Find the right budgeting method to achieve financial freedom in your 30s.

What, actually, is financial freedom?

Financial freedom could be simply defined as having the?monetary stability?to do what you want in life without having to worry about your bank account. To paint you a better picture, here are?the general characteristics:

• You have a dependable cashflow that allows you to live the life you want.
• You aren’t worrying about how you’ll pay your bills or sudden expenses.
• You aren’t burdened with a pile of debt.

Though often used interchangeably, financial freedom is not equivalent to financial independence. In fact, it is a step further than independence.

When you’re financially independent, you’re able to meet your own financial needs without relying on anyone—you have a steady income, able to pay all of your bills, have some money to save, and even invest.

But, it is when you have a long-term plan to build the life of your dreams and secure a comfortable retirement, will you finally become financially free.

Read more about the definition of financial freedom and its difference with financial independence?here.

From: lazy present-self, To: thriving future-self

You may feel comfortable with the way you’re spending money right now, but every time you click?check out?on your favorite shopping sites, think of the version of you in 10 years—will they be proud?

For a lot of us, financial freedom might sound like a distant, unreachable dream. But by?implementing the following tips, you will steadily make your way to the finish line.

1. Take stock of your spending.?Take a little time to tally up your monthly nut including housing expenses, utilities, food, insurance and all other regular expenditures.
2. Automate. Use online banking or other types of software to have your bills paid automatically each month by their due dates. It will help you avoid late fees AND save you a great deal of time.
3. Plan shopping trips in advance.?By taking a few moments to plan your next trip to the grocery store, you will be able to control impulse purchases and look up vouchers or discounts to save up.
4. Automate savings, too.?For example, if you are paid on the 15th or the 30th of each month, set up an automatic transfer from your paycheck that goes directly into a savings account.
5. Do the math.?A simple budget just takes monthly income and subtracts monthly expenses—that’s it. Take a little time to figure out exactly where you stand each month when all the math is done.

If the tips above sound familiar to you and you’ve been doing them for a while, you might start to feel a sense of financial comfort. But do not let it catch you off guard. Maintain and even level up your financial stability by?incorporating these changes:

1. Start a side hustle.?What are you good at? What do people pay you for? Focus and channel the extra hours you do have in building that business.
2. Budget everything.?Create a weekly or even daily budget tracker and stick to it. Reframe the way you look at money as a tool to achieve your goals.
3. Pay yourself first.?Put a specific amount of money in your savings account before paying anything else, such as bills and living costs.
4. Stop trying to act rich.?Consistently spending money on trendy items won’t get you anywhere, except perhaps one person saying “that’s nice.”
5. Live well below your means.?Allocate your money wisely and master a frugal lifestyle. If it seems impossible, start by inserting 1 low-budget day weekly.

Learn more about the tips on achieving financial freedom?here?and find 5 more changes you should start to incorporate?here.

The first step determines your course

Step one aka the base of personal financial management is evidently budgeting. When creating a budget that fits your goals, you can start by using a?budget calculator, or you can pick from the many popular budgeting methods, including these 3:

50/30/20 Rule

Arguably the most popular among its peers, this method requires you to divide your income into 3 categories: 50% for needs, 30% for wants and 20% for savings/financial goals.

Pros: solid starting point, keeps your essential expenses in check, lets you treat yourself

Cons: uses percentage of income, no account for geography, no focus on highest-leverage goals

Zero-Based Budgeting

Instructs implementers to assign every piece of money they earn to a specific line item. For example, if you earn Rp10.000.000 monthly, you will need to allocate all Rp10.000.000 to different categories down to Rp0.

Pros:?offers visibility, prevents overspending, prioritizes financial goals

Cons:?time-consuming to create, difficult with unpredictable income, no account for varied expenses

Cash-Only Budgeting

• Also called “envelope budgeting,” this method is carried out by taking out cash each time you receive a paycheck. Then, you allocate specified amounts of cash to each of the envelopes or budget line items.
• Pros:?no overdraft charges, less wasteful spending, accurate spending records
• Cons:?no cashback or rewards, confusing mix of envelopes, need to physically go withdraw cash

Remember that each person will have different financial needs, and the right method for you might change throughout the course of your life. It does not hurt to try out different methods or even mix them to find the best customized potion for you.

Are you a budgeting junkie? Or, are you more of a ~go with the flow~ spender?

Either way, you will need to find the right balance and you will need to do it as soon as possible, to hurt your future-self less.

Have a financially-stable week ahead, and we’ll catch up with you next week.

Cheers!