A Guide To Working Towards Financial Freedom During LockdownBy Her Agenda
May 4 2020, Published 10:10 a.m. ET
If you weren’t financially free before lockdown, you might be wondering how you can possibly become financially free during lockdown. It can be hard to make positive changes at the best of times, let alone during a global pandemic. However, you can take baby steps towards financial freedom during lockdown that will have a positive impact on your life for years to come.
If you have plenty of free time on your hands now, there’s no better time to take an honest look at your finances and habits and figure out where you may have been going wrong this whole time. Why aren’t you financially free now? Financial freedom is available to everybody. Some may find it more difficult than others, and need to make more changes, but it really is something everybody can achieve with determination and commitment. Read on to find out how you can work towards financial freedom during lockdown:
1. Honestly Review Your Financial Situation
The first step to work towards financial freedom in any situation is to honestly review your situation. Sitting down, looking at your incomings and outgoings, and assessing your spending is crucial if you want to change for the better. You can’t bury your head in the sand and hope things will magically get better. You absolutely need a clear idea of where you’re at so you can move forward. This might be uncomfortable, but it’s so important!
2. Have An Open Discussion With Other Members Of Your Family
If you live with others, getting them on the same page as you is pretty important – especially your partner. Money is one of the reasons many couples argue, and something many struggle to be honest about with one another. This is a good time to get into the habit of having regular money meetings. Not only will this enable you to have an honest and open dialogue about money, but it can help you teach your kids (if you have them) valuable lessons about money, too.
When you commit to having a meeting once every few weeks, you’ll be held accountable for how you are spending money and how you are progressing towards your goals. This alone can be a big push in the right direction.
3. Figure Out Where You Can Cut Back
There are likely many areas in which you can cut back. Clothes? Entertainment? Eating at restaurants? People often spend a huge amount of money on these things without batting an eyelid. These things give us instant gratification, which of course putting money towards a debt or even investing may not give us. It can take time to reap the rewards from the latter. However, the latter is so much more satisfying in the long run! So, where can you cut back? Making small changes a little at a time will likely be much easier than making huge changes all at once.
4. Aggressively Pay Off Your Debts
Now, you may need to wait until lockdown is over and you are earning enough to do this. However, if you can spare any amount of money, putting it towards any debts you have will be a wise idea. You probably don’t need a lecture on debt. However, it’s worth bearing in mind that the longer you have the debts, the more you are paying overtime. The interest may not even seem that big, but it does add up over time. Using a credit card to pay for an emergency may be necessary from time to time if you don’t have the funds, but you should not be creating debt for yourself by buying things you simply ‘want’ and don’t really need.
Putting as much money as you possibly can towards your debts is a good idea – do this before you put money into a savings account so you can avoid paying interest. Find a way of paying your debts off that suits you. Some like paying off the smaller debts so they have fewer to think about, others like bringing the bigger debts down first. You could potentially consolidate all of your debts so that you only have one payment to think about. This can take a weight off your shoulders and help you to come up with a reasonable budget for regular payments.
5. Be Strict With Your Spending
You do need to have some discipline when it comes to your spending. Just because you can buy something, doesn’t mean you should. Allowing yourself a small amount of money to put towards things you want is a good idea, and you can then be more choosy over what you actually buy. Allocating money to things like debts and investments first is far more important.
6. Review Your Utility Providers
Never simply let something roll over when it comes to your electricity and other utility providers. Always look for a better deal, compare, and see if your current provider will match a deal. It’s easy enough to do and shouldn’t take long at all. If you don’t do this each year, then you’re definitely wasting money.
As your goal of financial freedom is first best achieved by bringing down your bills and reducing your living expenses as much as possible, this is one of the easiest ways to do it.
7. Consider Starting A Side Hustle
A side hustle can help you to make more money to put towards your debts and investments. However, it’s important to consider how much time you have to invest, and whether you’ll need to consistently put the same amount of time into your side hustle in the future for it to work. This is because swapping your time for money forever can hardly be called ‘freedom’. Swapping a little time may be necessary, but it may not be the best idea to start a hustle that will eat up all of your time.
8. Figure Out How You Can Maximize The Money You’ve Got
Look at the money you’ve got and figure out how you can maximize it. Maybe you could put your savings into a high-interest savings account, or use this website to figure out how you can start investing. Having a decent amount saved in an emergency fund is a great idea and can stop you from taking on debt. That being said, your savings will depreciate over time, and this is why investing with a view to long term wealth is best. You won’t see returns right away, and any investment comes with a certain level of risk. However, you should be able to find strategies that suit the level of risk you are willing to take.
If you don’t know where to start and feel overwhelmed, try using an app that invests your spare change!
9. Learn As Much As You Can About Finances
School doesn’t teach us nearly enough about finances, and we often pick up the beliefs and bad habits of our parents. It takes time to unlearn the bad habits and beliefs that we have picked up from them and to replace them with more useful beliefs and habits.
Find YouTube videos that resonate with you, listen to podcasts, buy books, and learn as much as you possibly can. This will take time, but say you vow to read one book on money each month, you will have 2 books worth more knowledge in just one year. You could make big changes in that time!
10. Figure Out What Your Priorities Are
Every person’s priorities are different. Would you like to travel without worry, or have your bills paid for while you sleep? Knowing your own priorities will help you to come up with a list of goals that appeal to your emotions and make you want to stick to them. The last thing you want is to do all this for somebody else’s dream. You won’t stick to it!
11. Investigate Passive Income Opportunities
Passive income opportunities are the smartest way to make money while you sleep. However, they are not all entirely passive. You will need to do some work to get them set up before they can run on autopilot, and even then, you may need to spend time on maintenance and marketing. That being said, you will spend much less time than you would in a full-time job. This takes time, but in time, you could make as much money as your full-time job without doing much at all. Options include:
- Affiliate marketing
- Writing ebooks
- Creating online courses
- Opening an online store
12. Find A Mentor
A mentor can be a fantastic way to learn and stay accountable. Is there somebody in your life you would like to emulate? Ask them to give you tips. Spend more time with them. The more time you spend with those you want to be like, the better!
13. Track Everything You Spend
You absolutely will not achieve your goals without tracking everything you spend. Everything, no matter how small! It might sound tedious, but you will have a much clearer picture of where you need to improve.
How will you begin working towards financial freedom?
[Editor’s note: This post is produced by one of our trusted partners.]