When you were a child, did your parents ever tell you that they work hard so you can have a better future and/or more opportunities than they did? Many children who grew up in the middle or lower economic class (myself included) were told this time and time again. However, a recent study shows that this American Dream of economic mobility could be on a serious decline. But you don’t have to let statistics hinder your ambitions. Here’s how to triumph over the numbers and achieve the dream in your own life.
The Decline of the American Dream
According to a recent study highlighted by CNN Money, it’s becoming harder for Americans to move up economically than those in most other developed countries. Given that the American Dream is built on a foundation of rising above circumstances to achieve success, this is a discouraging trend.
Miles Corak, economist from the University of Ottawa and Russell Sage Foundation Fellow, shares the factors holding many Americans back – namely greater income inequality, an imbalance in public education funding, a changing family structure, and social policies that don’t distribute the wealth as much as other developed countries.
While the trend may be discouraging, that doesn’t mean that you should lose hope. You do have the power to overcome the statistics.
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How You Can Still Achieve the American Dream
Facing less economic mobility may mean that achieving the American Dream is becoming more difficult. But let’s face it, achieving the American Dream was never easy. Luckily, you do have the power to take your future into your own hands, starting with your finances. Here are a few steps to help you achieve financial freedom and get one step closer to your own American Dream.
Build a Budget. Follow it Consistently.
Budgets may be tough to plot out and even tougher to stick to, but love or hate ‘em, they are the ticket to your financial future. If you don’t have a clear understanding of where your money is going, then it will be nearly impossible to take control of it. Here’s how you can get started:
- Build a budget by making a list of what you earn and what you spend on each month
- Examine what you can cut and what you can reduce in frequency
- Find ways to earn extra income
Once you have an idea of where your money is going and how you can free up some money and earn extra money, then you can start planning for the future. But in order to stick to whatever goal you choose, you’ll need to stay accountable to your budget each day, week, or month. And these days there are more options than ever to help! You could keep a check register (even if you use debit cards for purchases), maintain a spreadsheet, or use a website like Mint or software like YNAB.
Once you are on track with your budget and maintaining it, the next step is to make a plan for future goals. If you have debt, the most important goal to focus on is to:
Focus on Debt Payoff.
Debt costs money. It costs money in interest and the potential savings lost when you think of how much money could have been applied to savings (with interest accruing for you instead of against you) that was instead applied to monthly payments. If you’re reaching for your American Dream, then the first thing you need to do is focus on paying off debt.
There are a few ways to do this, but a targeted focus is the key. If you have multiple accounts, choose one account and make it your target. Any extra money paid should go to that and that alone while every other account gets the minimum payment. Once that’s paid off, apply whatever you were paying on your target account to your new target account on top of the minimum payment. Continue on until you’re debt-free.
This will allow you to pay your debt off much faster than you would if you were to spread your extra money evenly across all accounts. Plus, this targeted focus makes it easier to see the impact of your payments and stay motivated.
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Always Look to the Future.
No matter where you are in your financial goals, it’s imperative to always look to the future. It’s tough to stick to a budget (especially if you’re living paycheck to paycheck) and a journey out of debt can sometimes be longer than we’d hope for. But keeping your eye on the prize – a future of financial freedom – will keep you going. Think about things like building an emergency fund, saving for retirement, and even investing so you can not only save your money but grow it as well. Now that’s achieving the true American Dream – finding a way to make your hard earned money work for you.
The American Dream may feel elusive, but it can be achieved through hard work, focus, and determination. And if you ever need a motivational boost to help you get through, join the ReadyForZero Community and you’ll meet a group of people who are willing to share their goals, their struggles, and what has helped them along their own journeys!
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