Financial Independence for Newbies: The Realistic Path

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Financial Independence for Newbies: The Realistic Path

If you’re just entering the world of personal finance, it can be challenging to find financial independence. Don’t be scared, though – it’s truly a lot easier than it seems! Here are some steps you have to take towards your financial freedom.

Set Goals

Let’s be clear: financial independence looks drastically different for every individual. Of course, if you ask your parents or coworkers, they’ll share their ideas. But you need to figure out how financial freedom looks for you and set specific goals.

Whether you’d want to live lavishly or enjoy a basic minimum, note down how much you’d have to save to make that a reality. Then, set a general deadline for that amount. This should make it easier to understand what you’re working towards and how much work you need to put in.

Manage What You Already Have

Once your goals are set, take care of what you already possess. Start budgeting to see how much and what you spend while saving for your big goals. There are quite a few budgeting methods you can try:

  • Incremental budgeting;
  • Zero-based budgeting;
  • Activity-based budgeting;
  • Value proportion budgeting;
  • Flexible budgeting.

Build Your Wealth

Congratulations, you’ve set a goal and learned how to budget your money! Now, it’s time to earn more and build your wealth.

Set Up a Saving Plan

In 2023, it’s wise to open online savings accounts. Create one for emergencies and one for retirement. Then, you can set up an automatic withdrawal to your new accounts. That way, you won’t forget to transfer your funds every month.

The sum you save will be based on your income and circumstances, and it should be the first payment you make as soon as you receive a monthly paycheck. Books like “I Will Teach You to Be Rich” by Ramit Sethi will also aid you in your savings journey. You can check out sites like for additional guidance on banking.

Pay Off Debt

Whether you have a credit card balance or mortgages weighing you down, paying off debt is an essential step to becoming financially independent. And if you need help with you mortgages, make sure to consider getting help from your reliable and trusted mortgage services.

First of all, make it a rule to pay off your credit card balance every month. Second, adopt a snowball repayment approach. According to that method, you start taking care of your smallest loans first, thus minimizing the amount of interest you have to pay each month. You won’t notice how fast your debt disappears!

Invest in a Diversified Portfolio

No, investments don’t have to be about cryptocurrency. Instead, your portfolio should be as diverse as possible to make your investment process safe and lucrative. Most professionals say that everyone should invest 60% of their money into stocks and 40% into fixed-income investments. These can be:

  • Bonds;
  • Gold;
  • Real estate;
  • Certificates of deposit;
  • Mutual funds.

Don’t take risks as a newbie. Open an online brokerage account to learn how to invest and create a diverse portfolio. Set up automatic payments towards each asset. Want to learn more? Bookmark Better Investing by the National Association of Investors (NAIC) and dive into the world of investing education.

Common Misconceptions About Financial Independence

1. It takes a lot of time to save money.

Sure, it can be a complicated process at first. But once you take care of most debts and start investing and saving each month, you’ll see a huge difference in your savings account yearly or even monthly.

In addition, if you feel like your efforts are not enough or want to use your free time fully – try earning more with microtasks. It doesn’t take much time or energy to share your opinion, right? The small tasks we’re talking about can earn you a few extra bucks each month only by you completing online surveys. Even gamers could profit from their hobby if they start testing PC and mobile games.

2. You can’t use credit cards if you want to be financially independent.

Doesn’t matter how much figures your earn; you can greatly benefit by owning and using a credit card. When you become more familiar with your budget and trust yourself, take advantage of all the credit card perks. Use it responsibly to diversify your payment methods. Grant yourself some wishes you could never afford before.

3. You have to restrict yourself to become financially free.

Well, it just makes sense, right? To save more, spend less. In reality, it doesn’t work like that. The restriction will lead to burnout and dissatisfaction, then to failures and splurge spending. It doesn’t mean you should spend everything either. The key to success is trying out different approaches and adjusting them for your personal use.

It’ll take time, but financial independence is totally worth it. Move past the misconceptions and hardships, set your goals, save money to reach them, and watch your life transform!

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