Here we have put together 10 tips for pursuing your financial independence from today. So, what do you think about making peace with your pocket and creating an investment portfolio?
1. Write down all your expenses
The first step is always lazy, but it’s worth it. To start, you need to have a financial plan and write down all your expenses.
You can use spreadsheets or cell phone applications. Even pen and paper will do, if you’re more adept at the old-fashioned way.
Record what your income is per month, that is, your salary. Then, enter how much you spend per month on bills such as: rent, water, electricity, internet, grocery and transportation.
Subtract your expenses from how much you earn per month, this way, you will have a free amount to spend on leisure and investments.
2. Map your debts
It’s time to be in the red, right? After you have mapped out all your variable and fixed costs, set aside a place in your financial planning to detail your debts.
How much do you owe? For whom? What is the expiration date? What are the interest rates? Enter all the information to get an idea of the final amount of the debt and how much you need to pay per month.
The next step is to place the debt portion within fixed costs, as you will have to honor this financial commitment every month.
On the other hand, if you can’t afford it, then you’ll have to go a different route. Talk to your creditor to reach a payment agreement that fits your budget and doesn’t suffer too much with interest.
Also don’t forget: don’t take on any more debt!
3. Seek extra income
When looking at your entire financial life on paper, what goes into and what comes out of your pocket after your salary drops, see what the situation is like. If it’s really ugly, it might be a case of looking for extra income.
Organizing a thrift store for clothes you no longer wear, selling homemade food to friends and acquaintances, freelancing in your area of expertise and even working with app services are some good options.
Any extra income that comes in goes directly to helping pay off debts. The objective is to pay off everything and have your finances in order to move on with your life without being in the red, and thus start investing.
4. Have an emergency fund
This is a super important tip to avoid falling into the hole again. An emergency fund serves precisely to prevent you from going into debt to resolve an unforeseen event. It’s money saved in case you become unemployed, have a health problem or break down your car, for example.
Part of the money left over from your budget (after you have paid off your debts) is what will create your emergency fund, or rather, your life jacket.
The ideal is to have saved the amount equivalent to six months of your monthly expenses. But don’t worry, it doesn’t happen overnight, it’s a construction of heritage.
You can have an emergency reserve behind investments such as public Treasury bonds or CDBs, which are private Bank Deposit Certificate bonds. These are conservative, safer and immediately liquid investments that will yield according to the linked index and also increase your capital.
At the end of the day, you will have money saved to resolve any unforeseen events in the future.
5. Start saving
Even if you have recovered financially, make it a habit to stop unnecessary spending. Try to better select your outings, dinners in restaurants and trips to the cinema. But the idea is not to cut everything out, after all, no one is made of iron, right?
Because if you take away all your leisure, there is a greater chance of becoming frustrated and no longer seeing any sense in financial organization. Therefore, the proposal is to donate and save part of your salary. Some experts say that the ideal is to save 10% of your earnings.
Furthermore, the more you save, the more you will have. A good tip is to put the money you save in an inaccessible place, avoiding the feeling and possibility of spending on impulse.
6. Invest your money
Without debt, with your finances organized, an emergency fund created and with money saved, the time has come to take the next step, start investing in earnest.
The amount you set aside and saved can yield much more and help you accumulate more capital, achieving your goals that you set out at the beginning.
To invest, first know what your investor profile is, which can be conservative (risk-averse), moderate (supporting more fluctuations) and bold (risk-loving).
7. Improve your knowledge
Learning more about financial education will keep you sharp and updated to keep your budget organized.
There are several ways for you to improve your knowledge. It can be through books or eBooks about investments and finance, and videos and other content on YouTube or platforms.
Another option is to take a course in the area. This way, you will know how to deal with your money and change your mind set to invest your savings and reduce your costs.
8. Include the family in the package
Not only you, but your family also needs to fall in line. From children to the elderly, they must have an idea of what to do with money. Even more so if they live in the same house and the costs are distributed.
Use and abuse home economics tips. How to reduce household, energy, water and supermarket expenses. Taking care of your credit card and helping with the amount of money saved makes all the difference.
9. Have discipline
Don’t lose discipline in any part of the process. The desire to kick the bucket will appear and spend on whatever you want, but try to think in the long term. Keep investments frequently and accounts up to date.
Follow your financial planning and keep your expenses under control. This way, everything becomes a habit without going back into the red. That cliché phrase “don’t trade a life for a moment” fits well here.
10. Analyze the situation
From time to time, analyze your financial situation. See how your investments are performing, whether your profitability is paying off or whether it’s time to diversify your portfolio further.
It’s also worth considering how your fixed expenses are, whether moving house or buying a car fits. So, if it doesn’t go as expected, you can change your strategy.
If you have already achieved any of your goals, you can think about others and chart the path to get there. Having an investment advisor or financial educator by your side helps when reevaluating your financial life. It’s a way to minimize mistakes and guide your journey to success