Financial independence is a life milestone that we are constantly pursuing since itâ€™s the only thing that represents true freedom and great peace of mind to anyone.
Sometimes things get in the way every time we try to make plans to become financially independent. It can be debt, lack of motivation or a big share of family expenses. This can be very frustrating and deter us from achieving this important life milestone.
Of course, itâ€™s not all negative, there are ways to gain control over your finances, have a clearer picture and start making small progressions towards obtaining financial independence.
What does being financially independent mean to you?
This is crucial because financial expectations are different for everyone. You need to have a good understanding of what financial independence means to you.
Financial independence could mean to retire early with enough financial independence, but it could also mean to work hard for decades, build a good retirement fund and live the golden years resting after a hard-work life.
You decide what you need to become financially independent, so explore your circumstances and define how far youâ€™re willing to go to achieve this.
Itâ€™s also important to understand that financial independence can significantly vary between individuals from various factors such as geographical location, cost of living to the expectation of lifestyle.
So rather than following a definition of financial independence online, stay with personal reflection and conclude what you perceive as financial independence than a standardised or unrealistic definition by someone else.
Start banking properly
Explore your banking options to find the right type of accounts for your money. Retirement fund money should go to a different place than your emergency fund and you should strive not to keep your money stored in cash form. This avoids dipping into it unnecessarily.
Also, make sure that if you save money and youâ€™re having problems to keep a saving schedule, then automatic deposits may be a solution. Your employer or your bank can deposit a portion of your income automatically into a savings account. That way you donâ€™t stress over forgetting to save, because someone else is doing it for you.
Budget and track spendings
A budget is the best tool to gain control over your finances. Sadly it is very difficult for people to come up with a budget and stick to it. A budget is the best way to have the clearest picture of your income, this will allow you to find areas where you can make cuts and save money.
If you are constantly struggling with obligations, then start tracking your expenses so you know where your money is going. Learn to recognise the small victories, so if after a month of saving you come up with Â£100 or less, then acknowledge that as a small victory that takes you closer to your dreams and aspirations.
Take advantage of the internet and its tools, there are many online tools that can help you create a budget within your means and to wisely track your spending.
Don’t rule out emergency funds
Sometimes you may feel tempted to avoid saving in order to take care of debt. Just make sure that you can handle it.
If you donâ€™t have a good saving habit, this may be more difficult to accomplish. Just remember that regardless of the amount, saving is a great effort that will pay in the long run, plus youâ€™re building a habit that will help you for the rest of your life.
Boost your savings
Find a way to boost your savings. The more savings you have the more financially independent youâ€™ll be. You can easily boost your savings just by clicking here and finding out if you are entitled to file a claim for a mis-sold PPI policy.
This means that if by any chance you were unfairly charged a PPI, the bank that charged you with that PPI is obliged to give you back all the money that you unnecessarily paid. The process is fast and it may be the door to access tax-free, unexpected money that can help you become more financially independent.
There are many ways to attain financial independence but they all require sacrifice and commitment and deep knowledge of your own circumstances, itâ€™s a hard task but not an impossible one.