(DailyThrive.com) – Financial freedom can be a difficult topic to discuss. It isn’t as simple as how much you save compared to how much you spend; you also need to think about how your mind perceives financial independence in the first place.
What we’re trying to say, here, is that the exact definition can vary depending on the person. One individual might see it as simply living comfortably, while another wants enough money to vacation for at least half of the year. Neither of these is truly wrong, but people on both sides often struggle with the same hurdle: the subconscious mind.
Susan Hayes Culleton explains in this video from VectorVest:
Here’s Why You’re Stuck
- Being in the wrong money mindset. Holiday bonus or a lump sum of money from your parents? That money is burning a hole in your pocket. You have to spend it. This mindset can lead to disaster, especially if you have outstanding debts or past due bills you need to pay. It’s ok to have fun, but always pay your debt down before you are able to blow those extra dollars you just acquired.
- Not having a rainy day fund. Budgeting 101 means having enough money set aside for emergencies, debt, household expenses and retirement. Anything leftover can go to a rainy day fund. But if you don’t have one, don’t pull from one of those funds just so you can go on a shopping spree. Set aside a separate account to build up a fun spending account. This will help keep finances on track and not take away from building your nest egg.
- Not diversifying your income. No matter how much money you make, you need to set some aside for your future. Generate passive income that will grant a high return as time goes by. Use your 401k to invest in mutual funds. Consider high-yield bonds or dividend-paying stocks as well. These are small ways that you can invest money for the future rather than easily spending on impulse.
Obtaining financial freedom starts with getting into the mindset of investing your money and paying down debt first. It’s easy to let bills slide, but it will hurt you in the long run. Don’t let money mistakes hold you back. With a little planning and putting money away, you’ll be closer to your goal of financial independence.
~Here’s to Your Success!
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