Here are some steps to achieve financial freedom[1]:

1)      Pay off your credit cards: Before you think about investments you should pay off your credit card balances.

2)      Establish a six month contingency plan: Putting money away for a rainy day or unforeseen circumstance is a huge benefit.  This practice will save you from a money scramble when something does occur.

3)      Pay yourself first: Regularly put away a set amount out to invest.

4)      Begin investing as early as you can: The earlier you begin to invest the more interest you begin to generate.

5)      Invest in indexed funds: These funds are designed to replicate the movements of an index of a specific financial market. So if the S&P/TSX Composite Index goes up, your index fund goes up by the same proportion.

6)      Find an unbiased adviser: If you are not comfortable managing your investments, find an adviser to do it for you. Find an adviser that does not sell their own brand of investment products.  This will ensure that you are getting unbiased advice.

7)      Put market drops into perspective: These will occur at regular intervals and the best approach is not to get too driven by emotions.

8)      Allocate your assets: as you continue forward you have to remember to expand and increase your investments.

[1] www.theglobeandmail.com/report-on-business/retirement/nine-steps-to-financial-freedom/article1335531/

1) “Know your finances intimately”
This process begins with knowing how much income you have and where it’s going. Start by working out your monthly income and list the sources of this income. Then list your expenditures.

2) “Decrease your expenditures”
Cut your costs. With the expenditures list from the first step, begin to go through the list and cut out expenses that are not necessities for living.

3) “Increase your income”
Begin to think of ways to increase your income every year. This could involve getting a job or a second job, getting extra hours, reducing your tax, starting your own small business.

4) “Play the interest rate game”
Determine the different interest rates on your debts. If none can be lowered by the creditor, then you can start focusing on one debt and paying more than the minimum payments on it while maintaining the minimum payments on your other debts of course!

5) “Spend Less”
Base your spending on absolute need versus want. Use rational versus emotional criteria for making spending decisions. Consider the following:

• Don’t carry credit cards with you
• Pay cash or write cheques
• Turn down credit line increases
• Don’t sign up for new credit cards
• Make a special event fund (holiday gift-giving, vacations)
• Ask for a friend’s support in your attempt to save money
• Pay cards on time to avoid late fees

6) “Earn More”
Starting a small home-based business — picture framing, painting and decorating, lawn-mowing, eavestrough cleaning, baking or furniture refinishing — or thousands of other simple businesses may be an option for you. In addition to having some extra dollars this business may help you transition into retirement more comfortably.

One of the most important things to remember during the Christmas season is to plan your purchases. Saving money year round for Christmas is a very good trick to allow you to buy presents without having to use credit cards. Trying to pay with cash will also help you stay within budget as opposed to putting things on a credit card and not being sure of exactly how much you spent until you review the receipts after shopping. Be careful with your cash though. Have an amount set, take out that amount and stick to it.

You can also try and to go through one week only spending money on groceries and gas. No coffee, no eating out, etc. At the end of the week add up what you saved and place it in a holiday fund. Tips like these will help you to save and your holiday fund can begin December 26 giving you a full year to save again.

With the growing cost of tuition fees, books, and residency, many students need the assistance of a government student loan. If you need a student loan, you should use it. Investments in advanced education usually pay-off in terms of higher lifelong earning power. But if you are approved for a $15,000 loan, don’t use all of it just because it’s there. Living frugally while you are a student and developing good money habits are part of the overall education process.

If you have a student loan, within six months to a year following your graduation, the payments on the loan will begin. Following graduation and getting your first full time job, it’s important not to get caught up in the thrill of moving out on your own, expanding your wardrobe, and buying a first car. While the student loan remains outstanding, consider having a roommate to share living expenses, or renting a room in someone’s home. With either of these strategies, you can reduce your living expenses and put more of your income into loan payments. Researching living costs in the city you plan to move to is also a good idea. While the lights in Toronto or Vancouver burn bright, costs in these two cities are higher. Make comparisons of cost of living by city so that you will be able to determine a cost effective place to begin your career.