Are you wanting to achieve financial freedom? If you’re saving every penny you earn, I’m here to tell you that strategy isn’t going to get you there. But cultivating careful and strategic spending habits, matched with educating yourself on where to invest your money – that will do the trick and get you on your way.
1. Categorize Your Expenses and Monitor Your Spending
Start by breaking down your expenses into categories, make it simple. Try these 4 subcategories: unnecessary, productive, lifestyle, and protective.
Unnecessary expenses meaning: using credit, spending on vices or services that don’t add value to your life. Overdraft fees, using credit to consume, spending on vices, or products or services you don’t use or that don’t add value to your life – and if it doesn’t add value and is draining your bank account, it should be an easy goodbye.
Productive expenses meaning: expenses that will make you money, for example, being an early investor in a company or product with great potential. These expenses are also ones that are likely to improve your overall well-being like continuing your education, eating healthy and gym memberships.
Protective expenses meaning: insurances for health, life and auto.
Lifestyle expenses meaning: the fun stuff! I’m very adamant about having fun, and no matter your age, never stop having fun. So these expenses can be vacations, new technology, whatever makes your soul happy.
By categorizing your expenses this way, you’ll be able to easily quit the destructive spending, learn to spend conservatively on lifestyle expenses, and splurge on your protective and productive expenses.
2. Quit The Habit of Emotional Spending
We all have bad days, but as we all know, buying those new pair of shoes is definitely not going to make you feel better.
So instead of going on a retail therapy splurge that is sure to turn to regret, try to regulate your emotions by talking with your friends and family, letting it out in the gym, watching a documentary, or reading.
3. Strategically Pay Off Your Loans
Loans can be intimidating and downright terrifying, but don’t get anxious so quickly. If you’re seeking to get a loan, take some time and do your research on the different types of loans that are available out there.
If you are already in debt, pay off the loans with highest interest rates first, and then consider consolidating your loans into one longer-term summary.
4. Educate Yourself and Invest Wisely
Investing is smart, but do your homework! It’s terrifying how many people do this, but please, don’t hand off your money to someone without educating yourself first. Trusting people is great, but know where you’re investing your money, know the process, and pay attention.
How are you going to cut out unnecessary spending in your life?