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Learning to become financially independent is an important skill for women to know. As a professional woman, you will be solely responsible for your finances at some point in your life. Whether it be when you’re first starting out in your career, or if you become a widow. So, for that reason, you need to know how to manage your money and the steps to financial freedom.
What Is Financial Confidence?
Before we talk about the steps to financial freedom, it’s important to address women’s financial confidence.
Financial confidence means you understand how to manage your money and you feel good about your finances. You don’t stress about money and you’re ready for whatever comes your way.
Unfortunately, most women don’t understand how to manage their money. According to a recent study from UBS Global Wealth Management, 58% of women leave financial planning up to their male partners. When you leave those crucial choices up to your man, it’s hard to know what’s going on with your money.
This bad habit can put you at risk financially, particularly if you get divorced or if your spouse dies. Even if as a professional woman, you make a good salary, you still need to know how to manage your money if something were to happen to your spouse.
So ask yourself, how confident would you feel about your financial future if your husband was no longer around? Would you be able to pick up right where he left off?
If the answer is “no” let’s go over how you can improve your financial confidence.
How Can I Improve My Financial Confidence?
The number one way to improve your financial confidence is by becoming knowledgable. Now, I’m not saying not to let your husband manage the money in the household, however, it’s very important that you know what he’s doing. Be sure to schedule a monthly check-in so that you both can assess where you are.
When couples work together on long-term money goals, UBS’ research found women felt more confident in their future and had less stress around money.
So, here’s what you should know about your financial situation:
- You should know how to manage a budget.
- How much money is coming in and going out of your household.
- Exactly where all your money is and the types of investments you have.
Even if you’re single right now, you should also be very knowledgable about your money and know how to budget.
Finally, consider having a financial professional in your life. An expert can help you build a solid financial plan. They can also help you avoid mistakes that are difficult to anticipate, as well as give you effective strategies for managing your finances.
Once you become more knowledgable about your financial situation, you can work on taking those next steps to financial freedom.
What is Financial Freedom?
Financial freedom is when you no longer have to work for money in order to meet your financial needs. Early financial freedom should be a powerful motivator to help you make good financial decisions.
Why Is Financial Freedom Important?
Financial freedom is important because it gives you the choice to do things because you want to—not because you need the money. Imagine if you went to work only because you want to and not because you “need this job.” Do you know how much more pleasant it would be to go to work?
When you’re financially free, you can live life on your terms. You can live where you want (because you’re not tied to a job) and you can do what you want. You also have the freedom of time because you don’t have to spend at least 40 hours working for someone else.
In general, here are some reasons why you might want to be financially free:
- You can spend your life doing the things you want to do.
- You don’t have to rely on a job for money.
- You have more time to do the things you enjoy.
- It reduces stress in your life because you don’t have to worry about how you’re going to pay your bills.
I know a lot of professional women who make good money but are miserable (I was one of them). Things certainly change when you know you don’t need your job. You start to know your value more and don’t put up with mistreatment. You also show up with a much more pleasant attitude because you don’t feel forced to be there.
So, what are some of the reasons you would like to be financially free? Take a minute and write it down.
How Do You Get Financial Freedom?
There are plenty of steps to financial freedom. It’s something that you have to constantly work towards and it doesn’t happen over night. It usually takes many years to become financially free. But there are things you can do to speed up the process. So let’s go over the different steps to financial freedom.
Steps To Financial Freedom
Step 1: Change Your Money Mindset
Before starting any financial journey, it’s important to change your money mindset. You cannot approach your financial journey with a scarcity mindset or limiting beliefs.
When you think of money, you should say to yourself “there’s more where that came from” instead of always thinking “I can’t afford it.” So I want you to get rid of any limiting beliefs you may have. If you want to learn more about how you can work on changing your money mindset, you can read my article “How To Change Your Money Mindset So You Can Have More Money.”
Step 2: Make A Budget
One of the most important steps to financial freedom is creating a budget. Creating a budget can help you feel more in control of your finances and let you save money for your financial goals. If you want to improve your finances, the first thing you need to do is allocate where your money is going.
A budget can help you track your spending and figure out what areas of your life you can cut back on spending. Start your journey by getting a FREE printable Monthly Budget.
If you want something a little more sophisticated, you can use my Budget Templates.
This budget spreadsheet is how I was able to save over 50% of my income. If you want to learn more about exactly how I use this excel spreadsheet, you can read my detailed article “How I Use My Monthly And Yearly Household Budget Spreadsheet.”
Step 3: Track Your Spending
Once you make a budget and allocate where your money is going, you need to track your spending to make sure you are sticking to the plan. A budget is useless if you don’t follow it. Therefore, it is important to review your budget on a regular basis to make sure you are staying on track.
