It’s hard to believe 2020 is right around the corner. As we approach the end of 2019 (and the beginning of a new decade), it’s time to start thinking about your New Year’s resolution. What do you hope to achieve in 2020? Or over the next 10 years? Some people may focus on meeting a weight-loss goal or starting a new hobby. However, a majority of Americans dream of a seemingly elusive objective: financial freedom.

Financial independence means different things to different people. For one person, it’s being able to retire by 50. For someone else, it’s the ability to quit an unsatisfying job to pursue a passion. Regardless of what it means to you, achieving financial freedom is possible. Here are several steps to consider that can help you get started on this journey:

Step 1: Define what financial freedom means for you

Consider what achieving financial independence means for you and what you need to accomplish to get there. Keep written goals to serve as a reminder of what you are trying to achieve and track your progress. People who can describe their goals in detail are more likely to succeed in reaching them.

In addition, figure out where the challenges will be and how to overcome them. Track your spending to help provide insight into where your hard-earned pay is going and identify where you may be able to cut back.

If you have children old enough to understand, involve them in the family financial goals. By getting the entire family involved, your kids will learn practical money skills such as budgeting, the difference between a need versus a want, and how to set financial goals. Finally, forget keeping up with the Joneses. While living a lavish lifestyle may look great, it’s not going to help you achieve financial freedom. Living a balanced, reasonable lifestyle is the way to go.

Step 2: Pay off high-interest debt

Paying off high-interest debt is always a smart move. Let’s say you have a credit card balance of $10,000 at a 15% annual percentage rate (APR) and are only making the 2% minimum payment. In this scenario, it will take you over nine years to pay off the principal and almost $5,800 in interest charges.

If you have multiple credit cards, there are two common options to pay down the debt: the snowball method and the avalanche method:

  • If you want to see progress quickly, choose the snowball method. Start by paying the minimum balance on all your credit cards. With any extra cash, pay down the smallest balance first. Once that card is paid off, use the extra cash to increase your payment toward the next smallest balance, and so on until all cards are paid off.
  • If you are more concerned about reducing your monthly interest payments, consider the avalanche method. When using this plan, you can continue to make the minimum payment on all credit cards. However, you apply any extra cash toward paying off the credit card with the highest interest first, then continue paying off the other cards in descending order of interest rate.

Step 3: Build up your emergency fund

Once you have a debt management plan in place, avoid resorting back to credit cards for big expenses by saving three to six months of living expenses in cash. Financial setbacks in the form of unexpected medical bills or a sudden job loss can quickly derail your financial plan. Be sure to build your emergency fund even if you are focusing on paying down high-interest-rate debt.

Step 4: Pay yourself first and save

Paying yourself first is empowering, whether you are building your emergency fund or contributing to your 401(k). You are forming the foundation for your financial freedom. The ultimate goal is saving 15%-20% of your gross income annually.

Consider having your paycheck deposited into a savings account and transferring what you need for your regular expenses (e.g., your mortgage, car payment, utilities, etc.) into your checking account. You are more likely to reconsider spending extra cash on the impulse items in your Amazon cart if you must take the money out of savings to pay for them.

In addition, keep your fixed costs such as rent or mortgage as low as possible so you can funnel cash toward meeting your savings goals. While a lender may approve a mortgage up to 35% of your gross annual income, you should aim to keep your payments below 25%. Some experts recommend keeping them below 15%; however, this may not be feasible depending on where you live. Review your insurance, cable/streaming services, cell phone and other bills annually. Don’t be afraid to call and attempt to negotiate a lower payment. Nothing ventured, nothing gained.

While it’s something your parents probably did, making regular deposits into a “vacation club” or “Christmas club” account is still relevant today. Having separate accounts for those short-term goals or expenses helps keep your budget intact throughout the year.

Step 5: Take advantage of compounding interest

Start early and save as much as you can for retirement — you would be surprised by the difference 10 years can make. For example, let’s say Chris and Pat both invest $10,000 annually with a 6% annual compound rate of return. Chris starts investing at 25 and stops at age 65. Pat starts investing at 35 and stops at 65. Not considering any fees or taxes, Chris’ account is worth $1,547,619, whereas Pat’s account value is $790,581. Note, compounding interest can also work in reverse if you are in debt. That is why it might take over nine years to pay off $10,000 at 15% APR.

If you need to decide between building up your emergency fund and contributing to your 401(k), choose your emergency fund. In 2015, 21% of all active 401(k) participants had a loan against their account at one point in time because they did not set aside enough money in an emergency fund.

Step 6: Protect yourself from life’s risks

It’s essential to protect yourself and your family from financial stress caused by a fire, car accident or death by having sufficient homeowners/renters, auto and life insurance. Consider adding umbrella insurance for extra liability coverage beyond your homeowners or auto insurance policy.

Step 7: Take care of your health

According to a 2017 study by the National Bureau of Economic Research, people who remain healthy are able to earn and accumulate more wealth over their lifetime. The average difference in net worth between a healthy 65-year-old man and an unhealthy man of the same age is over $150,000. Accordingly, taking care of your health can help you achieve financial independence in multiple ways.

For one, eliminating unhealthy vices such as smoking and drinking alcohol will allow you to direct those funds to savings, while improving your physical health. Poor eating habits, stress and lack of sleep can create health issues. Health problems beget financial stress, ultimately resulting in more health issues. High health care costs can lead to reduced retirement savings, credit card debt and even bankruptcy. If you live close to your employer, consider walking or cycling to work. Not only will you improve your physical health, but also reduce your fuel costs, car maintenance and possibly auto insurance expenses.

As we launch into a new year and decade, it’s time to create a new, financially independent you. Remember that knowledge is power. As you start the journey to financial independence, take the time to learn about general investment concepts, as well as understand your insurance coverage and how personal taxes work. As your assets begin to grow, don’t be afraid to seek professional help and ask relevant questions so you can continue on the road to financial freedom.