Achieving financial independence is a goal many of us strive to achieve. Whether you are building an emergency fund or getting your own place, having financial freedom can relieve stress and help you plan for the future.

But what is financial independence? It comes down to these principles:

• Being in control of your finances
• Supporting yourself financially without the assistance of others
• Knowing how to manage your finances

Here are 5 tips to ensure you always have the means to be financially independent:

 

1. Set goals

The best way to achieve a goal is to make it measurable. Set a financial goal, break it down into smaller objectives and track your progress along the way. Your first goal might be to pay your own phone bill or reduce your monthly expenses. No matter how big or small, make sure to share these goals with friends and family so they can encourage you on your path to independence.

 

2. Take control of your cash flow

Now that your goals are clear, the next step is to fully understand your cashflow. Cashflow is the total amount of money you have coming into your account versus going out. When you have full awareness of your cashflow you can build financial slack with the money you have left over after all of your expenses. Make sure to check out our spending plan worksheet to ensure you know where your money is going every month.

 

3. Get insurance

Insurance can play an important role in an emergency. Having enough insurance will reduce your financial stress and allow you to maintain financial slack in unexpected situations. Make sure you take these factors into consideration when building your spending plan. Your health, vehicle and home insurances are some of your most important tools in achieving financial independence since out-of-pocket costs add up and become expensive.

 

4. Eliminate debt

Many of us have credit cards, mortgages or student loans to pay off. Being able to manage your debt is an important way lenders determine your ability to borrow. Take inventory of your debt payments each month and include it with your other expenses when you set up your spending plan. With this strategy you can see if you can afford to pay down debts faster with any financial slack you find in your spending plan. For more information on debt, check out our articles “Getting Ahead of Your Debt” or “Debt Consolidation”.

 

5. Save

Once you take control of your cashflow and eliminate debt, you can focus on building financial slack. Saving for the future or unknown events may feel like you are sacrificing resources now, but you should think of it more as valuing your future self. You will have more money during retirement if you decide to invest your money today. The same idea applies to building emergency savings, long-term savings or an investment portfolio. Remember, achieving financial freedom may not be quick, but it is possible. Be mindful of your spending and stay committed to your savings goals.

 

Ready to get started?

Visit your neighborhood Financial Health Center or make an appointment with a Member Relationship Specialist– real people who will meet you where you are in your life and help you make progress towards your financial goals.