A monthly income to reach: it is crucial to estimate how much you will need to live comfortably each month, once you have reached your financial independence. By knowing this figure, you will be able to better plan your savings and investments to be made.
Savings Capacity : Understanding how much you can save on a regular basis is essential to planning your financial empowerment. This will help determine how long it will take you to reach your financial goals.
How to set short-term, medium-term and long-term goals?
Short-term goals (less than a year): build an emergency fund, pay off debt, save for a specific purchase.
Medium-term goals (one to five years): buy a house, plan a career change, start a business.
Long-term goals (five years or more): early retirement, complete financial independence, creating a financial legacy.
To help you better understand the deadlines:
Use the SMART (Specific, Measurable, Achievable, Relevant, Time-bound) approach for each objective.
Break down goals into smaller steps with specific deadlines.
Set milestones to measure your project’s progress , adjust strategy if necessary, and celebrate milestones reached along the way.
Manage your finances effectively
Create a realistic budget and establish financial priorities
This involves reviewing your income, expenses, and financial goals, and then allocating your resources wisely. By establishing clear financial priorities, you can allocate your money effectively and avoid unnecessary spending.
A popular budgeting method that can help you with this is the 50/30/20 method . It involves dividing your monthly income into three categories:
The most important thing is to find the level of savings that best suits your situation, in order to generate monthly savings and invest them every month.
By adopting frugalism in a more advanced way you can, for example, drastically reduce your budget linked to non-essential expenses to allocate it to investment , but this lifestyle focused on deprivation is not suitable for everyone.
Track your spending and reduce waste on a daily basis
Regularly tracking your spending is essential to optimizing your finances and becoming financially free. It allows you to become aware of your spending habits, identify areas where you could reduce waste, and better manage your money.
By reviewing your bank statements, using financial management tools, or following a budget, you can identify unnecessary spending, save on impulse purchases, and direct your resources to higher priority areas.
Implement a strategy to repay debts and avoid financial pitfalls
Debt management is essential to achieving financial freedom. Having a debt repayment strategy in place can reduce the interest you accumulate and improve your financial health.
By prioritizing high-interest debts, making extra payments when possible, and avoiding taking on more debt , you can gradually eliminate your debt and free yourself from financial constraints.