I love checklists and I admit, I am one of those people who make a checklist for anything I want to make a progress in. If you have a big goal, checklists can help you break it down into smaller, more achievable goals or milestones. This is most especially important for goals that don’t happen overnight.
Finance

My Financial Freedom Checklist -Steps to Financial Independence

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I love checklists and I admit, I am one of those people who make a checklist for anything I want to make a progress in. If you have a big goal, checklists can help you break it down into smaller, more achievable goals or milestones. This is most especially important for goals that don’t happen overnight.

I can’t just blindly take a stab at this financial journey thing without a clearer plan on how to achieve it, right? I figured, I need to have a roadmap of some sort to reach it. So, today, I made my own financial freedom checklist so I can see the big picture a little bit clearer and know what steps to take.

I love checklists and I admit, I am one of those people who make a checklist for anything I want to make a progress in. If you have a big goal, checklists can help you break it down into smaller, more achievable goals or milestones. This is most especially true for goals that you can’t achieve overnight.

I hope this financial freedom checklist can help you set the ball rolling, check your progress and ultimately reach that goal.

Know Where You Stand Financially

 

It can be challenging to go anywhere if you don’t know where you are right now. Before you make any progress, you first need to know how you stand financially at this point in time. Know your net worth by listing down all your assets and liabilities. Subtract your liabilities from your assets and the figure you get will now become your net worth. If you’re at a negative, then you have more serious work to do. You’re running on a financial deficit.

But if you get a positive figure, then you’re off to a good start. Either way, you need to know your net worth so you can make a more concrete financial plan as you move forward in this journey.

Create A Budget

 

Your budget will dictate your cash flow and allow you to allocate the suitable amount for each of your expenses. A sound and realistic budget will prevent you from going into a financial deficit and steer clear of the paycheck-by-paycheck lifestyle. Your budget will guide you into properly prioritizing, allocating and using of your hard-earned cash as aligned to your financial goals.

Build Your Emergency Fund

 

Your emergency fund is going to be your first line of defense for any unexpected expense so that you’ll not ruin your budget, whip up your savings and get into deeper debt while fixing the issue. Some people start by building $1,000 for their emergency fund and then they put the rest of their money towards savings. Others are more comfortable building a heftier fund to cushion for bigger expected expenses, typically ranging from three to six months’ worth of expenses.

The bottom line is you need to build an emergency fund first so you get to stay on track despite the curve balls life throws at you.

By the way, I am currently working on this. Read this post on how I plan to save $3000 in 5 months.

Other Recommended Readings:

The Total Money Makeover By Dave Ramsey
The Millionaire Next Door
Dave Ramsey's Complete Guide to Money

Pay Off Your Debts

 

Even if you have already worked on the previous steps, it can be difficult to move forward if you’re indebted. Debts can slow down your progress in accumulating wealth because you’ll always feel like there’s a looming dark cloud over you.

Settle all your consumer debts first or at least crush the ones with the highest interest so you can begin investing for your future. Credit card bills, personal loans and other consumer debts need to exit the picture so you experience a less stressful financial life. As you move through the process and remove debt after another, you’ll see how much money and freedom you’ve been missing out and realize that debts have been holding you back from enjoying your income your own way.

Live Within Your Means

 

This is an old but proven trick from people who have achieved financial freedom themselves. Living within your means simply implies that you don’t spend more than what you earn. It’s even ideal if you can budget your income in such a way that there’s some surplus money for you to save and invest. You can live within your means by setting a budget, separating needs from wants and using your money in order of priority. It will take discipline and commitment to lead this kind of lifestyle, but it will also fast-track your progress towards financial freedom and helps you break free from the paycheck per paycheck lifestyle.  

 

Related Post: How Minimalism Can Transform Your Life and Finances

Establish Your Career And Save For Retirement

 

Your job, career or business supplies you with income you need to achieve financial freedom. It is best to start assessing where you want to be in your career for the long term. It is important to see yourself growing in your chosen career path because your earnings also potentially grow along with it.

If not, evaluate yourself and career goals now to determine your next best move.

Along these lines, it is also essential to already shave away some money for your retirement. Most workplaces offer retirement employment match. Take advantage of it as it is practically free money towards your nest egg in the future. It is also great idea to start working out on your retirement fund apart from the employer match, in form of other investments like retirement savings, stocks and bonds.

