Achieving Financial Freedom

Do you find yourself living paycheck to paycheck? Or wishing you could pay for unexpected expenses without a credit card or loan? Or wanting to save for the future?

Everyone has a different definition of financial freedom. Sarah Nelson, assistant vice president area manager at Town and Country Bank, defines it as “the ability to identify what your financial goals are and having a plan to achieve those goals.”

She recommends these steps to gaining control over your money:

1. Define what financial freedom means to you

Is it not living paycheck to paycheck? Being able to save for retirement? Paying off a student loan? All of those? Don’t choose a goal that’s so overwhelming it seems undoable. It’s better to start with one goal and when you achieve it, work towards another. A banker can help you identify your goal.

2. Develop a budget and stick to it

Town and Country Bank and Peoples Prosperity Bank have tools to help. A banker can tell you about some while others are available on this website in the Services and Tools section. One is the Savings Goal Calculator, others are the CD Calculator and Mortgage Calculator. You can also find budget forms and articles through the Internet, as well as budget apps for your phone.

To help, keep track of your expenses, Nelson says. “What are you spending money on? How much is that cup of coffee in the morning? How many times a week do you eat out? Is that money you could use to pay down debt or save in any emergency fund?”

3. Create an emergency fund

“Have three to six months of your living expenses saved in an account in case of an emergency, like a job loss, unexpected car or home repair, or the like,” Nelson says. If that seems undoable, start by saving $1,000 in the fund.

The point is you don’t want to pay for unexpected costs with credit cards if possible – that can lead to ballooning credit balances which, because of high interest rates, become even harder to pay off and can lead to a debt spiral.

If you have unexpected expenses you can’t afford, consider taking out a home equity line of credit to pay for them instead of using credit. These typically have lower interest rates and longer timelines for repaying.

4. Save for retirement

The sooner you start saving, the more your money will grow thanks to the interest rate increasing your pot of money over time. This is especially important if your employer matches any contribution you make to the company’s retirement plan. That’s free money and you don’t want to lose out on getting it.  

5. Set up auto deposits

This helps you pay yourself first. Your banker can help you set up automatic deposits from your paycheck into different accounts, like an emergency fund, checking, and retirement savings, for instance.

While achieving financial freedom may seem overwhelming, focus on one step at a time. Your banker can help – talk to them about setting your goals and how Town and Country Bank or Peoples Prosperity Bank’s services can assist you.