Everyone wants to achieve financial independence someday, but not everyone knows how to do it or even where to start. Most Americans in their 30s live paycheck to paycheck. Still, you can achieve financial independence before hitting 30 and remain there. In this blog post, you can learn how to become financially independent by the time you’re 30 years old.
Set Yourself Up for Success
The first thing you need to do when reaching for financial independence at age 30 is simple: save. For starters, focus on saving 20% of your monthly income. Then, put as much as possible into tax-advantaged accounts—including an employer-sponsored 401(k), if applicable. If necessary, you can also set up an individual retirement account (IRA). Don’t forget about health savings accounts or flexible spending arrangements, either. These options allow you to deduct money pretax to pay medical expenses not covered by insurance and other out-of-pocket expenses.
Improve Your Current Income Sources
It doesn’t matter if you’re earning $30,000 per year or $300,000—we all have room for improvement. In some cases, small changes can make a significant difference in your financial picture, and it’s always worth exploring all of your options. You might be surprised at how much money you could earn with an additional side gig. Maybe there’s space for an extra rental property in your portfolio, or maybe there are opportunities within existing assets you own (such as real estate investments). Either way, never ignore revenue-generating opportunities; you never know what opportunity will pay off big down the road.
Create Additional Income Streams
There are a lot of ways you can increase your current income. Take on extra projects such as freelancing or doing something part-time during work hours. Negotiate for a raise. Start selling something on online platforms like eBay, Etsy, and Craigslist. The point is to not only create additional income streams but also to enhance them.
You can also consider starting a business on the side since it’s one of the fastest ways to earn. Depending on what you’re looking for and how much you can afford to invest upfront, think of products and services that you can offer. But if you feel that you don’t have the money or time to grow and possibly fail on your first business venture, you can always opt for franchising as a more secure option. A home builder franchise opportunity, for example, can be a guaranteed success and an excellent way to start your own business.
Start Tracking Your Money Flow
When you get your first real paycheck, do something with it. Open a bank account, deposit it and start tracking your spending. Over time, you’ll begin to see where you can cut back or maybe how often you dine out for lunch—all of which will help improve your finances. If you want financial independence before hitting 35, these minor adjustments can lead to big rewards down the road.
Create a Budget
The best way to start living without financial burdens is through a budget. It can be one of your first steps when looking for ways to save money. Even if you never actually finish your budget, just making one and sticking with it is essential to establish good financial habits. After all, saving is more than just about penny-pinching; it’s to know where your money goes. If you create a budget but decide later that it isn’t working for you, don’t feel bad about ditching it. Don’t feel bad about changing things up as often as needed. What works well for other people might not work well for you.
Have an Emergency Fund
If you’re living paycheck to paycheck, don’t have any money saved up for emergencies, and aren’t currently considering setting aside a little each month, it might be time to put an emergency fund in place. If you need fast cash (for example, if your car breaks down or you need to pay for a doctor visit), an emergency fund will give you peace of mind knowing that you can pay for your expenses without going into debt.
Live Below Your Means
When it comes to personal finance, there’s one main rule that indeed dictates success or failure: Spend less than you earn. If you can spend more than you earn, things will be rosy—but most of us can’t. So start living below your means today and make it a habit. You may not see tremendous results right away, but at least you’ll be off on the right track. And who knows? Maybe you can even implement some of these suggestions so well that by your 30th birthday, you’ll have reached true financial independence.
The most needed step in saving money and reaching financial independence is simply committing to doing so. Write down your goals, start saving today, and tell yourself that you’re going to stick with them—no matter what life throws at you. It’s easier to stay motivated when you keep reminding yourself of these things.