My views towards money have shifted pretty dramatically in the last few years.  From the ages of seventeen to twenty-seven I was in a relationship with a man who was in a secure and well-paid profession.  As our relationship was serious, I never gave a lot of thought to my own finances.  I wasn’t too stressed out about saving for the future.  And when that relationship ended, I was faced with the very scary prospect of having to finance myself through my future.  I realised that if I wanted to own my own house one day, or have a retirement plan or be in a position where I wasn’t living hand-to-mouth each week I needed to do something.

 

I made the mistake of confusing having a boyfriend with having long-term financial security.  Please don’t think that I got into the relationship for the money.  Or that I didn’t work hard to pay my own way.  It’s just that whenever I’d considered financial planning for the future, I didn’t put a lot of thought into it because I imagined that my future would include another person who was financially stable.  And it was a rude awakening when I realised that wasn’t going to happen.

 

Once the dust had settled on my break-up, I had to think very carefully about the kind of life I wanted to have.  When I got to thinking about my future, there were a lot of things I wanted: a house, overseas travel, a secure retirement, which weren’t going to happen unless I made some changes and took matters into my own hands.

 

Now I feel that I’m on the road to financial freedom.  I’m nowhere near that coveted place yet, but I’m travelling the right path.  Today I wanted to discuss some of the things that I’m doing to move towards financial freedom because I think it’s a really important topic that not enough people consider carefully.  I understand that I’m in a privileged position and that not everyone is able to take the same steps that I am.  But I wanted to share my own experiences to give you some ideas and encourage you to think about your own financial future.  So here are the things that I do to help improve my finances…

 

Work full time

When I moved out on my own I had a choice: I could continue to work part-time and have just enough to pay my expenses or I could look for a full-time job and earn enough to begin saving some money.  This wasn’t an easy decision for me.  As you may know, I have depression and was very worried about the toll that full-time work would take on my health.  But I decided to give it a shot when an opportunity for a full-time job presented itself.  It was a hard transition, but I adjusted and ultimately I’m very pleased that I did it.  I now earn enough that I can live comfortably and still put aside some savings each week.

 

Live well within your limits.

When I first started my full-time job, I went a bit crazy with my pay cheques.  I started taking myself out for meals several times a week, splurging on clothes and household items that I’d been coveting and buying gifts for family and friends.  It was a lot of fun and I think I earned a bit of play-time.  But after a month or so of this I noticed that my bank balance was at a standstill.

 

If you want to put away money for a rainy day, you need to live within or below your means.  Find ways to save money and don’t go crazy with luxury spending.  You don’t have to live like a miser, but you also can’t live on a champagne budget and expect to save cash.

 

Have a savings plan

It’s not enough to simply decide to save, you need to decide where your savings are going to go.  Last year I opened up a dedicated savings account.  It’s a high-interest account and I get a reward every few months if I don’t make a withdrawal.  I don’t have a card attached to this account so if I want to withdraw from it I have to physically go into the bank.  I aim to put at least a little from each pay into this account.  I have a list of specific big-ticket items that I’m saving for, such as an overseas trip and a house or apartment.  It really helps to have a dedicated account for your serious-grown-up savings that’s tricky to access so that you won’t be tempted to dip into it for discretionary spending.

 

Put money away for retirement.

Superannuation is unsexy but important.  If you want the best possible deal on your super, you need to shop around a bit. Try to find a fund that works well for your lifestyle and financial profile.  If you can, try to make a voluntary contribution to your superannuation every now and then.  In Australia, if you meet a certain income threshold, the government will match any post-tax super contributions you make.  There are also some super funds which will give you a bonus if you make voluntary contributions.  So it definitely pays to put some cash into your fund from your own pocket wherever possible.

 

 

Make payments off your debts

Debt is one of the biggest obstacles to financial freedom.  I have never let myself have a credit card, so I am thankfully free from credit card debt.  But I do have a fairly significant HECS debt from my time at university.  So I make a point of making voluntary payments off this debt when I can.  Once your debts are repaid, you’ll have less liability hanging over your head.  And then you can just focus on saving.

 

What do you do to work towards financial freedom?  Are your future finances something you’ve given much thought to?