An important aspect of being a thriving adult is knowing how to be financially savvy. Keeping track of your finances and instilling good financial habits enables you to ultimately reach financial stability, and to reach your goals.
No one wants to be worried about money, or find themselves in financial insecurity. But adding these financial tips into your wheelhouse, you too can take control of your finances to make your money work for YOU, and not the other way around.
1. Know the Exact Amount of Your Debt and Have a Plan to Pay It Off
This might be difficult for some. According to the Federal Reserve, American household debt climbed to $14.56 trillion in 2020. But moving forward, you do not have to be a part of that statistic. Understanding the exact amount of money you owe to other people can truly be overwhelming when you know the number is large. But knowledge truly is power and this is the first step in taking control of your finances and becoming financially independent.
Sit down with your favorite cup of coffee, some good music, and a notepad. Go through every student loan, every credit card, and the interest that is accumulating for both. Compare that to your income. How long will it take you currently to pay off this debt? How can you make that time shorter?
Keeping track of your finances in this way is going to take a lot of willpower, but will definitely be worth it in the end when you achieve financial freedom.
2. Have Multiple Streams of Income
There are many creative ways that individuals can establish multiple forms of income streams. Investing is more accessible than ever with personal apps like Robinhood, and the digital age has made passive forms of income streams incredibly attainable.
There is something for everyone, no matter what your own personal expertise or interests.
Are you good at drawing? Make teeshirt designs and sell them on sites that will automatically print and send to order. Do you excel at words? Write ebooks and sell on Amazon. Like making videos? Start a Youtube channel that eventually can bring you steady income from ads and partnerships. Have extra space in your home? Rent out one of the rooms.
There are plenty of options out there that will require a lot of work in the beginning but will eventually work on their own and continue to bring you cash flow.
3. Be Your Own Bank
This kind of process is called ‘infinite banking’ and was developed by a finance expert called R. Nelson Nash. Essentially this method uses whole life insurance policies as the base in which individuals can contribute and then take out loans against the premiums they have accumulated in their own policy.
This means that you are, in essence, borrowing from yourself. And in this case, the interests rates are predetermined at the start of your insurance policy and get put right back into your own policy, not the hands of the bank.
This kind of financial step is not the best for everyone, so make sure you do a lot of research on infinite banking before you decide if it’s for you.
How Will You Be Financially Savvy?
You have the power to be financially stable. If you take some of these financial tips that are the practices of many financially savvy people, you will be well on your way to financial freedom.
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