Habits to Build to Achieve Financial Freedom

A part of the financial strategy sessions I do with clients is to help them have clarity about their most important life goals. This can vary from raising a kid and sending them to a good school to being able to retire at an early age.

While each of us has our own definition of success, one thing we all have in common is that we want to live a life worry-free when it comes to money.

And the journey to financial freedom begins with building the right habits through effort and commitment. With that, here are the habits you may start practicing today to help you lay the foundation for your future financial well-being.

Habits to Start Today

• Habit #1: Create a realistic spending plan
  Knowing how to spend your monthly income ahead of time can help you be mindful of your cash flow and be intentional with your money.

  You can start by planning how you’ll spend your money next week. This must capture the things you need and want while staying realistic with your available money. Then, once you identify your usual cash flow, you can now adjust to creating your monthly spending plan.

  Keep in mind that the most important thing when making one is that it will be followed accordingly. For a more detailed guide on how to create a spending plan that suits you the most, here’s an article I’ve written before.

• Habit #2: Record your expenses
  Being aware of where your money goes will help you stay on track with your plan. And through this, you can identify where to adjust if needed.

  To do this, you can track a week’s worth of your expenses first. List the things you spend money on. You can do this on your phone’s notes or in a physical notebook, whichever works for you. Alternatively, you can also start by tracking a portion of your expenses, like your daily transportation costs. Then, eventually, take note of your other expenses as well.

  This will help you cut back on unnecessary purchases, monitor if the spending plan you made is being followed, and re-align your spending with your financial goals.

• Habit #3: Minimize debt and manage credit wisely
  Reduce financial stress and save money by avoiding loans with high-interest rates and using your credit responsibly.

  Create a reminder for yourself at least 5 days before the due date of your credit card so you have extra time to pay your bill. Since you’ll record your expenses, you’ll already have an idea of how much your total bill will be, which can help you set aside the needed money. It’s much better to clear your monthly dues so you can maintain your credit score as well.

  Having a good credit score will help you in the future if you want to avail a house loan, car loan, etc. from banks. This can determine if you’ll be approved and how high or low the interest rate will be.

• Habit #4: Build/maintain your emergency fund
  Having your own emergency fund can help you cope with unexpected expenses or changes in income.

  Set aside a portion of your monthly income and allot it to your emergency fund. Build at least six-month worth of your monthly expenses and refrain from using it for non-emergency purposes.

  If you’re going to put it in a bank, go for one that has high-interest rates to make the most of it. Ensure that it’ll be accessible when needed.

• Habit #5: Automate your savings
  Have your money go straight to your savings account to ensure your contributions and lessen the temptation of mindless spending.

  Online banks now have the option of doing regular transfers from one account to another. You can set this up with your emergency funds as well. Setting a specific amount and having this automated can help you build your savings consistently.

• Habit #6: Diversify your income
  In line with your life goals, look for other possible income sources and increase your earning potential if needed.

  While you can always try other income-generating opportunities, be reminded that money should work for you and not the other way around. There are financial vehicles that can help you achieve your life goals.

• Habit #7: Continuously educate yourself
  Make informed financial decisions by always learning about finance.

  You can follow a trusted financial advisor to be updated with the latest news in finance, read personal finance books, and even attend seminars and workshops. Of course, you can also do your own research. And in case time doesn't allow you, you can always reach out to me and I'll be glad to address any of your financial queries and concerns.

These are some of the habits that we can develop that can help us build the foundation of our journey. Knowing and applying these will be a great start toward financial freedom.

Remember to start small and try to gradually integrate these habits into your daily routine so that you may become consistent in anything. This will not be a smooth ride, but our goal is for you to progress in the right direction.

That's why here are some reminders for you to keep in mind.

Reminders for Your Financial Journey

• Be disciplined with your savings and have your savings system in place.
• Avoid comparing your journey to others. Enjoy your own unique one.
• Practice gratitude and celebrate all financial milestones.
• Stay committed to your plan and know when to adjust.
• If you ever feel lost in your journey, know to forgive yourself and always try again.
• Make decisions based on facts and not emotions.

And lastly, don’t hesitate to seek professional advice. Reach out to your trusted financial advisor for valuable insights and guidance to make informed decisions. If you don't have one yet, you can always book a Maximize Your Wealth Potential call with me.