Financial Freedom Part 1
Living from payday to payday is nobody’s idea of an ideal life. What most Kiwis aspire to is to have a comfortable life free of financial stress. There are eight simple steps that will help take you on your way to financial freedom and here are the first four:
Step One – Spend less than you earn
The ability to spend less than you earn is the one thing that separates wealth creators from those who stay trapped in the cycle of living from payday to payday. Decide how much you want to save each payday to achieve your goals, and set a budget that will enable you to live on what is left.
Step Two – Join a subsidised superannuation scheme
One of the best returns you will ever get on your money is to enrol in KiwiSaver. You will be eligible for a $1,000 Government kickstart, a tax credit of up to $1,040 per year and an employer contribution. Some employers offer subsidised schemes that have equal or greater benefits when compared with KiwiSaver.
Step Three – Pay off short term debt
Short term debt, such as credit or store card debt, usually arises because you either have unexpected bills or you are spending more than you earn. Stop paying interest and make getting rid of short term debt should be one of your top priorities.
Step Four – Set up an emergency fund
Life doesn’t always go according to plan. Setting money aside for unexpected events, such as a drop in income through redundancy or sickness or increased expenses such as car repairs and dental bills, will help you keep out of debt and avoid paying interest.
Next week we look at the final four steps that will take you to your goal of financial freedom.