And since we’re talking about financial goals that will hopefully lead to financial freedom, let’s talk about some “financial fireworks” you can light this fourth of July. As we celebrate freedom more generally, these are 7 habits you can start “burning” to get to your goal of financial independence more quickly.
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Table of Contents:
1. Light a Match to Your Debt
Debt is absolutely going to be the biggest killer of your journey towards financial freedom. That’s especially true if you’re in high-interest debt in the form of credit cards or personal loans. But any kind of debt, except for arguably mortgage debt with a very low interest rate, is definitely going to hold you back on your goals.
So if you haven’t been working on it already, now is the time to light a match to your debt. This means getting a plan to pay off your debt and starting to make regular extra payments towards that debt. Even if you can only do an extra $20 per month right now, that’s going to get you out of debt more quickly than making the minimum payments on all of your various debts.
You may also want to look into transferring your debt to a 0% balance transfer credit card. This is great if you know you can get rid of your debt within a year or so which is about how long the 0% interest rate usually lasts. You can see those offers here.
2. Accelerate with a Side Gig
Whether or not you currently spend less than you make, adding a side gig is an excellent way to accelerate your journey towards financial freedom. And the good news is that you don’t have to totally burn yourself out working around the clock, either. A side gig can take as little time as a few hours a month. And if you can use your side gig to do something you enjoy doing but maybe don’t get to do as part of your day job, even better.
Assuming you stumbled across this article while surfing the web, you’re already doing something that you could be earning money for! Sites like Swagbucks offer rewards, discounts, and even cash back for online activities you likely already do including shopping, watching videos, filling out surveys, even simply searching for content. You can learn more about Swagbucks here in our review.
There are a couple of keys to making this work. One is to be sure that you choose a side gig you don’t hate. You don’t have to be completely passionate about it all the time. Every job has some downsides, of course. But if you can sustain your interest in your side gig, it’ll be easier to find the time to do it. So whether it’s writing because you enjoy it or mowing lawns because it’s a good form of exercise, find some non-financial good in the side gig you choose. Need some inspiration? Check out Fiverr. There you can browse categories and see what services others are offering to decide if you want to join in and earn a few fives or more!
Read more: Can You Really Save Money on Fiverr?
The other key is to make sure your side gig money, outside of what the government requires you to pay in taxes, goes straight towards your financial goals. If you’re still in debt besides your mortgage, you should most likely put your money towards that debt. And if you’re out of debt and ready to start focusing on saving, the money can go towards your savings goals.
Related: Apps That Can Make You Money
3. Blow Up Your Goals with Automation
One of the best tools now available is automation. Being able to automate simple tasks and payments is an amazing way to save time and brain power. And when it comes to financial freedom, automation is a great way to stay on track.
Read more: The Best Automatic Investment Apps
Not sure what that might look like for you? Here are some ideas:
- Pay yourself first, automatically. You’ve probably heard the old adage to pay yourself first. It’s an important principle in finance. This means that before you spend money on today’s needs, you save for tomorrow’s goals. In practical terms, this means setting up automatic bank transfers on payday to move money to your savings account. Whatever savings goal you’re currently working on, this can be a great strategy to ensure you save before spending.
- Use round-up apps. Your grandparents probably used to have a change jar where they’d toss their spare change each day. You may almost never use cash. But you can still save the change virtually with round-up apps. Some like Qapital let you save the change for your goals, while others like Acorns let you invest your spare change easily. These are set-it-and-forget-it apps that are super handy to use.
- Pay your bills automatically. One problem with letting money sit in your checking account is that it may look like you have more money than you actually do. Paying your bills as you get paid, automatically, can solve the problem of forgetting to account for future withdrawals that need to be made from your account.
Again, automations like these are simple to set up and may not seem like a big deal. But over the course of a year, you could pay off hundreds of dollars in debt just by using a simple round-up app. Or you could save tons more money because money is automatically going to your savings account instead of your checking account on payday.
Learn more: 6 Ways To Automate Your Finances
4. Plan the Show With Solid Goals
Finally, be sure that you have a plan for these financial fireworks so that you can hold yourself accountable. This might look like figuring out your best debt repayment strategy or a deep dive into retirement planning and goal setting. If you already have these goals in place, now is an ideal time of year to check in to see how you’re doing. An easy way to do this is with a retirement calculator. Weathfront offers Path– a tool that will analyze your financial situation and determine how much money you may have when you reach retirement plus, suggest strategies to help you reach your goals.
