1. Build your Capital to get Financial Freedom
In your twenties it is the right time to invest in yourself. The little which you could be earning can be saved for your future progress such as going back to school. At this time there are few commitments and much time to do things that you are passionate about.
Make a list of your goals so that you can start saving. Goals will act as an incentive to work hard and save. According to Jean Fullerton, the most important step is to develop the discipline to save a little with each paycheck.
Adopt living below your means to enable you save. She suggests a direct deduction from the paycheck to avoid the temptation of spending the money. There are also apps that can help you save. The apps helps you set your goals and give rules that will send money directly to the saving accounts.
2. Find Ways to Clear Your Debts
To be come financially free, you need to work hard toward clearing all your debts. It will be a mistake getting into thirties with the debts that you made in your twenties. This may hinder your financial progress. You can opt to use the snowball method by Dave Ramsey. You start by listing your debts in order of smallest to largest, then make minimum payments on all of your debts except the smallest. On the smallest debt, you pay as much as possible, until it’s paid off in full. Then, you’ll repeat the process with the next smallest debt.
You can also use the debt avalanche method that requires you lists your debts by their interest rates. The debt with the highest interest rate should be paid first. Though you may not be able to pay all your debts before 30, it is a good idea to have a debt repayment plan during your 20s.
3. Start Your Investment Plan Towards Financial Independence
If you intend to reach financial independence at an early age, one way would be to start investing! If you put your money to work early in life, you will see the magic of compounding returns and the crazy outcome it can give you. So, where do I start? You can start by putting aside an amount of money every month to invest. Try beginner-friendly investments like Exchange Traded Funds (ETFs) and unit trusts.
You can also diversify your money by laying the foundation of a stable wealth and security in the long-term. Most importantly, decide your wealth goal which will help you know how to invest. These goals will also help you remain focused and motivated.
4. Build your Savings for Financial Freedom Before 30
Ensure you have a saving account that is used when necessary. Allocate a portion of your money to this account every month. The account will help you during emergencies which could be challenging in case you caught off-guard. Emergency fund saving account will save you from getting into unplanned debts.
Saving can also be inform of insurance. You can get a life assurance policy that can act as a future saving plan. You can also start a retirement account that will act as saving. Though retirement is decades away, thinking about saving for the retirement is appropriate when started at this age.
Saving money before age 30 allows it to grow and compound. It can also withstand the ups and downs of the stock market. Think about contributing to an IRA or individual retirement account too. A comfortable retirement is possible with diligent saving that starts early on.
5. Stick to your Budget for Financial Freedom
Being independent with personal income is a freeing sensation. Hardworking individuals can buy whatever they may desire. However, spending money without a budget will lead to trouble. Make your budget based on your income.
Allocate your amount to different areas such as retirement savings, emergence fund and regular bills. The goal of budgeting should be to make mire than what you are spending. If you make it a discipline of sticking to your budget, it will not take much effort even at 30. Incase of an increased salary due to career promotion, allocate more to saving and bit more to your daily expenses. A person can have a solid financial future with just a bit of discipline and strategy