As with every aspect of your life, having specific goals keeps you motivated. Even if you don’t reach them all, you’ll at least be on the right path.

Everyone wants more money, but how much is enough?

Achieving financial freedom is the ultimate goal for many people. Still, there are some milestones you can reach in the meantime.

Right now, you may be financially dependent (that is, depend on others to pay off your debts) or just solvent (being able to cover current debt payments and basic living expenses, like rent, food or clothes). If so, your first goal should be reaching financial stability—that is, eliminating all consumer debt and creating an emergency fund.

You could then think about the next milestones, like financial security, which happens when your passive income, or your savings, could cover your basic living expenses for the rest of your life. When you’re financially secure, losing your job won’t leave you in desperation.

After that, we have financial independence. In this state, your passive income or your overall savings could cover your current lifestyle. If you lose your job, the quality of your life won’t worsen.

Last but not least, financial freedom happens when your passive income, or your savings, could cover your ideal lifestyle—that is, you can do whatever you want for the rest of your life. This is the Holy Grail of financial goals.

Of course, it’s tough to reach financial freedom within a year. But if you take one step at a time, anything can happen.

So, what’s your milestone for this year?

One of the well-known business quotes says: “If you can’t measure it, you can’t manage it.”

These words can apply to many areas of our life, but they’re especially true in the context of personal finances.

If you don’t check and analyze the amount of money you have—then you can’t manage it properly, and you can’t improve the state of your finances.

Many people (I know at least a few) actually don’t know how much money they have in their bank accounts. If you’re one of these people, then you’re probably in one of these situations:

• You’re rich, and you have more money than you need—well then, congratulations!
• The state of your finances almost makes you cry, so you try not to think about money, nonchalantly stating that money isn’t that important after all.

If the second situation applies to you, and you’re not content with the amount of money you have, start paying attention. You don’t need to count every dollar. Still, it’s good to know the overall trends (is the situation better or worse than a year ago, are you generally getting richer or poorer, etc.).

If you start taking care of this area of your life, the magic will happen.

Have a look at all your expenses, and think if you can cut some costs without worsening your life quality.

There are many ways of doing that. Quitting drinking/smoking, eating out less frequently, eating seasonal fruit and veggies, eliminating waste of food, buying timeless pieces of clothing, online shopping, using comparison sites, purchasing plane tickets and booking hotels in advance, etc.—those are only a few good examples.

Of course, we’re all different and have various needs, so don’t force yourself to cut spendings too hard. Life is short, and it should be pleasant: a glass of good wine from time to time or buying an expensive but beautiful and versatile pair of shoes won’t hurt. Just don’t throw money around.

When it comes to spending, balance is the key. Extravagant consumption can drain your pockets, but excessive frugality isn’t necessary either, and sometimes it can do more harm than good (I wrote about it in this post about morning lattes 😉 ).

Not necessarily all debt, though. Having a mortgage now, when interest rates are so low, isn’t such a bad idea—provided that it’s not a huge debt and you know how to manage the rest of your money.

Nevertheless, most debts (like student debts, consumer debts) are a burden. Therefore, the best thing for you would be to eliminate them as soon as possible. I know it’s not easy, but if you make this goal a priority, the results will come.

There are many ways to start letting go of your debt. You can:

• Identify and sell the things you don’t need (car, clothes, collectibles, etc.);
• Find a job that pays better or start a side hustle;
• Create an additional bank account and set up a standing order so that a certain amount of money goes there with every payroll (if you don’t see it, you don’t spend it 😉 ;
• Consider eliminating your credit cards;

… and so on.

To be honest, I’ve never had significant debts, so I don’t have any good advice about fighting it. But I’ve read and seen many success stories, and I know personally people who got themselves out from a terrible situation. If they could do it, you can do it, too.

I’ve been investing my money on the stock exchange for more than a dozen years. I got so used to it that now I can’t imagine my finances without this additional source of income.

To me, investing my money is fun, and I like experimenting with different financial instruments. Nevertheless, it’s easy for me because I work in the financial sector. I’m in my natural environment.

But investing really is for everybody.

If you’ve already created an emergency fund, and you have some more savings, you can easily invest them in long-term, low-risk instruments like some stocks, bonds, ETFs, investment funds, physical gold, or real estate.

The possibilities are endless, but before you invest your money, be sure to read about the asset you plan to buy. When it comes to investing, ignorance often leads to losses.

And that brings me to another essential issue …