Have you ever dreamed about leaving the rat race and retiring at 45? Although doing so might sound like a pipe dream, it’s much more plausible than you might think. Individuals who achieve financial freedom have a solid understanding of their finances and clearly define their goals. You don’t have to be a twenty-something just starting your career, either. Setting goals later in life and developing better financial habits doesn’t disqualify you from achieving financial freedom. Best of all, our platform enables you to get on the path to financial freedom without a significant time commitment. All of the necessary tools are available within a few clicks!
Are you ready to turn your dreams into reality? Here’s how to stay on the path to financial freedom:
Create a Budget
A budget is a financial framework that outlines your monthly income and expenses. Without a budget, it’s incredibly challenging to manage your finances and meet your savings goals. A budget consists of all your sources of income, such as your salary, dividends, and bonuses. Similarly, a budget outlines your expenses and how much you expect to spend. The most significant expenses on a budget are housing, food, utility, and insurance costs. At the end of the month, your end goal should be to have residual income that you can save, invest, or use to pay debt.
Stick to Your Budget
Although you might not follow your budget to a T, your income and spending should be reasonably close to your budget. You can always make changes if needed, but the important part is that you monitor your income and expenses and then compare them to your budget. Our platform lets you see how your spending compares to your budget over six months. After securely connecting your bank account with Plaid, all your transactions (cash outflows and inflows) will flow into the Chunk platform. Our application will do the hard work for you, and you can effortlessly track your budget with handy visuals.
Maximize Your Income
Boosting your income is often easier said than done. Sure, you could work 70 hours a week at a full and part-time job, but most Americans value work-life balance. Fortunately, there are a few ways to boost your income without giving up your precious free time. First, you can look for a better-paying job that doesn’t require you to work more than your current job. In today’s workplace environment, it’s not uncommon to stay at a job for a few years and then job-hop for a ten to twenty percent raise. You can also increase your income by creating a passive income source. Examples of passive income sources include blogs, mobile applications, and investments. As you boost your income, be mindful of lifestyle creep (spending more money as your income increases).
Choose Your Investments Wisely
If you let your cash accumulate in a savings account, inflation will make you lose purchasing power. Therefore, many individuals invest their money in stocks, bonds, ETFs, debentures, and other financial instruments. You can invest through your 401(k), traditional IRA, Roth IRA, or a personal investment account. Like a 401(k), many retirement plans will create a default investment strategy based on your age and target retirement date. Generally, you can assume more risk during the early stages of your career, as you have more time to recoup losses. As you near retirement, it’s often best to invest in low-risk bonds and certificates of deposits (CDs). Nevertheless, we recommend speaking with a financial advisor to create an investment strategy that helps you meet your long-term goals.
Avoid High-Interest Debt
High-interest debt, such as payday loans, can set you back on the path to financial freedom. Companies that offer these loans market to working-class communities and charge exorbitant interest rates and hidden fees. In some states, such as Nevada, payday loan interest rates can exceed 600 percent. We understand that sometimes people are strapped for cash and don’t have other options, but there’s always an alternative to payday loans. For instance, you may be able to get a cash advance on your credit card or borrow money from friends. While these options aren’t ideal, they’re much better than getting a paydown loan. If you only make the minimum payment on a payday loan, you’ll pay an astronomical amount of interest in the long term.
Strategize Your Debt Paydowns
Paying only the minimum amount due on your debt isn’t often the best approach, and you’ll ultimately pay significantly more interest. If you’re wondering how to pay off debt fast, Chunk is the solution for you. Our platform features a debt tracker, which enables you to view all your outstanding debt in one place. In addition, you can use a debt simulator to find the best paydown technique (i.e., the debt avalanche method or debt snowball method). Most consumers tackle high-interest debt first because it’s the most expensive in the long run.
Monitor Your Spending
We have many ways to spend money – credit and debit cards, checks, wires, ACH payments, and cash. Fortunately, our application lets you view your spending all in one place (at a high and granular level). For instance, you can choose a specific month and see how much you spent on transportation, entertainment, and housing. Our platform lets you set up financial notifications, such as balance updates, overdraft fees, and large transactions. You’ll receive notifications via text or email. Even if you’re not logged into the application, our timely financial notifications will ensure that you’re always in the know.
Have Open Conversations with Your Partner
If you share finances with your partner, you probably already know that achieving financial freedom is a team effort. Therefore, it’s crucial to have open conversations and find common ground. Both partners should create the budget, monitor spending, and set long-term financial goals. If only one person is involved, the other partner may not stick to the budget or lose sight of becoming debt-free. Our platform features robust expense management tools that you and your partner can use to make strides towards financial freedom.