Everybody wants to achieve financial freedom. In simple terms, financial freedom means having savings, cash on hand, and investments to sustain the kind of lifestyle you have always dreamt about.
The vital part of financial freedom is having enough savings so you can follow your dream career without being motivated by the annual income or retiring without having to worry about finances.
While it is important, a significant percentage of the adult population does not achieve financial freedom. Many people have to deal with increasing debts, wasteful spending, financial emergencies, and other issues that stop them from reaching their goals. Unexpected events such as natural disasters or pandemics also change plans and reveal loopholes in safety nets that were previously unnoticeable.
Although anyone can run into trouble, the following tips should help you achieve financial freedom.
1. Understand Your Current Position
Nobody can achieve financial freedom unless they understand their starting point. Once they set themselves on the path to achieving financial independence, people should analyze their current position to know how much debt they have, how much they have saved, and how much money they need.
Before doing anything else, always create a list of the debts (student loans, credit cards, car loans, and mortgages) accumulated. The list should also include the total amount of money borrowed from friends and family at any given point. This should indicate the total debt.
After determining the total debt, a list of all the savings, including stocks, company stock matching programs, savings accounts, retirement plans, and company retirement matching programs. Also, add any recurring monthly payments like money from side hustles and salary.
2. Write Down Your Goals
You can’t achieve financial freedom if you do not know why you need money. Different people have different reasons for choosing financial freedom. When some people want to escape from the 9-to-5 prison, other people want to save up enough to travel after retirement.
Realistically, you may not achieve every set goal within a month or two, but you can measure the progress over a year. Always connect each of your goals to a specific number and time frame.
After setting goals, do not sit back and relax. Get down to work and focus on achieving every particular objective you have written down. Knowing the specific thing you wanted to achieve makes it a lot easier to achieve financial freedom.
3. Create Extra Sources of Income
After deciding to chase financial freedom, you may realize that your salary is not big enough to cover all your debts. Catholic financial freedom requires severe sacrifice and dedication. Your regular job may not provide everything you need, so you may have to seek an extra source of income aside from your current job.
Experts recommend having at least six streams of income. Income falls into two categories: active income, where the time you spend impacts the amount of money you make, and passive income, where you keep earning money even when you do not work.
Starting a business can be another great source of income. Before starting a business or seeking an alternative source of income, always weigh the pros and cons to make sure that you are making an informed decision. The good news is all seven streams of income can be from a single source, so you can start a business and have seven different outlets. Also, remember that you do not have to begin with all seven streams, and you can build it gradually.
4. Invest in Your Future
This is an essential part of financial freedom. You can follow all the provided tips and establish substantial savings with zero debt, but that will only help you in the short term. Financial freedom includes getting prepared for any unexpected occurrences.
Make sure you set aside enough money for the rainy days or retirement. Although it is something nobody likes talking about, the truth is you can also die at any point. Failing to invest and prepare for the unexpected will leave your family struggling with taxes, funeral expenses, and the debts you left behind.
Talk to your employer about adding a retirement plan to your employment contract. If they already have one, monitor it regularly to witness your savings grow.
Also, create an emergency fund equivalent to 6 months of your monthly salary. You can start gradually and grow it over time. An emergency fund covers unexpected emergencies such as accidents and damages to your property.
Financial freedom is the key to taking control of your finances and your life. The main aspects of economic freedom are living on what you can afford and only spending money on necessary things such as shelter, food, and even vacations so you can unwind. Sticking to the financial freedom tips provided in this article will get you closer to your goal. Take a look at your current financial situation today, write down your financial goals, create additional sources of income and invest in your future to break Free from the bondage of financial slavery.