If you want to stay on top of your spending habits, use this FREE Daily Expense Tracker.
If you don’t like to manually track your spending (like me), you can use a third-party website like Personal Capital to see your spending all in one place. Personal Capital is a FREE wealth management tool to help you get a better understanding of your finances.
After you link all your accounts, you can see all your accounts in one place to have better money oversight.
If you sign up today and link at least one of your investment accounts (with a balance of more than $1,000), we’ll each get $50. That’s FREE money for keeping track and staying on top of your finances (something you should be doing anyway)!
Step 4: Cut Your Expenses
Another one of the important steps to financial freedom is cutting your expenses. You need to reduce your expenses in order to achieve financial freedom quickly. Cutting expenses is important because the less you spend, the less money you will need overall to achieve financial freedom.
An additional benefit to spending less money is you can save more. The more money you save, the faster you can achieve your financial goals.
One easy way to cut spending is to use a service such as Trim. Trim is a virtual personal assistant that constantly works to save you money. They analyze your spending patterns to find ways to save you money, set spending alerts, and automatically fight fees. Trim also negotiates cable, internet, phone, medical bills, cancels old subscriptions, and more.
Step 5: Save Aggressively
One of the main steps to financial freedom is you need to save aggressively. You cannot save only 10% of your income and expect to be able to retire in less than 10 years. Start by trying to save at least 30% of your income—but ideally, you want to save 50% or more.
In order to save such a large amount of money, you have to get smart with your spending and know exactly where every dollar is going. You also need to cut spending wherever possible.
You can also save money on the things you already buy every day by getting cash back from places like Ebates, Drop, and MyPoints.
Use the Ebates browser extension to make it even easier for you to earn cash back. The way the browser extension works is when you land on a store page, Ebates shows you how much Cash Back is available. Just shop as normal and then get paid by check or PayPal. It’s that simple.
If you want to learn how you can save a significant amount of money every month, read my detailed article “How To Save 50 Percent Of Your Income.”
Step 6: Increase Your Income
As a professional woman, you may already have a high paying job. But that shouldn’t limit you to trying to find more ways to increase your income even more. The more money you make, the faster you can be financially free.
I also recommend you have more than one way to make money. The more streams of income you have, the more financially secure you become. If for some reason one stream of income dries up, you can rely on your other streams. If you want to learn more about developing other streams of income, you can read my article “5 Easy Ways To Increase Your Income Streams.”
Step 7: Pay Down High Interest Debt
Having high-interest debt is counterproductive to achieving financial freedom and a drain on your finances. I consider any debt with an interest rate above 8% to be “high interest.”
The reason why I would pay off any debt with an interest rate above 8% is because the stock market has returned about 8% over the long haul. Paying off a debt with an interest rate greater than 8% is equivalent to getting a guaranteed return of more than 8% on an investment.
So you’ll get the biggest bang for your buck by paying down any high-interest debt.
Gather all your debt together, such as your student loans, medical bills, credit cards, tax debt, car note(s), etc. Determine how much you owe and at what interest rate. You can use this Free Debt Worksheet found in my Resource Library to help you. My FREE Resource Library is loaded with more than 20 pages of easy to print worksheets, checklists and money saving tips.
Once you have your Debt Worksheet, make a list of your debt from highest to lowest interest rate. This will make it easy for you to prioritize your debt repayment plan.
Use Debt Repayment Tools
Once you have a debt repayment plan, you can use an app like Tally to help you execute that plan. Tally is an automated debt manager that makes it easy to save money, manage your cards and pay down balances faster. It’s absolutely free to download, and they don’t charge any fees to use the app
The way Tally works is they monitor your balances, APRs, and due dates on each credit card you register. Tally’s smart technology will determine which cards to pay first, based on factors such as APRs and utilization.
You can also use an app like Qoins to help you automatically pay off your debt even faster. You’ve likely heard of apps that turn your spare change into investments (like Acorns) but Qoins is an app that takes that change and uses it to pay off your debt.
Qoins will send out payments according to the schedule that you’ve set up. They also track how much you’ve paid out towards your loans and see how much of a dent you’ve put in your debt.
I highly recommend Qoins if you want to speed up paying off your debt while making it as easy and painless as possible.
Step 8: Invest Your Money
You cannot only save your way to financial freedom because that would take forever. You have to invest your money. You should invest in things that produce income and increase in value.
For example, I like to invest in real estate and the stock market because in the long term it will increase in value over time, and it can also produce an income through cash flow. Investing in real estate and the stock market has helped me achieve financial freedom more quickly than if I were to just save money.
