Happy Saturday! Another week has mercifully ended and now that you’ve gotten (hopefully) and good night of rest, I want to take this opportunity to discuss a critically important topic…your road to financial freedom! I wish I could jump in a time machine and go back to 2011 and tell you to buy as many Bitcoin as you can, but we are not that fortunate and our road to financial freedom will be accomplished one step at a time over the next 20+ years. With that being said, I’d like to ask a question…What step are you going to take this weekend to get yourself one step closer to financial freedom? Below are a few ideas that could be the right next step for you:
Analyze and Create a Budget
Look, I understand that just about anything is more exciting than sitting down and sifting through your checking and credit card statements and filling in a budget spreadsheet! But, it you have never done this or haven’t in quite a while, I guarantee you will find some things that both surprise and terrify you. Analyzing your budget is a critical step on your road to financial freedom…and the tighter your budget is the more important it is to identify and rectify every inefficiency in your budget. Luckily there are a ton of free options that you can easily locate if you Google “Free Budget Spreadsheet” and find one that works for you. This site has a few that I like and this one in particular is the one that I’m going to use to analyze my own budget. If you’re intimidated with this task, contact your local Airman Family Readiness Center (AFRC) and ask about making an appointment to speak with an advisor who can assist you through this process. I’m going to assume that most military bases have free resources in this realm at the finance office so ask around and find the resources on your base for all my military peeps out there.
With your budget complete, you can look for any opportunities to cut expenses. Perhaps you’re only trimming $20-40 per month…but that’s more money that you could use to pay down high interest debt, fund your emergency savings or contribute to your retirement account. Everyone’s budget is different but understanding YOUR budget and spending habits is a vital step in your journey towards financial. So, how exactly are you going to make cuts from your current budget…
Hacking your budget could be as simple as spending less on shopping, eating out and entertainment if those are cuts you’re willing to make to save a little more each month. But, there are many other ways to make cuts from your monthly expenses. Recently I wrote a blog post with 8 different budget hacks that could save you some serious money every month and, again, a simple Google search will lead you to other great tips and ideas for hacking your budget and finding extra money that you could be putting to better use every month. True story, I followed my own advice and assessed my DirecTV account last week and though I am still under contract for another 10 months (after which I will be cutting the cord completely), I was able to choose a different package which affected zero channels I actually watch and saved myself $24 per month! Better than a kick to the face! So please, hack your budget this weekend!
Get Acquainted with your Credit Report and Score
For better or worse, your credit report and score have a significant impact on your financial life. It could be the difference between having to put a deposit with your local utility company or having to submit first and last months rent when moving…and, it can obviously affect your ability to make large purchases (car, house) at all or at a reasonable interest rate. If you need to know more to get started on this topic, please see my blog post from a few weeks ago on this very topic. With a little education and understanding, managing your credit report/score is pretty easy.
Assess your Emergency Fund
There is no hard, fast rule when it comes to how much and where you should have your emergency fund. The predominant guidance is 3-6 months of expenses in a savings account. For many, having 6 months of expenses to set aside is an unrealistic luxury but having no emergency fund at all is a recipe for disaster (and credit card debt). Life tends to kick you when you’re down but a little bit of emergency money ($500-1000) can soften the blow. Tire blowout, surprise tax bill, a trip to the ER…these things never come at an opportune time and unless you’ve got some cash readily available in a savings account or something similar, you may find yourself having to charge this emergency to the game (aka credit card w/ 27% interest) or having an expense that you cannot pay which will go to collections and f*** your credit score (see above regarding credit score). I know setting money aside is a challenge for many people, believe me, I’ve been there…seriously, I’ve been there! This is why having your budget in order is such a critical step in your journey towards financial freedom…budget surplus = money you can put away in your emergency fund for a rainy day…because life will rain on you and usually when you least expect it! Don’t take my word for it though, here’s Dave Ramsey’s thoughts on emergency funds.
Take a Look at your Retirement Plan
If you’ve more or less got your month-to-month finances figured out then take a good hard look at your retirement plan. Are you on track? Again, a Google search of “retirement calculator” will yield links to many different types of retirement calculators that will ask you questions regarding your current finances, your financial goals and desired retirement income to let you know if you’re on your way to meeting your goals. These calculators are a good starting point, but unless you’re extremely financially savvy, to get a true assessment of your retirement readiness, I recommend talking to a professional. Many brokerage services offer some kind of free consultation (as does the AFRC)…call their 1-800 number and ask that question or go online and do a bit of research. I can personally recommend former Air Battle Manager and now Financial Advisor Dennis Lott…I am positive that he will be able to help you and get you the assistance and resources that you need to ensure you’re on your path to financial wellness. Contacting a financial advisor is a great way to get a free (usually) vector check on your retirement gameplan!
Unless you’ve won the lottery, were born with a silver spoon or are an overnight crypto currency millionaire, your road to financial freedom is going to take hard work and consistent effort throughout your life. Like any long journey, it begins with a first step, and then another step and then, you guessed it, another step. I can tell you from experience that financial freedom is unlikely to happen by accident, so consider taking another step this weekend. Once you start to put things like budgets and savings in place, additional steps become a little bit easier! People like myself and Dennis are here to guide you on your way…so, please reach out if you need help! I sincerely wish you much success on your journey 🙂