THREE STEPS TO FINDING FINANCIAL FREEDOM
February 04, 2020
What is financial freedom? The answer is different for everyone.
For one person, it might be an opportunity to do a debt-free scream. For others, it’s retiring at 50 or making enough to drive their dream car or have that waterfront view from their living-room window.
In any case, there are a few best practices that can help make your own vision of financial freedom come true. Here are our three steps to finding financial freedom:
1. BUDGET (AND STICK WITH IT)
Whether you’re a numbers nerd or a free-spirited spender, every dollar counts. Those monthly utility bills, movie nights and morning lattes add up quickly.
You work hard for your money, so make sure it’s working for you. There are plenty of budget-building apps and tools out there—find one you like and begin to build your budget today.
- First, figure out how much your basic needs (like housing, food, transportation, and healthcare) cost you each month. These are your priorities—the things you can’t live without. One way to determine where your money is being spent is to review your last three months’ worth of bank statements, then enter that information into a home budget calculator.
- Next, add categories for things like savings, debt payments, and “fun money.” You’re aiming for a balanced budget, which means you don’t have any money uncategorized, nor are you in the hole. Once you’ve budgeted for everything you can think of, you’ll see whether you need to cut back, or if you actually have more money than you thought.
2. PAY DOWN DEBT
If you’ve borrowed money to buy a car, to splurge on a vacation or just to get an extra 10% off at your favorite clothing store, you may want to consider prioritizing paying off those debts. In addition to the amount you actually borrowed (which is called principal), you’re making interest payments as well. If you can pay these debts off faster, it may be worth considering. The more quickly you eliminate debt payments, you may be able to adjust your budget.
- If you’re a homeowner, you might be able to consolidate debt with a home equity line of credit (HELOC). With flexible terms and competitive interest rates, HELOCs allow you to transform your home’s equity into a line of credit you can draw on whenever you need to.
- Another option that may be available to you is a personal loan. Personal loans also have flexible terms and competitive rates that might be lower than what you’re currently paying other lenders.
3. PLAN FOR A BRIGHTER TOMORROW
Whether you’re looking for short-term growth or doing some long-range planning, there are plenty of ways for you to begin saving for the future.
- If you’re just starting out on the road to financial freedom, saving can be as easy as automatically deferring a portion of your paycheck and having it transferred to an interest-bearing savings account. Since you can direct funds to come out of your check before it’s deposited in your checking account, many people say this type of savings “feels” less painful than moving money themselves.
- If you’re looking further down the road, an individual retirement account might be right for you. There are options that offer either tax-deferred or tax-free growth of any earnings*, and some IRAs even provide tax-deductible contributions.
- Be sure to check with your employer for more information about retirement plans, as some companies may match a certain percentage of money employees contribute to their individual accounts. If yours does, be sure to take full advantage of the opportunity.
At Renasant Bank, we’re committed to building long-term relationships and offer a wide array of banking services to help our clients experience financial freedom. If you’re ready to get started on your journey, call 877-367-5371 or stop by your local Renasant location today.
*Taxes are due upon withdrawal. Please consult your tax advisor to determine amounts you may deposit. This should not be relied upon as tax or legal advice. You should consult a tax professional or attorney for advice or information.
All loans and lines of credit are subject to credit approval.