Financial freedom is something anyone can achieve regardless of their current financial situation. It is the goal a lot of people have set for themselves and continually strive to achieve. Although the steps to achieving might be different for different individuals, however, the end result is the same; having enough savings, investments, and funds available to give ourselves and our families the kind of life we want.
Regardless of how bad your financial situation is right now, there is always a way to get back on your feet. This article will provide steps on how you can attain financial freedom.
What Does It Mean to Be Financially Free?
Financial freedom refers to financial well-being and security. It means an individual has the required resources and capacity to live the life they want without financial issues. Also, it means you have enough income, savings, and investments to cover your current and future expenses. Hence, enabling you to live a certain lifestyle and also giving you the freedom to follow your true goals and interests.
The process of achieving financial freedom involves several practical steps and habits. The steps will include paying off any debts you might have, building a safety net by having savings, looking into ways to generate passive income, creating a thorough budget, and long-term planning.
Following the steps will ensure you achieve financial stability and freedom. As it will help you to track your spending and also ensure that your income exceeds your expenses. However, the most important you should keep in mind is that financial freedom is a journey, not a destination, and it will take time, effort, and discipline to achieve it.
How to Become Financially Free
To become financially free, the steps you can take are:
#1. Assessing and Understanding Your Current Financial Situation
Before you can start working towards financial freedom, it’s important to understand your current financial situation clearly. This includes knowing how much debt you have, how much savings you have, and how much money you need to achieve your goals.
#2. Set Goals to Keep You Motivated
Once you clearly understand your current financial situation, you can start setting goals. These goals could include getting rid of debt, saving for a specific purpose (such as a home or retirement), or achieving certain financial stability. It’s important to tie your goals to something emotional to stay motivated throughout your journey.
#3. Create a Plan on How to Achieve the Goals
After setting your goals, it’s important to create a plan to achieve them. This plan should outline the steps you will take to reach your goals. For example, if your goal is to pay off debt, you can create a plan to prioritize your debts and pay them off using the snowball or avalanche method.
#4. Start Taking Action by Following Your Goals
Once you have a plan, it’s time to take action. This may involve changing your spending habits, increasing your income through side hustles or investments, and consistently working towards your goals. It’s important to stay disciplined and committed to your plan.
#5. Pay Off Debt Strategically
Decide on a debt repayment strategy that works best for you, such as the snowball method (paying off the smallest debt first) or the avalanche method (paying off the debt with the highest interest rate). Pay more than the minimum payment to accelerate your debt repayment. Celebrate each debt milestone to stay motivated.
#6. Develop a Budget and Stick To It
Make a budget for yourself that details your income, your expenses, and your goals for savings. Maintain a record of your expenditures and look for platforms where you might save money. Also, your spending should be prioritized to line with your long-term financial goals.
#7. Educate Yourself on Financial Literacy
Financial freedom requires financial literacy. Continually educating yourself on personal finance, investing, and money management is important. This can include reading books, attending seminars, taking online courses, or working with a financial advisor. The more you know, the better equipped you will be to make informed financial decisions.
#8. Invest for the Future
Gain an understanding of the various investing opportunities available to you, such as stocks, bonds, mutual funds, and real estate. You might want to consider working with a financial advisor to design an investing strategy that is in line with the goals you want to achieve and the amount of risk you are willing to take. Also, if you want to lower your risk, diversify your investments.
#9. Live Below Your Means
Make frugality a part of your lifestyle by avoiding lifestyle inflation and minimizing expenses that aren’t absolutely necessary. Delay your satisfaction by giving up some of your immediate desires in order to secure your financial future. You can also consider putting yourself in the company of people who share your values and are willing to help you achieve your monetary objectives.
#10. Monitor and Adjust Your Plan.
As you progress towards financial freedom, monitoring your plan and regularly adjusting as needed is important. Life circumstances can change, and adapting your plan is important. Regularly review your goals, track your progress, and adjust as necessary to stay on track.
What to Do When You Are Financially Free?
When you are financially free, three things you can do are:
Pursue Further Education
When you become financially free, you can look into further education. It can be a valuable way to make the most of newfound freedom. You can further your education to learn new skills, pursue a passion, or earn more money. It can also be some sort of investment for your future and meet new people and build new relationships.
Educate Others on Financial Freedom
Another thing you can do after becoming financially free is to educate others on how to get there too. That way, you will be giving back to the community. You can host seminars, talk shows, develop courses or write books to guide others. