Ways to Manage Money to Achieve Financial Freedom

Financial freedom has become the desire of many young people today. Here are money-smart tips that can be applied to achieve it.

    Financial freedom is a dream for many people today. People who are financially independent do not mean they are no longer working, but they are free to do any work without pressure.

People who are not financially independent will work under pressure because their financial needs have not been met.

The hope, after achieving financial freedom, people can do whatever they want. Have assets that can be used as passive income as needed.

Here are money-smart tips that can be applied to achieve it.

1. Smart in managing income in a specific, measurable, achievable, realistic, and timely manner.

There is an income allocation strategy that can be used, which is 50:30:20.

After getting income such as monthly salary, 50% can be used for needs in a month, 30% for wants, 20% for investment.

2. Prepare emergency funds.

Your work may not always run smoothly. Like the Covid-19 pandemic, which made people stop working for two years. Having some extra funds available for emergencies is an important component of your overall financial well-being. With enough cash to cover expenses between six and twelve months is a general recommendation. The emergency fund required ideally is 12 times the salary. (securian.com)

3. Long-term Financial Planning and make adjustments over time.

To achieve financial freedom, you can make financial plans based on a certain time period.

For example, within a period of 25 years, or you want to work until the age of 40, you must think about how much money you need to allocate for financial freedom.

4. Invest by checking risk profiles.

You should know the risk profile of the selected investment asset class. For example, you want an asset that goes up fast, even though the risk is big, it can be taken. (If you are willing to take the risk).

There are also a number of investments that can be taken with a low risk profile, for example deposits and mutual funds.

5. Smart shopping management

It is advised not to be tempted by discounts during the shopping festival. So, spending money must be according to need. Shortcomings in shopping should be covered by not taking advantage of pay later facilities or online loans, but cover them by saving or increasing income.

6. Be smart in using various savings

There are various types of savings, such as savings for business transactions, investments, and for future plans that can be adjusted to your needs, so that the funds do not leak everywhere.

So, if you want to go on vacation, don't use the installment facility (paylater), but set aside the money through the savings.

7. Maximize investment return.

Many people forget to check the return on their investment. In fact, if you like to check, the return on your investment, the profits can be used for investment in other aggressive asset classes. For example, you can earn interest from bonds, the proceeds can be used to increase assets by buying other, more aggressive investments.