Financial Freedom… ahh!
You have most likely referred to it or heard someone talk about their financial life goal and mention this. We are also guilty of dreaming of financial freedom, which is okay. Everyone seems to be after it, which begs the question, what exactly is Financial Freedom anyways?
Financial Freedom means different things to different people and is defined in terms of one’s personal goals and financial status. It could be going on a trip or saving a percentage of their income after necessities. There is still a universal understanding of what financial freedom means for everyone, whatever yours is. One or all of the following is true for all people regarding being financially free.
- Being able to afford the lifestyle you desire for yourself or your family.
- The choice to work. Being able to pursue the career you want without being driven by earning a certain amount.
- Having robust savings and diversified investment, an emergency fund nest egg with no debts or loans looming.
Wow! It can sometimes feel like financial freedom is a distant, unattainable goal that only people born into wealth have access to. What are the regular 9 to 5ers like ourselves to do? There are a million books written on financial freedom, so we will not rehash all of what has been said and written. Today, we will demystify the idea of financial freedom and help you realize whether it is a possibility for you or if there are changes you have to make.
When you think about it, financial freedom can feel overwhelming, especially when you live from salary to salary with a cycle of never-ending bills and the constant increase in the cost of living. It can be challenging but working towards financial freedom is a journey with years of money management and wise financial decisions. It does not happen overnight and would take diligence, discipline, consistency, and meticulous planning.
All this is to let you know that it is achievable! It can definitely be done, and you must have this mindset and hold on to it if that is your goal.
Changing the way you view money is a major step to getting there. Each person’s relationship with money is unique to them and influenced by their financial background, family upbringing, earnings, and lifestyle. It would also help to reexamine your beliefs about money and discard wealth acquisition bias. You should set financial and life goals that build your confidence and bank account.
There are other actionable steps to take in achieving this. They have been talked about again and again whenever personal finance is discussed. We’ll look at both the uncommon and the absolutes you already know.
- Start Investing Now
This topic of investment is no joke. You already know saving, budgeting, and tracking your expenses are essential. You must have also heard of investing, but we need to emphasize this. There is no better way to grow your money than through careful long-term investments. There are several options to choose from in investing; you can start small and diversify as you grow. Investment is a great way to make additional income passively rather than simply working to save 20% of your income. If we’re being honest, you have to do more than your regular 9 to 5 to get any extra income.
- Live Below Your Means
We did say that you might have to make some drastic changes, right. Mastering a frugal lifestyle would go a long way in helping you achieve financial freedom. Living below your means could be that you would begin to spend less on things you can afford but don’t necessarily need, less eating out, less online shopping, less Uber, and even fewer Friday nights out. You have to distinguish between the things you want and what you need. Mindful spending can help you distinguish between wants and needs and help with deciding whether to spend on something now, delay or completely walk away. Even wealthy people developed this habit before reaching affluence.
- Know your Financial Status
It entails everything. Some people do not know their net worth right now, just living on vibes and cruising. If your goal is financial freedom, you cannot live that way anymore. When we say financial status, we’re talking about your net worth, assets, properties, and valuables, then your debts, loans, and overdrafts. You should be aware of all these and monitor them as well. Being financially free may equate to zero debt and minimal reliance on loans, so part of the process is working to pay off any debts you might have and living without acquiring more. And if you must get a loan, make sure the income or benefits from taking that loan outweighs the cost of the loan. You never want your liabilities to outweigh your assets.
A key takeaway is to start early and also to seek advice. You are better off well-informed either by educating yourself or learning from a financial advisor. Be sure to set milestones as you go on because your financial Freedom is yours to define and achieve. Give yourself a break, take care of your health, and celebrate your wins.
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