The New Year is almost upon us, and with it will come a slew of New Years’ resolutions that, for many people, will be forgotten by February. But for those who make the resolution to become financially secure in the next year, that’s a goal that you shouldn’t let slip away. Achieving financial independence is a vital step in creating the future that you envision for yourself. So here are 3 tips to help you achieve financial security in the coming year.
Take Stock of Your Debts
First, make a complete list of your debts using this worksheet or a similar template. Include the name of the person or organization that you owe the money to, the exact amount you owe, the monthly payment amount, and the due date. If you’re struggling to remember all of your debts, try using your credit report to confirm what you owe. By having all of the different debts and total amounts in one place, you’ll be able to see a complete picture of your debt so that you can better manage it.
Of course, don’t just make the list and forget about it. You should be updating it regularly as you make payments. This also helps you to feel a sense of accomplishment as you watch your debts go down with every payment that you make. That feeling can be a big motivator in helping you to pay off those debts completely.
Consider Automatic Deductions
Now that you know what you owe, how do you go about making those payments? One good idea is to automatically deduct payments from your paycheck. Or, if that option is not available, at least ensure that you make payments on your debt prior to any other spending. When you see funds in your account, it’s natural to think, “I can afford to treat myself,” whether it’s to a night at the bar with friends or a pedicure for yourself.
By paying down your debts first, you’re forced to look at only the funds you have left, and manage your spending based on what is in your accounts. After accounting for all essential monthly costs (food, rent, utilities, etc.), any surplus income you have should be going directly towards your debt. At the very least, commit to putting at least 80% of your surplus towards debt repayment every month.
Find Additional Income
A vital step towards financial security is finding additional sources of income. This is something that many people overlook, because they believe that their regular 9-to-5 job is going to give them the security they need. However, this is the case for fewer and fewer people every year. With growing cost of living, increased college tuition, and rising housing costs, debt keeps climbing, and many people need an additional revenue stream to be financially independent.
This doesn’t mean that you need to start working two or three pages. Additional income can come from sources like editing college students’ papers, teaching music lessons to kids, or other things that you’re passionate about and talented at. Business consulting is one popular means of earning an income among entrepreneurial millennials, because there are countless niches that need to be filled, and many opportunities to earn an income.
Consulting coach Sam Ovens has helped thousands of entrepreneurs start their own consulting firms, and many of those have become fully-fledged businesses that earn six figures a year or more. So don’t be afraid to turn your “side business” into your primary source of income if the opportunity arises. You never know what may come of it.
With proper management of your spending, careful attention to your debt, and an additional revenue stream, achieving financial independence by the end of 2018 is within your grasp.