Three steps to financial freedom
Today I am writing this article to help you achieve financial freedom. You will be amazed by the simplicity of the three steps I plan to show you. I love minimalism, and I believe personal finance should be simple and elegant. Therefore, without further ado, let me share my thoughts.
Disclaimer: This article intends to entertain you and should not be taken as financial advice of any kind.
I will assume you have a regular salary, paid monthly. The three steps I will propose below are the first things I normally do each month, after I get paid, in the following exact order.
Pay off high-interest debt.
Wherever you may live on this planet, chances are that you use a bank to secure your money and facilitate your transactions. According to this page, in 2021, approximately 70% of people in the U.S own a credit card. However, credit cards can be very dangerous for people who use them very often, as debt accumulates. Many people find paying off their credit cards difficult, and the interest rate is outrageous (10–15%). This means that if you fail to repay your credit card, the bank charges you with a price that accumulates extremely fast.
Create an emergency fund
I have discussed the emergency fund in the article “Ideal emergency fund amount.” I firmly believe that you MUST have an emergency fund. Life is challenging and unpredictable sometimes. Therefore, you must be prepared for everything. If you want to learn more about the emergency fund and its use, click the link above.
Invest
That’s the most challenging yet exciting part of the process. However, you must start investing only once you have completed the first two steps. I have written articles about investing, and you can find them on my profile page. Investing is a process that must be simple and minimal. If you think that investing makes you nervous, then you are doing it wrong, and you should either avoid it or learn how to invest with a professional. I repeat I am not a professional, and my articles shouldn’t be taken as guidance.
Conclusion
Once I get paid, I pay off my credit card every month, and then I invest. But, I invest because I have created an emergency fund and a sufficient amount in it. If I hadn’t constructed my emergency fund, I would add money monthly until I had three months of savings collected in it.
I propose those steps to everyone because it provided me with peace of mind and, at the same time, it was the most straightforward methodology I have ever followed. Let me know if it helped you too.
Until the next article, stay safe! Cheers!
