Planning and investing tips to help create financial freedom
Financial freedom is the long term goal of everyone as they enter the workforce. Some entrepreneurial minded people think “hitting it big” will happen quickly while others take the slow and steady approach to creating wealth.
By following the tried and true methods for accumulating wealth explained in this article you may be able to safely maximize growth from your investments.
Start investing early and often
Investing is one way to avoid spending money on superfluous items. While saving is great, investing is often better. Why? Because your money grows without you having to do anything other than keeping it invested.
There are a couple ways to consider to get you started investing immediately as you enter the workforce:
- Playing the stock market: Even if you don’t know much about the stock market you can start by putting money in mutual funds. These are groupings of asset classes with relatively low risk and often a steady rate of return on your investment. You can open a stock market exchange account at trusted brokers to get started.
- Investing in higher risk asset classes: When you’re young and just entering the workforce you may have the luxury of investing in higher risk asset classes like cryptocurrency. This is because you have more time to make up any losses before you retire. Research the different cryptocurrencies to find altcoins with use cases you believe in. Worldcoin is an interesting example of an altcoin that provides users with a verified digital identity by scanning their iris which cannot be spoofed. Worldcoin has seen significant user adoption with reportedly over 16 million users registered since launch in July of 2023. According to Binance, Worldcoin has a market cap of $607.88M with a price of $1.52 as of September 2024.
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Set financial goals
Create healthy financial habits when you’re young and be disciplined in following those steps. You should create short and long term financial goals. For example, a short term financial goal could be to save $10,000 to have in case of an emergency. A longer term goal could be to save for a new home.
When creating your goals, make your goals specific and measurable. Instead of saying, “I want to be better with my money” you should specify by saying something like “I want to cut my entertainment budget by $500 next month.”
By making your goals specific you can measure how successful (or not) you are at hitting them.
Use financial management tools
Now that you have specific and measurable goals you should use a financial management tool to keep your income and expenses organized. Accounting software can be used to download all of your credit card transactions to organize them into categories. This could also make tax time a lot easier to manage.
Keep your expenses separate from your business expenses
If you’re a business owner it’s important to separate your personal and business expenses. Mixing personal accounts with business accounts can give a false sense of “wealth” and motivate you to spend more than what you have right now. Mixing your personal and business expenses can also create more complexity when it’s time to calculate taxes.
Budget out a monthly salary that you pay yourself from the business and use that salary to manage your personal expenses, save and invest.
Don’t ignore the small expenses
Services that charge directly to the credit card can be traps for those who want to save. Track every expense each month to ensure you know how much you’re spending on all of the subscriptions services you sign up for. Most of these will offer a free trial period before they start charging you. Keep track of that and cancel any that you don’t plan on continuing to use and pay for.
Tracking every single expense line item will also help you pinpoint any fraudulent charges that may come through on your credit card.
Conclusion
Your income is your greatest wealth building tool so take care of the money you earn. Track your expenses, reduce unnecessary spending and invest as much as you can as early as you can. The long term exponential growth from invest early in your working years could set you up for retirement even if you don’t have a large salary.
This content is for educational purposes only. Your situation is unique, and the products and services discussed here may or may not be right for your individual situation. This is not an offer of financial advice, or financial services. Performance information may change. Past performance is not indicative of future results. All investing includes the risk of loss. The opinions expressed here are that of the contributor alone.
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