Being financially independent is more than just being able to cover your essential living needs like rent, food and medical care. Picture: Freepik
What does it mean to be independent financially?
Being financially independent is more than just being able to cover your essential living needs like rent, food and medical care. It also means saving money, protecting your money against inflation and wasteful spending.
OctaFX offers its top 10 tips for achieving financial independence. It is important to to remember that the advice will only work if you make it a habit to use it. The journey to financial independence also requires time and effort.
1. Track your spending
Start by learning about your financial inflow and outflow. It might be difficult to track your expenses on a piece of paper, so if your banking app cannot help you then install an expense tracker app.
2. Come up with a realistic budget
Draw up a budget that fits your lifestyle. This will allow you to plan ahead on how you are going to spend your money.
3. Create an emergency fund
This will help you deal with unforeseen situations without borrowing money with interest and getting into debt. Put aside R1 a day, that will give you R30 more to add to your account at the end of the month.
4. Pay your bills on time
It’s a simple way to manage your spending and avoid paying late fees.
5. Get rid of unnecessary recurring charges
If you signed up for a free trial to a streaming service, you might have recurring charges you have forgotten about. Look at your credit card statements and ensure you are not paying for something you don’t need. Unsubscribe to the streaming service and put that money in your emergency fund.
6. Pay cash for expensive things (most of them)
Loans can help you with major purchases like a house or a car. For other big purchases like a TV, cash is often best as it saves you the monthly interest payment you will have to pay when buying using credit.
7. Use credit cards wisely
Ensure your credit card repayments are on time, keep your credit card limit for tight situations and repay purchases within a month to avoid paying extra fees.
8. Diversify your savings
To protect your savings from inflation and other negative market factors, try diversifying them with different currencies, precious metals, and real estate income by renting out property. This will make your portfolio more resilient.
9. Start saving for retirement
Start saving for retirement from as early as possible because the earlier you start the more you will get. Have a separate fund or term deposit to ensure you don't access the money for purposes other than savings.
10. Create an investment strategy
Choose wisely. There are many forms of investment: some are more easily accessible, while others are more complex. A small contribution to your investment is a potential for additional income and financial independence.
IANS