More money, more stress sounds like a line off a rap song, yet it unequivocally describes the financial state of middle-class households! For every penny added to the income column, a hundred or more is added to expenditure, thanks to inflation.
Today, around the world, many feel financially stuck. Recent surveys show that most adults are under increasing financial stress. This is an irony, considering most actually earn more today than they ever did! This highlights a financial truth: economic freedom is much about proper management than it is about expanding income.
In this short article, I briefly explain 7 practical money moves you can make today to ease your financial burden.
Why the Middle Class Feels Stressed
First, let us look deep into the whole financial stress conundrum, across all boards, and beyond just inflation.
Lifestyle inflation: An increase in income follows an increase in taste for the good things in life. The middle class is plagued by the habit of living beyond its means. This is a deadly life choice.
High fixed expenses: Recurrent expenditures kill income. The higher they are, the quicker people get stuck. High rent, high-interest loans used to sponsor “wants”, and expensive health care are just a few things killing the middle class.
Increasing debt: Credit cards sponsor false hopes! They are the best friends of the financially reckless.
Low savings discipline: 10% saved monthly, as prescribed by Napoleon, is the barest minimum. Yet, most middle-class families overspend. No savings means no pool for investment.
The good news is that financial freedom is a product of several healthy financial habits. Financial expert Robert Kiyosaki expounds on this in his book Rich Dad, Poor Dad.
Here is the fact: you can be financially free. Families are doing it. You do not need to be a genius; simply be smart and copy what geniuses do.
The 7 Smart Money Moves
- Automating Savings
Saving is hard, but it can be made easy by delegating the decision to others. There is an abundance of systems in place that automate savings. Some workplaces have systems that direct part of their wages to a savings deposit. Banks help too. And, financial apps also exist for this purpose. Save before you spend anything.
- Micro-Investing Consistently
Get familiar with Compound interest. Small but consistent investment in Index funds, for a long period of time, can secure your future. Think being broke is tough as a middle-aged person? Old age is worse. Secure it today.
- Reducing EMI Pressure
Stay clear of high-interest debt! They are never worth it. Cut up your credit cards, or use ones with the lowest APR and the best and suitable perks. Call to renegotiate with loaning establishments! Get out of debt!
- Cutting Lifestyle Creep
If you cannot afford it, leave it be! Move back to your parents’ home, or a less expensive house. Stop eating out. The kids will do well in public school, too! Why 2 cars? Cut down on expensive clothing. Live frugally and live below your means!
- Building an Emergency Fund: The legendary finance experts advise that the first step to true financial freedom is to save up for a 1-year period, even before clearing debt! Do it!
- Starting Small Side Incomes
Look into side gigs, and get more extra work hours. A few hours per week through freelancing or digital work adds a meaningful extra income stream. This is but for a while.
- Learning Personal Finance Basics
You cannot control what you know nothing about. Financial illiteracy is a crime. The consequence is financial stress or death. Learn the basics, budgeting, reading income and expenditure sheets, understanding discounts, bulk purchase, etc. This will save your life.
Conclusion
You can be financially free if you choose to. Start by loosening the handcuffs a bit and then finally freeing yourself. Choose healthy financial habits over self-indulgent, destructive decisions. Live below your means, save as much as you can, and build wealth slowly.
