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Although the idea of financial freedom may mean different things to different people, a recent report by Bank of America correctly identified the top three areas that many women say indicate financial independence.
To get the results, more than 3,500 women 22 years of age and older were surveyed about their thoughts on financial confidence, especially when it comes to investing.
Here are the top three indicators of financial independence, according to survey respondents, plus some simple tips to help you achieve those goals.
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For starters, 47% of respondents feel that no debt is a great indicator of financial independence.
While some forms of debt – such as Mortgage or student loan – can buy you the flexibility to be able to take a chance or acquire an asset, for many people the idea of actually owed enough money to create a sense of dread. Many people Feeling uncomfortable with debtand those uncomfortable feelings are reason enough to make their balance disappear a priority.
Paying off debt also allows you a little more flexibility in the face of difficult circumstances. For example, if your credit card limit is $5,000 and you’re carrying a $4,500 balance, you’ll have only $500 left to cover the cost of an unwanted auto repair or a leaky roof. if you don’t have Emergency Fund to drag the word. However, if you have to pay off that balance, you’ll still have more room to cover a necessary expense if your emergency fund isn’t enough.
There are many strategies when it comes to pay off debt. Popular debt snowball method involves removing the smallest balance first while paying only the minimum on your other debts. The idea is to work your way up to the largest balance until you are completely debt-free.
Another tactic, debt avalanche method, which includes getting rid of your highest interest debt first while making minimum payments on the others, and gradually reducing your lowest interest rate debt. This special method will help you save maximum interest costs.
Debt consolidation is another strategy that can potentially help you save on interest fees while also arranging your debt into one monthly payment. With this option, you are essentially using debt consolidation loansuch as Goldman Sachs’ Marcus Personal Loan or LightStream Personal Loan, to have your funds sent to each of your creditors to pay off those balances. After that point, you simply pay back the debt consolidation loan you borrowed.
Another alternative is to use balance transfer card with 0% introductory APR termsuch as Citi® Diamond Preferred® Card have a 0% introductory APR on balance transfers for 21 months from the date of the first transfer, (15.24% – 25.24% change thereafter; all transfers must be completed within the first 4 months) or Chase Freedom Unlimited®, there is a 0% introductory APR for 15 months from account opening on balance transfer, after which the APR varies from 15.74% – 24.49%, to transfer high interest credit card balance to card New credit at no charge for a limited time. The idea is that the 0% introductory APR period will give you enough time for your entire monthly payment to go into the balance and not the interest, which will help you pay off your debt faster.
Emergencies are bound to arise, which is why 39% of women who responded to the survey said being able to get through an unexpected expense is a sign of financial independence.
Only one Emergency Fund – a cash you can use in case of need – can help offset these unforeseen expenses. For example, you can use the money you have in your emergency fund to replace a damaged auto part, fix a leaky roof, or pay a medical bill you didn’t intend to.
An emergency fund can also help you cover your living expenses in case you need it lay off a job with little or no notice. While unemployment benefits can help you cover some of your day-to-day expenses, those funds are generally not enough to cover your entire living expenses.
You should keep your emergency funds in a relatively easily accessible account, such as Marcus by Goldman Sachs High Yield Online Savings or one Ally . Online Savings Account. With High productivity saving account, you’ll be paid monthly interest just for keeping the balance, helping to grow your emergency fund a little faster.
Experts generally recommend having an emergency fund of about Living expenses worth three to six monthsalthough how much you should save depends on your personal situation and what your monthly expenses are usually.
According to the survey, 34% of respondents said that not having to ask their family for financial support would make them feel more financially independent.
The cost of living increases, student loan debt and stagnant salary has left many people struggling with daily expenses – sometimes, they have no choice but to turn to their family to help bridge the gap between what they need and what they need. can actually pay.
While it is often advised to find ways to cut spending to free up cash for other expenses, in a highly inflationary environment like the one we are currently seeing, there may not be much room for individuals. reduction multiplier. spend more than existing.
If you find yourself struggling with your cash flow, it may be time to consider asking for a raise at work or even move to a higher paying job if you can. If you want to stay with your current company, try taking on a side job – preferably one that you really enjoy – to help make a living.
If you choose the hustle route, think about your personal skills and interests and try to find a side gig that works best for you. For example, if you have a knack for creating custom digital illustrations, think about selling them through a site such as Etsy.
While doing extra work can be tiring, there are a few things you can try to minimize burnout. First, avoid doing side gigs that force you to use the same skills you’re using for your day job. For example, if you’re already working full-time as a writer, taking on that extra side job as a freelance writer can feel like a complete overload when it comes to writing. Consider using another skill you already have that you can earn money on so you don’t get stuck doing too much of the same thing every day.
You should also think about how much time you actually have to devote to a side hustle each week. If you can only spend 15 hours per week, you will get stressed and burn out very quickly if you are chasing a side gig that will feel like another full-time job.
Editing notes: The opinions, analysis, evaluation or recommendations presented in this article are the sole opinions of the Select editor and have not been reviewed, approved or endorsed by any third party.