We all want financial freedom. Whether you are consciously working towards it or not, financial freedom is something that we all dream to achieve by a specific age. The freedom of spending your money however you want and not worrying about bills sounds like a dream.
However, many things discourage us from gaining financial freedom. You may have a huge student debt that you are struggling to pay off or are barely being able to manage your everyday expenses. Regardless of your story, we have good news for you: you can achieve financial freedom.
What is Financial Freedom?
While we all have heard the term, we may not know what financial freedom means. In theory, it can be about taking complete ownership of your money and expenses. But in reality, financial freedom is much more than that. It can be a situation where you no longer worry about paying your bills next month or where you do not have any debt to your name.
Once you set out on a pursuit of achieving financial freedom, you should first become self-aware. This means that if you already have some debt to pay off, you should start by focusing on expanding your revenue streams and increasing your monthly income. Self-awareness about financial freedom should also mean that you account for any unexpected medical expenses that may arise, your long-term financial situation, and even come up with a feasible plan for your retirement.
To help you reach a point of financial freedom in your life, we have two different ways of facilitating you.
5 General Steps to Reach Financial Freedom
Before we can dive into the specifics, there are some general steps to financial freedom that you need to consider right now:
1. Pen Down Your Goals
Ask yourself this simple question: why do you need money? Perhaps you are struggling to pay off debt or save to purchase your first home.
Once you determine what your exact goals are, you can easily follow the steps to financial freedom. When you slowly find yourself reaching your goals, you will become more and more motivated to become truly financially free.
One interesting way to determine your goals is by writing them down. You may think of this as a mundane thing to do, but it helps you develop specific, measurable, attainable, and time-specific goals.
2. View Money Positively
Spending all your hard-earned money on monthly bills can be discouraging. As a result, you may start disliking the idea of making any money at all. This has a negative impact on your mental health – since you start looking at money in a negative way.
But that needs to change. You should look at money positively because it helps you get your necessities like water and food and allows you to achieve bigger dreams and lead a stress-free life.
According to a financial freedom book by Jen Sincero, people who are unable to make money often attach shame to it. This becomes the biggest obstacle towards attaining financial freedom.
As Sincero stated, you need to remember that money is used to enhance your life – and thus, you need to look at it more optimistically.
3. Know Where You Spend
Budgeting is an important part of your entire financial freedom plan. There are many online tools that can help you track the amount of money by categorizing it into different accounts, such as groceries, bills, debt payments, and entertainment. This allows you to become aware of where you spend and helps you avoid overspending.
By maintaining certain goals about your spending patterns, you can save extra money, which helps you achieve financial freedom in the long run.
4. Save First, Spend Later
By following a regime of putting a specific amount into your savings before even paying your bills, you will be able to see a huge difference in your savings account. While you may think that you don’t have enough to put aside the money into savings, that is actually just a reminder to pick up a side income since you need to pay your bills.
By saving first, you always have a guaranteed amount going into your savings. This contributes to your overall financial freedom plan.
5. Buy Happiness Instead of Things
Life is not all about making and spending money. Instead, it can be about a bunch of other things that may not even require you to spend a single dollar.
This means that you need to buy intangible experiences in your life, not tangible products. The chances are that your happiest memories will be with certain people – not of purchasing certain things. This mindset makes the financial freedom movement much easier. You just need to focus on creating low-cost memories with the people that you love.
5 Practical Steps to Financial Freedom
Now that we have highlighted the basics of achieving financial freedom, it is time to get down to the specifics. You may have already heard about the steps to financial freedom by Dave Ramsey.
While his advice has proven successful for many people, you do not always need a financial freedom book or financial freedom podcast to tell you what to do. Here are some practical changes that you can make in your life today:
1. Build an Emergency Fund
Life is unpredictable – and you need to plan for it. You may have a car breakdown, a medical emergency, or even get laid off from your job. In this case, you should have an emergency fund that you can rely on.
This is a very crucial step to financial freedom since it requires you to save up to six months’ worth of expenses. While some people suggest you to cut this down to three months, we would still suggest that you have a six-month emergency fund according to your current spending and bills as it could definitely rescue you on a rainy day.
2. Pay Off Debt
You can never have a complete financial freedom plan without paying off the debt that you already have. This may be a student loan, a car installment plan, or even a house mortgage. The most important aspect about achieving financial freedom is starting with a clean state – and that can only be done once you have no debt to your name.
For your financial freedom movement to be successful, you should steer clear of any debt in the future too.
3. Start a Side Hustle
Considering the number of expenses that we have today, one job is not sufficient. This means that apart from your 9-5, you should consider starting one or multiple side hustles that help you gain an extra income. This could help you attain your goals quicker and is an incredibly significant step to financial freedom.
To your advantage, there are many different side hustles that you could do. This includes freelance content writing, starting a blog, or even investing in the forex market. Best of all, this side hustle could become a great way for you to do something that you are ambitious about – such as starting a home bakery!
4. Make Investments
Investments will help you have a stable source of income even on rainy days. Many financial freedom podcasts are quick to recommend investments as an easy way of attaining your goals – especially since it is very convenient, and you can even start with a minimal amount.
Many companies offer retirement plans, and investing in that monthly could be a great way of reaching financial freedom upon your retirement. Apart from that, you can easily invest in mutual funds, peer-to-peer lending, or maybe some government bonds.
5. Remain Consistent
This is something that you can always learn from financial freedom books or financial freedom podcasts. Achieving financial freedom is not something that you can do overnight because it will take years of planning and saving before you reach a point of not worrying about your expenses. However, you also need to remember that financial freedom is not unattainable – and with the right financial freedom plan, you can achieve anything.
Being consistent with your plan may sound easy now, but it is certainly difficult to follow when you desperately want to drain out your savings for an international trip. In times like these, even we suggest that you turn to some financial freedom podcasts for motivation.
Once you have gone through all of our steps to financial freedom, we hope you can clarify your personal financial freedom movement. Remember that both the general steps and practical steps to financial freedom are equally important – but you will need to plan your own journey according to your specific goals.
The most important part of this journey is that while it may seem like a struggle right now, but having the freedom to not worry about where your money will come from or how you will pay your bills is a truly euphoric feeling.
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