Most people think the key to financial freedom is having a lot of money; however, financial health is not the same thing as being rich. When you are financially healthy, you are confident about your financial status; you know where the money to pay your next bills will come from. Other ways of measuring your financial health are looking at your debt level and evaluating whether you have money to cover an emergency. Your journey to financial freedom starts by changing your saving and spending habits. Some of the strategies you can use to achieve financial stability are discussed below.

Live within your means

You've probably read about living within your means countless times; it's emphasized because it's the fastest lift to financial freedom. People fall into financial difficulties while trying to live like others. When you are keeping up with your favorite celebrity or friend in terms of fashion and partying, do you take time to compare your incomes also? Living within your means is spending on what you need and without overstretching your finances. In that way, you will have enough money to invest in your future and cover emergencies.

Keep a budget

After you decide to be living within your means, learn to budget. Impulse spending is a sure route to debt and financial instability; you might spend all your money on things you can do without. This leaves you without money to cover pressing needs such as tuition fees and healthcare thus pulling you slowly into debt. Having a budget helps you keep track of how you spend your income. Further, it will ensure you prioritize your most important needs.

Reduce your debt

The ultimate goal should be to get rid of debt completely, but sometimes it is impossible to make significant investments without loans. Healthy borrowing demands discipline; if you borrow funds for a particular investment, don't divert the money to other expenses. With a budget, your income should be enough to cover recurring expenses. Borrowing to pay your bills is a sign of financial instability.

Another strategy of tackling debt is reducing your cost of borrowing. For example, if you maintain a high credit score, the interest you are charged on loans will reduce. For long-term loans such as mortgages, look around for mortgage services with the best terms before taking the loan; a small interest rate difference could have a significant effect on the total amount you will pay over the term of the mortgage.

Start saving for retirement

Financial stability should last to the time you'll have no employment income. Sadly, most Americans have not realized the importance of retirement savings. According to a report by the Economic Policy Institute (EPI), almost half of American families have zero retirement savings. You should be in the remaining half, and it's never too early to start.

Financial experts recommend that you save at least 15 percent of your annual gross income towards retirement. If you can't achieve that, just save as much as you can. If you have an employer-sponsored retirement plans such as 401(k), make the most of it by contributing the maximum amount. You can use such plans to meet the 15 percent threshold.

Pay your bills immediately

It's never a good idea to let bills pile up; they might overwhelm you when the deadline draws near. Essentially, what you are doing by letting bills pile up is holding money that doesn't belong to you in your pocket. It's advisable to activate the auto deduct feature for regular bills. This will leave you with smaller items to budget for.

Increase your income streams

Most of the strategies we've discussed are about cutting your expenditure, but you can achieve the same result by finding ways of increasing your income. Becoming familiar with SEO will help your future business strategies when looking for ways to earn additional income. For example, do some freelance work and invest to earn passive income.

The bottom line

Financial health gives you peace of mind, but achieving it is not a stroll along the beach. You will need to reduce unnecessary expenses and find means of increasing your income streams. Start implementing the strategies above as soon as possible and be consistent.