The key here is always to make sure your goals are personalized to your situation. Just because some people aim to be able to quit working at 50 doesn’t mean you have to. Maybe you want to enjoy life a little more now but be able to have the freedom to take a job you love rather than one that pays really well. That’s also a great goal.
5. Spark a Flame With New Investments
Now that you’re more than mid-way through the year, it’s a great time to start up with some new investments. There are four investments I think are ripe for a mid-year consideration, which I’ll outline below.
If you’re already investing in stocks, great. But if you’re not, it’s time to get started. Heck, even if you are, you should consider some new strategies. There are really two strategies I recommend – buying individual stocks and investing with a robo advisor.
For buying individual stocks, I really like You Invest by J.P. Morgan Chase right now. It has a simple-to-use platform and you have the option of investing on your own or using a guided portfolio. When investing on your own, you won’t pay anything in commissions, either.
For a robo advisor, the two I like most are Betterment and Wealhtfront. Betterment has some extra options, like a checking account, while Wealthfront makes it easy for you to open things like a 529 college savings account. Both are excellent, and both will give you a diverse portfolio that’s automatically rebalanced.
This is a subset of stocks but done in a much different way. Micro-investing is done through apps that take small chunks of money and invest them into a well-diversified portfolio. To be more specific, Acorns is a great example. As mentioned earlier, Acorns will “round up” your purchases to the next dollar and invest the difference.
So, for example, if you buy groceries for $44.60, Acorns will round up that purchase to $45 and invest $0.40 in your Acorns account. Each time you swipe your card, the round-ups happen and over time you’ll end up accumulating a nice little nest egg.
Invest in Fine Art
Another great mid-year investment is in fine art. Masterworks is a platform that purchases fine art from all around the world, registers them as investments with the SEC, and sells “shares” of that artwork back to you as an investor.
According to Masterworks, art historically has outperformed many other types of investments, and it adds a layer of diversity to your overall portfolio you can’t get through regular stock or ETF investing. You can start with as little as $1,000, and you’re able to spread your investments out across a multitude of fine art–with as little as $20 each.
Lastly, a great mid-year investment to round out your portfolio is in real estate. But not just any real estate – commercial real estate. The problem is, your only options traditionally have been REITs or real estate ETFs if you didn’t want to buy an actual investment property to manage.
Enter Fundrise. Fundrise allows you to invest in commercial real estate projects through crowdfunding with as little as $500. And as an investor, you get to enjoy the long-term gains from these investments through things like rent and overall asset appreciation.
6. Track Your Spending With Brilliant Budgeting Tools
Another important thing to do at this time of year is to check in on your spending. You’ve now had more than half of a year to spend, so it’s important that you check in to see how you’re doing. There are two tools I am going to recommend, in order of how much time you need to spend with them, so you can determine which budgeting tool is best for you.
The first is Personal Capital. Personal Capital requires a little less attention, since much of it is automated, and it adds to the benefit of tracking your entire investment portfolio. Personal Capital has a beautiful interface and works really well if you’re someone who wants a balance between active and passive budgeting.
The next is Albert. I’ve been using Albert for a while now and I love it. It’s completely automated and it’s like having a butler for your finances. Albert will create a budget for you, send you updates on how you’re doing, and where you can improve, as well as save micro amounts into a savings account for you. The downside is that it’s fully automated and if you’re a control freak, you’ll hate it. But for those who want to set it and forget it, you’ll really enjoy Albert.
7. Celebrate Savings and Add to Your Emergency Fund
Finally, it’s a great time to add to your existing emergency fund. Or, if you don’t have an emergency fund, it’s a great time to start one. In fact, if you don’t have one, this would be the first thing I’d do. I generally recommend saving six months worth of expenses in emergency savings–and remember this is just your expenses after you strip away all the “wants” (like YouTubeTV, Spotify, a gym membership, and anything else you’d probably get rid of in case of an emergency).
But where should you house your emergency savings? There are a ton of options. I always recommend a high-yield savings account like American Express® Personal Savings or CIT Bank, who both offer above-average savings APYs. Another option, though, is to use the cash accounts inside of Betterment and Wealhtfront (who I mentioned earlier). You can keep your cash close to your investments, but also earn a really great interest rate on your savings.
Ultimately, financial freedom is what it looks like for you–your own pursuit of happiness, if we want to borrow the words of the Declaration of Independence.