Strategize Your Investments

 

You’ve also probably heard experts say “don’t put all your eggs in one basket.”  At this step, you need to evaluate every single investment and plan out how you want them to work out for you in the long run. During this evaluation, you need to determine your tolerance risk for each investment vehicle. You’ll also need to gather pertinent info about each investment such as ROI, interest rates, maturity dates and other policy details. Plan to invest as soon as you can because the power of compounded interest over time will be in your favor.

 

 Get Protection

 

Typically, employers provide insurance benefits to their employees. If you’re working full-time, you may already have some coverage for life, health and disability insurance. Still, it pays to look at your policy as your life circumstances change to ensure that you’re getting adequate coverage.  Your insurance acts as an extra layer of cushion for life’s uncertainties. You don’t want to use them, but you’ll feel at peace knowing they’re there.

 

If you’re not satisfied with the coverage, it’s time to tap for extra coverage coming outside your workplace. Do make sure to get the right plan and coverage for your needs and do a regular evaluation to get the right protection at all times.

 

FINAL WORD

 

There’s one thing this checklist proves to us – you don’t have to be ultra rich to become financially free. However, you do need to work on the negatives and turn them into positives.

 

We need to work on improving our lives through careful evaluation of our options and making decisions that serve our best interests. This is a simple a strategy that we can follow to live a more meaningful and financially-free life. The key is to simplify your finances and bring them to manageable bits so you can take most of the control and stay on track during your financial freedom journey.

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24 Comments

  1. Brilliant tips! It’s great to create space and look at your finances strategically. This has given me the motivation to do just that – thanks!

  2. Very well written post. You seem to cover all angels to becoming financially free. I can’t wait to see your printout.

  3. great tips that many need to hear. I have stumbled and fallen but have always gotten back up Thanks for the tips you shared

  4. Great information! This gives me a great starting point.

  5. Great tips and totally true. I LOVE how you added that subscription box at the end. You are giving me such a great idea! Love this blogging community!

    1. jane

      Me too!lovin blogging

  6. I love your post because your tips are right on target. Having an emergency fund is something many people forget to save up for, and it is a must for financial stability. Thanks for sharing

  7. Thanks for sharing these helpful tips. I totally agree, that you don’t need to be rich to be financially free.

  8. Thank you for good information! As you mentioned, it’s really important to set a goal and achieve it step by step. I downloaded your check list! So I’ll try it!!

  9. There is some great information here and it has caused me to re evaluate my situation and make some necessary changes.

  10. Nice strategies and tips for all of us, ofcourse if we want to be successful financially we must build a goal first. which mostly people ignore, its like dieting they’ll always say “oh It’s for tomorrow”

  11. Shannon Sawicki

    Great tips here and love the printable checklist….I have some work to do. 🙂

  12. Lisa Rios

    I definitely try to live within my means and save. It can be difficult when you have the “squirell” syndrome though.

  13. Thank you for this. I’m 22, still in college, barely scraping by and looking for a job. I don’t want to be irresponsible when I start making money. I want to save it and definitely have an emergency fund. Printing out that checklist!

    1. jane

      Hi August! That’s really good that you’re thinking of that now. At 22, I didn’t have that concept of saving money … All I had in my mind was to buy clothes… so look, financially, I’m pretty much still where I was 10 years ago. Hope the checklist will help you! Thanks

  14. Kiwi

    Having an emergency fund is so important and people will not realize it until that emergency pops up. That goes hand and hand in budgeting, but great tips on having a financial freedom checklist!

    1. jane

      Very true! I realized how important it is to have an emergency fund only when I faced it and it was really hard. And money was even harder to find when I needed it.

  15. Sian

    I definitely need to work on these tips! I have cut my debt down significantly but need to work on having an emergency fund

    1. jane

      Good luck Sian! I have another article on building an emergency fund. You might want to check it

  16. Thank you for such a well structured & logical approach to this topic. Bookmarked!

    1. jane

      Thank you !

  17. I love the idea of the emergency fund, I will look into that for sure.
    It is difficult for me to save, but I must try harder, thank you for motivating me 🙂

    1. jane

      Thank you and good luck!

  18. Nice Tips for financial freedom.

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