A path to Financial Freedom involves more than just saving a little each month. It requires financial planning, goal-setting and actionable steps to achieve your objectives says registered chartered accounting firm Drumm Nevatt & Associates.
Review your personal budget and identify areas to trim
The first step towards financial freedom will always be spending less than you earn. While this does sound easy enough, in practice it can often be hard to do. It all comes back to having the right mindset and keeping yourself in check. One of the simplest ways to do this is to use the “pay yourself first” method. This is where you set aside money each payday into a savings account by automatic transfer.
Refine your processes to ensure you get paid faster
Take time at the end of the year to review all your processes to see if they can be finetuned to increase the rate of which you get paid. Having an efficient process ensures you will be paid on time which is key in maintaining a healthy cash flow and is how a business survives and grows. Find out more and get our tips for being paid faster here.
Get ahead of your debt
Getting out of debt can be a struggle both mentally and financially. That’s why it’s vital to have a plan to make yourself debt free. If you have several loans to repay, focus on repaying a single debt while keeping the rest at the minimum payment. “Pay off the highest interest rate first, then rinse and repeat until you’ve paid them all off,” says Craig Nevatt, Director at DNA.
Having an emergency fund safety net can be a life saver when you face unexpected events such as job loss, illness or unforeseen bills in your business. “Ideally your emergency fund should be the equivalent of around three months’ living expenses,” advises Craig. Not only is this a smart move financially, it also gives you peace of mind that if the unthinkable happens, you and your business have time to get back on your feet.
Review and minimise expenses
While you should be doing it all year, now is a great time to review your expenses for the year and see where you can minimise expenses as a whole. Identifying wasteful expenses may require you to think outside the box and be open to an idea of changing the way you do things. It is key to remember that cutting costs is good, but it’s also a balancing act. Make sure you continue to invest in things like training and new product development as they are key for the long-term health of your business.
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