great way to boost your self-confidence and get you used to standing up for yourself.

 

Diversify your portfolio

Your portfolio is the collection of investments you have, like stocks, bonds and real estate. You can even include cash in your portfolio if you are conservative with your investment strategy. Diversify your portfolio to reduce your risk and give yourself some financial flexibility. For example, if you have all your money invested in stocks, you are putting all your eggs in one basket. This is risky, as stocks are volatile. Diversifying your portfolio includes having some money in a mix of stocks, bonds and cash. You can also diversify your portfolio by investing in different industries and types of companies. You can also diversify your portfolio geographically by investing in companies based in different parts of the world.

 

Take control of your housing costs

Your housing costs make up a significant portion of your total expenses. Take steps to lower your housing costs by living with roommates, researching low-cost neighborhoods, renting versus buying and making smart energy choices. You can also take steps now to increase your income to better prepare yourself for future housing expenses, like getting a promotion at work or starting a side hustle.

 

Summing up

If you are serious about achieving financial freedom, you have to be willing to put in the time and effort. You can't rely on luck to get you where you want to go. It will take focus, diligence and hard work to get there. But the good news is that it is never too early to start!