5 Quick Tips To Put You On The Path To Financial Freedom

By | April 18, 2011

Getting yourself on the road to financial freedom may seem like a daunting task right now, however it’s actually a lot easier than you might think. All you need is to follow some basic guidelines to help yourself to stay away from temptation and to start rebuilding your financial life. Here are five quick tips to put yourself squarely on the path to financial freedom:

1. Carry A Notebook With You

This is probably the single most powerful piece of advice you’ll ever get for getting yourself out of debt and forever on the path to financial freedom: Simply carry a notebook with you and write down every single thing you buy and what it costs.

The simple act of jotting down the cost of an item will often make you decide that it’s simply not worth buying the item after all. The reason it’s so effective is that it prevents you from making those little impulse purchases that we all like to make when we go shopping.

Plus, even if you don’t get stopped by the initial experience of having to stop and think before making a purchase, seeing all the money you’ve spent over the course of a week or a month written down in black and white is a powerful psychological motivator to get you to change your habits.

2. Imagine That You Saved the Money for Retirement

Another great way to put yourself on the path to financial freedom is to consider any big ticket purchases as if the money had been invested for the next 30-40 years instead of being spent now. The rule of thumb for this is to double the money for every ten years until retirement. This means that the 60” 3D HD TV you’re lusting after for $1,500 should not be looked at as just a $1,500 investment.

Instead, if you’re 25 years old, imagine putting the money into an investment for 40 years which compounded until you were 65 years old. Now, your big screen TV set has cost you a cool $24,000. Ouch. Not such a good deal now, is it?

3. Make a Shopping List Before You Go to the Store

Stores of all shapes and sizes love impulse buyers. That’s why they always have a nice big display of knickknacks right at the checkout counter. The idea is to get you to drop a few more things into your shopping cart before you pay. Never mind all the other tempting things all over the store. Instead of buying all that junk you don’t need, just walk in with a shopping list and stick to it. Not only will you actually remember everything you went in to buy, but you’ll also save money in the process.

4. Have At Least a Small Savings Account Available

The standard advice from most financial gurus is that you should have between 3-6 months worth of salary put away for a rainy day. Unfortunately, for most of us, that amount just seems impossible to achieve. If you are earning say $50,000 per year, that means you need to put aside between $12,500 and $25,000 and keep it sitting around in a savings account. Most of us simply can’t fathom how we could save up so much money and so we don’t even try.

Instead of trying to save up such a large sum of money, try saving up between $500-$1,000 and having that available for emergencies. Having that relatively small amount of money available will mean that you are now prepared for most emergencies (i.e. your kid calls from college and is a few hundred dollars short of rent this month or your car breaks down and you have to pay for a tow). This means you’re not going to whip out a credit card every time something happens and you’ll actually start to pare down the credit card balance.

Plus, once you get to the point of having that relatively small amount of money put aside, you’ll find it’s much easier to put aside larger sums of money and eventually to get to that 6 months worth of salary.

5. Leave Credit Cards At Home

If you love to go shopping (and who doesn’t?), a simple tip to put yourself on that road to financial freedom is to simply leave your credit cards at home. Carry $50 or $100 in cash instead. That money will then be the basis of your spending and you know you cannot spend more, no matter how cute that pair of shoes in the window looks because your card is sitting safely at home, where it can’t step in the way of your path to financial freedom.
Summary: Getting yourself on the path to financial freedom doesn’t have to be really difficult. Try these simple tips to make it easy.

George Gallagher is a personal finance and economy blogger.

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