We talked about how saving is the first step towards financial independence. To eventually become financially independent, you need to save a decent amount of money.
Just like starting a diet, you should begin with small, manageable steps. It’s unrealistic to aim to save $2,500 each month if you only earn $3,000. Every bit counts, so start now with a goal you can achieve. Begin by paying off any debt you have.
Next, open a savings account and deposit whatever you can into it. Some credit cards offer a feature where they round up your purchases to the next dollar and deposit the difference into your savings. For example, if you spend $2.19, it will round up to $3.00, putting $0.81 into your savings. This small amount can add up over time without you even noticing.
Any extra income you get should go into your savings too. If you decide to rent out an extra room or receive a bonus or a raise, put that money into your savings.
I haven’t mentioned retirement accounts like 401(k)s for two reasons. First, I don’t live or work in the US, so I’m not familiar with those options. Second, I plan on reaching financial independence long before I turn 60, so I need money that I can access sooner.
Starting small and being consistent will allow your savings to grow over time. Automate a portion of your savings so the money is transferred as soon as you get paid. This way, you won’t even miss it or have to think about it.
No matter how little you start with, if you keep at it, you’re on the right track to achieving financial independence.