I personally use Robinhood to purchase individual stocks and ETFs. This website is great because you can buy and sell stocks for free—there are no commissions or fees. Most other brokerage firms charge at least $4.95 fee per trade, and some have hidden fees.
Sign up today and you and I can get a free stock like Apple, Ford, or Sprint. With Robinhood you also don’t need a minimum account balance, so you can get started right away.
Step 9: Track Your Progress
It is important to set financial goals and track your progress regularly. You must make goals and prioritize them if you want to eventually be financially free. People who identify their goals and work towards them usually accomplish their goals, and accomplish them quicker.
I recommend you calculate your net worth every quarter and go over your financial goals every month. This will help you to see if you’re still on track to achieve your goals. If not, you know you need to make some adjustments.
The formula to calculate your net worth is pretty simple. The formula is:
Net Worth = (what you OWN) – (what you OWE).
You can find out your net worth quickly and easily with a FREE Net Worth Worksheet that you can get in my Resource Library.
- Related Article: Net Worth By Age: How Do You Compare?
Step 10: Get And Stay Educated About Your Finances
This step to financial freedom is just as important as the first. No matter what step you’re on in your financial journey, you have to get educated about personal finance. The most successful leaders in business and finance read every single day.
Warren Buffet reads 500 pages every day; Mark Cuban reads 3 hours a day; and Bill Gates reads at least 50 books a year. With this in mind, you should try and get into the habit of reading and get more educated about your finances.
You’re taking the right step by being here and reading my blog :). So, here are some personal finance books that I have read and recommend for additional reading:
The Money Book For The Young, Fabulous, and Broke
This book by Suze Orman addresses financial problems for young people who may need help with making a financial plan for the first time.
The Total Money Makeover
This book by Dave Ramsey is a complete guide to saving for a rainy day, paying off your debt and reaching financial prosperity in your life. He is a big proponent of paying off ALL debt (yes, including mortgages) and debt-free living.
Rich Dad Poor Dad
This book by Robert T. Kiyosaki will leave you thinking differently about money and how you earn it. It is definitely an investment classic and a book I have kept on my shelf and re-read many times.
The Richest Man in Babylon
This book by George S. Clason has been read by millions. It discusses the keys to success when managing your money and financial advice told through ancient parables.
The Automatic Millionaire
This book by David Bach make you understand the amount of your money goes to waste through the well-known “Latte Factor.” This book will help you identify where you unconsciously waste money and how those little expenses can add up to a huge financial loss. It will also show you how automation is the easiest and most effective way to build wealth.
The Millionaire Next Door
This book by Thomas J. Stanley and William D. Danko identifies seven common traits of those who have accumulated wealth. Most of the truly wealthy in this country don’t live in Beverly Hills or on Park Avenue-they live next door. They also don’t drive a fancy car or buy designer clothes.
It shows that anyone can be a millionaire if you live below your means and invest well.
Best Ways To Get Books
Since I think you should read, and read often, sign up for the FREE Kindle Reading App. You can use this app even if you digitally borrow books from your local library.
Also, most books I’ve purchased are cheaper if you buy the Kindle version of it, instead of the paper version. You don’t need a Kindle E-Reader to access Kindle books. The Kindle app is available for iPhone, iPod Touch, Android, Windows Phone, Blackberry, Android Tablet, and iPad.
Also, consider signing up for a Kindle Unlimited Plan. It’s a subscription plan that costs $9.99 per month that gives you unlimited reading from over 1 million ebooks, and unlimited listening to thousands of audiobooks.
Most of the books I just recommended are free to read if you have a Kindle Unlimited Plan, or at a much lower cost. You can try it out for FREE your first month and see if it is valuable to you. If you don’t like it, just cancel your subscription.
Finally, if you don’t have the time or don’t like to read, consider listening to audiobooks. I listen to audiobooks when I’m commuting to work or when I don’t have the time to sit down and read. Try Audible and get 2 FREE audiobooks.
With audible you get:
- Get 1 audiobook and 2 Audible Originals each month for a monthly subscription fee.
- Exclusive audio-guided fitness programs (a $95 value).
- Roll over any unused credits for up to 5 months.
- Easy exchanges—swap any audiobook you don’t love.
- Cancel anytime, your audiobooks are yours to keep.
So give Audible a try, and if you don’t like it you can cancel and still get to keep your two free books!
If you want to be financially free, it will take years of planning and sacrifice. As a professional woman, I know you’re capable of working hard and sacrificing to get what you want. Get started today and take your first steps to financial freedom.
- How To Make A Budget That Actually Works: 5 Simple Steps
- You Don’t Need A 6-Figure Income To Be Financially Free
- Step-By-Step Plan Every Beginner Needs For Financial Freedom
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