It is fair to say that most of us want to achieve financial freedom. To have enough savings and solid investments to afford the lifestyle you wish to can sound really attractive. Unfortunately, finding that freedom can be challenging.
Many people hold debt, overspend, or encounter challenges that make financial freedom challenging to achieve. However, all hope is not lost. Develop and maintain these simple financial habits if you want to attain financial freedom.
#1: Set specific goals
A goal like “I am going to be rich one day” is vague. A better way to set targets is to use the SMART technique. They should be Specific, Measurable, Achievable, Realistic, and Time-focused.
You should be working towards a SMART aim like “I am going to increase my savings by 1% a month for twelve months.” Write your desire down in a journal, and make it your mantra. Specific goals lead to accurate results, so cut out that fluff thinking.
#2: Write a budget
Budgeting is essential for wise money management. Instead of squandering money away and realising only when you’re broke, it’s better to start analysing your spending habits.
Ensure your bills are promptly paid and your savings are funded before allocating money to luxury expenses or feed your lifestyle inflation. Understanding where your money goes each day is the best way to control your urge to splurge.
#3: Clear your debts
With existing debts looming over your life, financial freedom seems like a faraway dream. When you owe financial institutions money, don’t forget that the interests are rolling.
To eliminate debt, you may want to try the pyramid strategy. Pay off your smallest debt first, then allocate that money to your next-smallest bill, and so on until you have paid your debts off altogether.
You may also be interested in reading our recent article on “top tips on how to pay off credit card debt quickly”.
#4: Automate your savings
We can’t emphasise enough because it’s one of the stablest ways to grow your savings. If you have a direct salary deposit from your employer to your bank account on payday, ensure a percentage of your income goes into savings right away.
It’s easy to set up recurring transfers to send money to a specific saving account every time you get paid, so you shouldn’t be giving any lame excuses. Once the automation is in, the routine will ease you into saving, so resist the urge to withdraw.
#5: Educate yourself on finances
We may be mistaken, but many of us do not have a good understanding of personal finances. Well, we can’t blame ourselves since it’s not taught in schools?
Take ownership to have at least a basic understanding of how money works – be it in the topic of debt or investments. Read books written by experts or consider taking some courses to develop your knowledge of money.
Speaking of which, do you know that Seedly is organising a Personal Finance Festival 2021? The most extensive personal finance event in Singapore is happening on Saturday, 10 April 2021, from 10am to 5pm. Read more about it here.
#6: Invest when you’re ready
Investing in the stock market can seem scary, and it’s no wonder why some people have analysis paralysis.
Yes, the market is volatile and can occasionally crash. Unforeseen circumstances can cause even the most robust markets to shrink. But without risk, there is no return. As such, the stock market is one of the greatest ways to grow your wealth.
If you know not where to get started, how about beginning your journey through Robo-advisors? From OCBC RoboInvest to DBS digiPortfolio and Stashaway, there are several local options for Singapore investors.
#7: Monitor your credit scores
Your credit score is the first thing lenders will examine when you wish to make a major purchase, such as a car or a house.
Do you know how to grab hold of your credit report? You can get a copy from the Credit Bureau (Singapore). Each CBS Credit Report is chargeable at S$6.42 (inclusive of GST). Simply make a purchase online, at any SingPost branches, at the Credit Bureau office, or CrimsonLogic Service Bureaus.
#8: Maintain your health and assets
If you achieve financial freedom but then neglect your health, your hard work could go to waste due to unexpected healthcare costs. Constant exercise, eating right, and avoiding unhealthy lifestyle choices will benefit you in the long run.
While you take of your health, don’t forget to keep an eye on your things. Making sure that they last longer can help you save money.
This is true for everything, from mobile phones to laptops and cars. Keeping them well-maintained is likely to increase their lifespan and save you money on costly repairs or replacements down the road.
#9: Don’t exceed your means
Frugality is frequently on our radar, and you might have read about it in several money-themed blogs too. But you know what? It is an excellent trait for achieving financial freedom, and we’re going to play it like a broken record.
The ideal way to live within your means is to distinguish between things you want and the things you need. Just because you can afford something does not mean you need to buy it. If there’s a cheaper option out there, go for it.
#10: Talk to an expert
Once you have accumulated some savings, talk to a professional about how to manage your money. Picking the right financial advisor who is legally obligated to act in your best interest instead of theirs is vital.
While financial freedom may seem like a daunting goal to reach, it is well within your means to achieve it! Taking a disciplined approach and developing the abovementioned habits over time will help you get to your desired state of financial freedom in no time.