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How To Reach Financial Freedom - 12 Habits
How To Reach Financial Freedom - 12 Habits
Unfortunately, too many people fall far short of financial freedom. Even without
occasional financial emergencies, escalating debt due to overspending is a
constant burden that keeps them from reaching their goals. When a major crisis
—such as a hurricane, an earthquake, or a pandemic—completely disrupts all
plans, additional holes in safety nets are revealed.
Trouble happens to nearly everyone, but these 12 habits can put you on the
right path.
KEY TAKEAWAYS
Set life goals—big and small, financial and lifestyle—and create a
blueprint for achieving those goals.
Make a budget to cover all your financial needs and stick to it.
Pay off credit cards in full, carry as little debt as possible, and keep an
eye on your credit score.
Create automatic savings by setting up an emergency fund and
contributing to your employer’s retirement plan.
Take care of your belongings—maintenance is cheaper than
replacement—but most importantly, take care of your health.
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more specific your goals, the higher the likelihood of achieving them.
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Next, count backward from your deadline age to your current age and establish
financial mileposts at regular intervals between the two dates. Write all
amounts and deadlines down carefully and put the goal sheet at the front of
your financial binder.
Ideally, the money for the emergency fund and the retirement fund should be
pulled out of your account the same day you receive your paycheck, so it never
even touches your hands.
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FAST FACT
Achieving financial freedom can be very difficult in the face of
growing debt, cash emergencies, medical issues, and overspending,
but—with discipline and careful planning—it is possible. That is the
ultimate goal of
The reason credit scores have so much weight is that someone with reckless
financial habits is considered likely to be reckless in other areas of life, such as
not looking after their health—or even driving and drinking.
This is why it’s important to get a credit report at regular intervals to make sure
that there are no erroneous black marks ruining your good name. It may also be
worth looking into a reputable credit monitoring service to protect your
information.
Poor health maintenance, on the other hand, has both immediate and long-
term negative consequences on your financial goals. Some companies have
limited sick days, which means a loss of income once paid days are used up.
Obesity and other dietary illnesses make insurance premiums skyrocket, and
poor health may force early retirement with lower monthly income for the rest
of your life.
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Although some states—including California, Hawaii, Washington,
Massachusetts, and Michigan—limit or prohibit the use of credit scores to
determine auto insurance rates, many companies do use a credit-based scoring
system to decide whether to insure you and how much you will pay. [2]
The Bottom Line
These 12 steps won’t solve all your money problems, but they will help you
develop the good habits that get you on the path to financial freedom. Simply
making a plan with specific target amounts and dates reinforces your resolve to
reach your goal and guards you against the temptation to overspend. Once you
start to make real progress, relief from the constant pressure of escalating debt
and the promise of a nest egg for retirement kick in as powerful motivators—
and financial freedom is in your sights.
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