For an audio version of this post, please click on the speaker icon (top left).
Lead by example.
That is the best way to have a profound impact on those wanting knowledge.
I find a lot of people speak from ivory towers about theories and practices that they themselves have not implemented in real life.
Without boots on the ground, the advice postulated from these individuals may not have any practical benefit to the recipients.
So I was pleased when Neiko, the blogger behind Secret To Finance, reached out and wanted to share knowledge about getting out of debt and the journey to financial independence.
Their blog focuses on budgeting, paying off debt, money tips, building generational wealth, and increasing income with side hustles.
Neiko and his wife definitely can lead by example as they were able to pay off $240,000 in 27 months.
Dealing with financial issues has become the norm in today’s society and impacts individuals in every income bracket.
It is vital to understand what areas are important to focus on to reach and live with financial independence.
That is to say, personal finance is 80% behavior and only 20% head knowledge.
While it is critical to learn the underlying principles, it is even more critical to learn how to actually put these principles into practice.
Many times, people misunderstand the ‘how’ of doing something, which can lead to unsuccessful results.
Use the following strategies to finally reach and live with financial independence so you can build generational wealth.
1. Get on a budget today.
Getting on a budget is one of the most important things you have to do first when implementing a personal finance plan.
Creating a budget is only the first step.
The most important step is that you have to learn how to stick to your budget.
Most people look at a budget as a bad thing as they feel restricted by it.
It is important to re-frame this type of thinking.
A budget gives you complete control over your finances.
A budget can actually give you the freedom to spend your money when and where you want.
Granted there are examples of some people that live without a budget, but even these individuals still have systems in place to manage their money.
Follow these 5 steps to easily create a budget:
1. Calculate your after-tax income
2. Calculate your monthly expenses
3. Choose a budgeting system
4. Write it down and execute it (your spouse too! If applicable)
5. Revisit and adjust as needed
The fastest way to build wealth is by using your income.
However money coming into a household without purpose typically does nothing to build wealth.
This is why a budget is so important as it is a geat way to give this money purpose.
Although it takes time and effort to create an effective budget, it will be worth it in the long run.
Of course, there are a ton of different budgeting methods out there.
However, what’s most important is choosing the one that works for you.
This article will help you get started with your budget even if you’re a beginner.
Our approach to budgeting is by using zero-based budgeting.
As stated above, money management is all about what works best for your situation.
So, choose what keeps you motivated to stay on a budget.
2. Get out of debt as fast as possible.
Getting out of debt is the first topic we talk about when helping people with their money.
Debt is anything owed to someone else, including car and student loans, medical bills, and credit cards.
The only type of debt we don’t have a problem with is mortgage debt.
However, the mortgage must be on a 15-year fixed rate and fit within your budget.
Our rule of thumb is that your mortgage shouldn’t be more than 25% of your take-home pay.
At the end of the day, keeping debt around will only slow down your path to reaching and living with financial independence.
In other words, if you live without debt, you will be able to reach financial freedom.
3. Build an emergency fund.
It’s important to have an emergency fund, aka the rainy-day fund.
This is an important foundational step to your finances.
You will have the ability to be prepared for when life happens.
We always suggest having a small emergency fund of 1-2 months of expenses even while you’re in debt.
Once you’re out of debt, beef up your emergency fund to 3-6 months of expenses.
Always remember to have a bigger emergency fund if your job is less stable or your family situation requires it.
Building an emergency fund is a safety net to get you out of any dicey situations.
This is a key step in reaching and living with financial independence.
4. Increase your income.
Finding ways to increase your income is a worthwhile endeavor to help your positive cash flow.
To reach and live with financial independence you need to have multiple streams of income.
On average, the typical millionaire has 3 or more streams of income.
Do you feel that every time you get paid an emergency pops up?
Well, you’re not alone.
Most people live with one stream of income.
Having your financial well-being dependent on a single source of income is risky because you can find yourself losing everything if that job goes away.
Here are a few ways to increase your income:
· Learn new skills that you can use to make money with.
· Start a side hustle or create a small business idea.
· Start investing up to 15% of your income.
With the recent increase of working from home, here’s a great article with 10 work from home jobs you can start today.
Takeaway on how to reach and live with financial independence.
Reaching and living with financial independence starts with deciding to change your life today.
It will require hard work and dedication, but it’s possible.
Set your goals and go execute them.
Getting out of debt will increase your confidence and remove fear from your thought process.
You will see an instant change in how you view money and your ability to live with financial freedom.
You’re now ready to live with financial independence!
We love seeing people change their financial situation and you’re up next!
If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”
Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.
NOTE: The website XRAYVSN contains affiliate links and thus receives compensation whenever a purchase through these links is made (at no further cost to you). As an Amazon Associate I earn from qualifying purchases. Although these proceeds help keep this site going they do not have any bearing on the reviews of any products I endorse which are from my own honest experiences. Thank you- XRAYVSN