My Top 5 Tips for Achieving Financial Freedom: A Guest Post from Tori Dunlap, Author of Financial Feminist

“How do I start?” I receive that question all the time from young women looking to improve their financial literacy. I started my company Her First $100K and wrote my new book, Financial Feminist, to give women the financial tools they need to reclaim their power. We live in a patriarchal society that is not equal, especially when it comes to money. It’s crucial to educate ourselves so we are setting ourselves up for success.

I want to help guide you through that process. Keep reading for my top five financial tips.

Create a Budget

I feel the need to disclose that I don’t use a budget. I know this might seem antithetical to my first piece of advice, but hear me out. I don’t personally use a budget because I know how much money I have to allocate to certain categories. However, if you’re new to your financial journey or want that added level of security, create a budget. I recommend my company Her First $100K’s easy-to-use budgeting tool to help you build your budget around the things you actually care about.

Have an Emergency Fund

An emergency fund is your first priority financially. Let’s say in the worst-case scenario, you have an accident that leaves you with thousands of dollars in hospital bills. If you don’t have money set aside for emergencies, you’ll most likely have to use a credit card to pay those bills. I don’t want you to go into debt due to an unforeseen circumstance. Aim to have three to six months worth of your basic living expenses in a high-yield savings account (HYSA). HYSAs have higher interest rates, so you’re earning money for saving money. That’s what I like to call a win-win.

Pay off Debt

Debt is not a dirty word. I will never shame you for having debt whether it’s student loans, credit cards, or a car note. What I am here to do is help you navigate paying it off. Here’s what you need to remember: High-interest debt is anything over 7%, and anything over that 7% is what you want to pay off first. The most common debt in this category is credit cards, payday loans, and occasionally car and student loans. After you have an emergency account (don’t forget that step!), prioritize paying off high-interest debt. I prefer the debt avalanche method, meaning you pay off the debt with the highest interest rate first and then you put that money toward the account with the next highest interest rate and so on and so forth. You will need to pay the minimum on all your accounts, but you’ll want to throw extra money at your highest interest debt. This can be a tedious process, but try not to get discouraged because you’ll eventually pay it off.

Start Investing

Investing is the best way to build wealth over your lifetime and set your future self up to retire. It’s time to begin investing when you have three to six months saved in an emergency fund, have you paid off all high-interest debts (more than 7%), and are currently taking advantage of your 401k with company matching (if applicable). I recommend starting with tax-advantaged accounts like your workplace 401k or 403b, or an individual retirement account (IRA) if you qualify. Work on maxing these out each year before branching into other brokerage accounts or types of investments.

Practice Mindful Spending

We all emotionally spend in some way. The important thing is to spend money mindfully on what brings you joy instead of mindless spending. Do you love to travel? Are you a foodie who likes trying new restaurants? Are you passionate about activism and want to donate to local charities? Decide what’s important to you and put your spending money there. That might mean cutting back on other luxuries, but in the long run you’ll be most fulfilled and avoid post-shopping regrets if you practice mindfulness while spending.

Implementing these five tips will put you on the path to achieving financial success.