Fireworks, barbeques, parades, and parties – there’s plenty of reasons to like the Fourth of July. Yet the beloved summer holiday is about more than just an excuse for a day off work — it’s about taking a moment to reflect about freedom. At Turbo, we think about freedom a lot, particularly financial freedom.
But what does financial freedom mean exactly? Everyone seems to have their own definition. Whether it’s not having to order off the happy hour menu or being able to Postmates chicken nuggets to yourself without second-guessing the spend, everyone’s version of financial freedom is completely unique to them. However, the path to freedom is quite similar for all of us because we all face financial reality checks at one point or another.
So how do you emancipate yourself from your financial burdens and actually get to your financial independence day? There are a number of money moves that everyone can easily act on to help you break free.
Think You’re In The Red? Find Out Where You Stand
You might think that your financial independence day is years away, but have you ever stopped to check on your true financial health status? Most think that financial health simply means the amount of money they have in their bank account, but it is actually more holistic. Your credit score, debt to income ratio, and verified income are the three key numbers that can tell you if you’re in a great or not so great place financially. Using Turbo will identify your three numbers to easily show you where you stand. (And you might be pleasantly surprised!)
While this seems pretty straightforward, the first step to getting on the path to financial freedom is knowing where you are and where to start focusing your efforts. But don’t get discouraged if you’ve got some work to do.
Don’t Be Blue About Where You’re At — Set Goals
If you’re a Turbo user, you already understand the value of financial awareness. You can’t improve what you can’t measure! You can’t measure without intent! You can’t have intent without a goal!
The earlier you define a goal, the earlier you can map a route to achieve it, and the earlier you can measure whether you’re on track. Pro tip: write your goals down, in detail. When you can visually track your goals and see if you’re meeting them, you can start holding yourself accountable and ensuring that you stay on course.
But a word of caution: be sure to set realistic goals for yourself. Don’t wake up one day and say “I think I’ll pay off my entire $10,000 credit card debt today.” If you can do this that’s awesome, and this can help improve your debt to income ratio, but if we are being honest, most people can’t afford to pay off their entire credit card in one large chunk. Match your cash flow to your goals. If you know you have a number of large expenses coming up, it’s better to have an outstanding balance on your card that you’re managing over time than going further into debt.
Raise The White Flag And Surrender To Your Future Plans
We know it’s hard to make future plans when you can barely make a decision on what you want for dinner, but one of the top strategies that debt-free people have is thinking long term. When the focus isn’t on immediate gratification, you can make smarter decisions. Sure, it would be nice to have this season’s trendiest shoes, but are they helping or hurting your chances of achieving your long-term financial goals? This doesn’t mean you can’t ever buy shoes! It just means you have to save up before you buy them and know what you might be giving up as a result of the spend. This also gives you the time to consider if you really even like the shoes and avoid impulse purchases.
Think about where you want to be in 5 years. Does that include a house? Marriage? Kids? A month-long vacation in Europe? If your future includes one of these options, this much is certain: it’s going to be expensive. Take the time to map out how you’re actually going to achieve these future goals. Try developing a budgeting or investment plan and track your progress. By mapping your future, you can set reasonable expectations for how to change your current financial state.
We’re All Green At Finances — Give Yourself A Break
Real money talk: it’s hard to stay on track when life gets in the way, so take things one day at a time. But be prepared if life throws you a curveball. Build up an emergency fund to protect yourself from going further into debt when you get hit with a surprise. We are all far from perfect, so even if you fall off the wagon and buy those pair of shoes, don’t let that deter you from getting back on track to your financial independence day. You can always make shifts and adjust your course along the way.
Take note that each of the tips above are part of a strategy — not a shortcut. No matter what, ambitious financial goals take hard work, reflection, and dedication. Keep an eye on important financial numbers with Turbo, including your credit score, verified income, and debt-to-income (DTI) ratio.
If you’re just starting on the path to financial freedom, that’s ok! Tell us how you define financial freedom in the comments below or tag us on social with #RealMoneyTalk.