How to Become Financially Independent in 2024
By Rimante Kudabe
abr 11, 2023 out 7, 2024 • 5 min read
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By Rimante Kudabe
abr 11, 2023 out 7, 2024 • 5 min read
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Achieving financial independence doesn’t have to be a dream! Now is the time to commit and plan for your future. With firm goals in mind, you can create a roadmap leading you toward real fiscal freedom in 2024 — why wait any longer? Take charge of your finances with these tips today and make it happen!
Financial independence starts with setting up goals. Goals are different for everyone: for you, it may be early retirement, whereas, for others, it may be a debt-free life. It depends on the person; hence, spend a few hours thinking about what financial freedom means to you.
Once you clear that image, check how your current financial situation can contribute to this goal and what setbacks it may create. With that in mind, create a deadline for your goal. Setting up a deadline increases your chances of reaching the goal itself.
Of course, financial freedom and your goal will not be reached overnight. Hence, create certain milestones in your journey. In other words, have one main, realistic goal, and split it into a few smaller ones that ultimately lead to your main goal. Make sure to keep those deadlines and keep yourself in line!
Goals, especially huge ones like financial freedom, can not be done without a budget. Consider your income and expenses and check how much you can spend on various things. That’s essentially what budgeting is!
There are many different budget plans to choose from. Considering finding out the one that suits you best. There is the classic 50/30/20 budgeting (50% of your income goes towards needs, 30% goes towards wants, and 20% goes to savings), but just because it is the most well-known one doesn’t mean it is the only one. You may also try out some money-saving challenges if you are brave enough.
What is recommended, though, is the length of your budgeting plan. The most success can be achieved by creating a monthly budget rather than a weekly one (or any other timeframe). This way, you will know how much you can spend and how much you can save every time you get your pay.
But if you get paid weekly and creating a weekly budget is easier or more reasonable — go for it! Some apps can help you keep track of your budget, eliminating the need to use Excel spreadsheets and physical notes.
For most, debts create the biggest obstacle to financial independence. No wonder we mentioned it right at the beginning of this blog post. Debts come in many shapes and sizes, including credit card debt, student loans, mortgages, etc. Not paying them on time creates more financial stress since it probably means paying more than intended.
Budgeting and eliminating (or at least minimizing at first) debts is an important part of financial freedom. They are always lingering there, causing tension, and eliminating them will not only improve your financial life but will also lessen the everyday stress of thinking about them.
Once the debts are gone, your budget will increase massively, and you will be one step closer to becoming financially independent. However, remember that paying off debts does not mean you are free to incur new ones. It is always way better to be debt-free.
Automating your savings can be a great way to stay on your budget. Various banking apps offer this feature, where a certain amount of money from your bank account will be put into a savings account on certain days. If you set it up to happen each time on your payday, you can easily follow the aforementioned 50/30/20 system and see your savings grow!
Some apps save minuscule amounts of your money after you make purchases. They take what you had paid and round it up to the nearest dollar. This way, those few cents are added to your savings, and after a while, you will be surprised how much you have saved. You can link all of your debit cards to these apps or the one you use the most. The savings tend to pool up quickly this way, and this income is completely passive too.
At first glance, investing seems like an activity that you can do once you have a lot of money. That is not the case, though. Today, investing can start at very small amounts (this is called micro-investing), but, of course, if you do have the means, you can make bigger investments, too.
Jumping straight to the stock market is not a smart move. It is very risky and takes a lot of market analysis to get a shot at success. What would be a better investment choice is simply putting your money to a savings account that creates interest. This way, your money is kept safe and grows over time. The growth may not be large, but it is still something in the long run.
If investing in stocks still seems like a lucrative option, consider creating a brokerage account. They will help you with the basics of investing and may point you to the right investments. You should also check out various investment and financial podcasts, videos, or other resources available online. The internet is full to the brim with various guides. Take some time to look them up and invest smartly!
Not everything in life can go according to plan, unfortunately. Even with the goals set and budget in place, certain things can go south easily. There are always certain expenses that you can not foresee. Be it a car breaking down or emergency repairs to your apartment. To mitigate these risks, consider creating an emergency fund just in case something happens.
This should be a separate section of your savings unrelated to your casual savings. The money in this fund is to be used only when everything else fails. If you do not have enough money in your monthly budget to cover a certain critical expense, take this money from the emergency fund. This way, you will stay on top of your goals and will not take a huge dent in your budget when bad things happen.
Living a frugal lifestyle can save you loads of money. It is living with the idea that every expense is accounted for and you do not spend anything more than absolutely required. On paper, it sounds terrifying, but in reality, it is not that bad. There are many ways to still have fun while being frugal, and stepping into this lifestyle is not as difficult as it may seem initially.
It does not have to be an overly restraining experience, too. Of course, it does require some cutbacks, but it also creates a boost toward your final goal — financial independence. With every expense accounted for, more money can be put towards savings, and more money in your savings account can bigger growth via interest. After all, the more you invest, the more your money will grow.
Becoming financially independent in a few short years is an achievable goal if you have clear financial goals and all the tools to achieve them. Remember that creating good financial habits and sticking to them is the secret to financial independence and a less stressful life.
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