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How to Create Financial Freedom

Four simple things to do to better manage your money

For those who strive for financial freedom, concerns over the potential changing of tax rates can be cause for concern, especially when you’re looking for ways to shore up your budget without giving up things you enjoy – like outdoor, shooting, and hunting activities. Fortunately, there are many no-nonsense approaches to managing your money that allow you to enjoy life while still watching your bottom line.

Man standing near a mountain peak, illustrating freedom
We all desire freedom in our lives, something that makes us competent individuals. Other than good health, it's the financial freedom that provides the essentials
for a happy and fulfilling life. 
(Photo by Pixabay)

Create a Household Budget

Putting together a household budget serves many purposes. It helps you see where your money is coming from and where it’s going. This is the first step in making decisions about where to trim, eliminate, and cut back. Start with set expenditures, like mortgage, insurance, investments, and average costs for utility bills, along with other regularly recurring expenses.

From there, add in the “extras” that are most important to you and your family. Maybe this is dining out, entertainment, travel, sporting events, or hunting and fishing trips. Make your budget a comprehensive overview of where your money goes. There are no “right or wrong” answers at this point – you’re simply taking stock of expenses to give you a full view of your financial picture.

Take a Line-Item Approach

Once you’ve accounted for all expenditures, start looking for ways to trim. Eliminate things you won’t miss – for example, when putting together a budget, PC Mag says many people find subscriptions they forgot they had or don’t use. Next, look for ways to pare back rather than eliminate. For example, you may be able to reduce your cell phone, cable bill, and car insurance by making a few minor tweaks to your current plan or package.

There may also be expenditures that can be lowered with a different approach. For example, if you take a regular two-week multistate camping or boating excursion every summer, consider cutting the vacation to a week and travel in-state. Once you start looking for ways to tweak your expenses, you’ll find you can shrink your budget dramatically.

Reduce Large Expenses

For most people, homes, vehicles, and credit card payments make up the bulk of their monthly bills. If you can refinance your home or car for a lower interest rate, you could save a significant amount of money. If you have enough equity in your home, you might be able to do a cash-out refinance and pay off high-interest debt in the process.

This saves you money in the form of lower mortgage payments, as well as monthly credit card bills. Just use caution and don’t run up new debt if you can avoid it. High-interest loans have the potential to snowball, and they can have a negative impact on your debt-to-income ratio and your credit score.

Make Small Sacrifices

Budgets only work if they’re flexible enough that you don’t feel like you’re depriving yourself. However, even minor cutbacks can save you money, allowing you to build your nest egg and prepare for any changes in earnings or tax burden.

For example, according to MSN Money, rather than buy coffee shop coffee daily, cut back to two days a week and make the rest at home; pack a lunch for work rather than go out to eat; or give up a gym membership and start a neighborhood hiking or trail-running group.

Get the whole family’s buy-in and make it fun by setting aside money for an outdoor adventure everyone will enjoy as a reward for cutting back. Once you get into the habit, you’ll find you don’t even miss the things that were draining your bank account little by little.

Sticking to a budget doesn’t just save you money, it also allows you to experience a feeling of financial independence and security, which can minimize stress around money matters. It also means you can plan for retirement in a way that helps you maintain the quality of life you want for yourself and your family.

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