Financial freedom is the dream of many people around the world, but not everyone will achieve it. Credit cards, loans and unnecessary expenses are the enemies of your savings! If you are wondering what to do to work for yourself instead of banks and loan companies, you must read this article. It could be the beginning of a beautiful adventure for a financially independent person!

Define how much you earn

While it may seem strange, many people don't know exactly how much they earn. While this is most often the case for entrepreneurs, even people who receive their salary as a bank transfer may have difficulty with that. Do you include money spent on commuting or necessary clothing? Without knowledge about your income, you won't even determine what expenses you can afford.

Start noting your expenses

Start noting your expenses

The second step to achieve order in your personal finances is to note every transaction. Become your own bookkeeper, remembering even about the purchase of chewing gum or a subway ticket. This will get you to step number 3.

Start keeping a household budget

Ok, you already know how much you make and what you spend. The more self-determined will even make statistics on what they spend the most on and how much they spend on pleasures. The next step is a little more challenging, as it can stretch even over several months.
It's time to decide how much you can spend on each category of expenses. Expenses such as rent or tuition for your children's education will be a priority, and it's also important to determine your max expenses on food or pleasures. Try to have at least a little money left over each month. In the beginning, this can be as little as a few dollars. The size of the surplus is strongly related to your paycheck. If we had to give a specific value, it could be, for example, 2% to start with.

Increase your income

It's likely that if you're running a household budget, you have enough money to spend more, because you're involuntarily cutting back on less necessary things. Now is the time to increase your budget surplus or raise your standard of living. It's always a good idea to increase your income to defy inflation and improve your material status.
There are many methods to increase your income. You can improve your qualifications and get a promotion that way, work more during the day or use Paidwork. An extra cash injection, no matter if it's $5 or $500 will be very helpful, regardless of the situation you're in.

Cut unnecessary expenses

Even $10 million a year is not enough if you spend money on things you actually don't need. Of course, enjoyments are important, but do you really need another pair of shoes, 2 coffees bought while you're at work, or a new leased car? Plan your pleasures; instead of making small purchases, make bigger ones that give you more satisfaction.

Pay off credit cards and loans

Only when you get rid of consumer debts you can call yourself free. There is no more stressful thing than a credit card that you have to pay off. Instead of borrowing, save unless you are confronting a really necessary expense. Credit card interest rates are over 20% a year. How many stock market investments achieve such a rate of return? Almost none. And that's why getting rid of your credit card is the best investment!

Build a financial cushion

If you don't have a credit card and have promised yourself never to take consumer loans again, you need to be prepared for unexpected expenses, such as a car repair, the cost of fixing a tap or a visit to the dentist. Although financial advisors recommend raising six times your monthly budget, start with something simpler. For Americans it could be $1,000, for Brits it could be £800, and for Italians it could be €600 in cash. Accumulate an amount that will allow you to cover at least some of the unexpected expenses.

Start developing your financial knowledge

If you have spare funds, you may be thinking about investing. But before you open an account with a broker, invest in your knowledge! Learn exactly what stocks and derivatives are and how the economy works, and your finances will become much clearer. No one requires you to be an expert, but a solid foundation of knowledge will certainly help you establish financial independence.
Also look for advice on the Internet. There are a ton of websites and blogs about finance and investing. Even if something is paid, you can easily earn the money needed to buy these guides on Paidwork.

reach freedom

Start investing

If you have the knowledge and money, it's time to invest! Start with small amounts. You can think about buying silver, as well as stocks or ETFs. Any option, as long as you learn enough is perfect.
If you don't feel confident with investing, don't force yourself to do it. Not everyone has to be a financial expert. There are many seriously rich people who put their money in cash. That's ok too!

Pay off the mortgage

The last step is to pay off the mortgage. Why the last step? Because compared to loans and credit cards, home loans have low interest rates. Besides, everyone has to live somewhere, and paying off a commitment often worth more than $100,000 is a big challenge, especially for younger people.
Paying off the loan means a great relief, finally a really big expense disappears from your budget. We are keeping our fingers crossed for you!


The road to being free is long, but no one said it would be easy. This guide is written in such a way that even if you fulfill only part of the list, it will certainly get easier. Don't be afraid to come back to this article many times, you may also need more tips. A lot of finance-related content is published on our blog, so it's worth coming back here. We wish you that each new article brings you closer to financial independence!

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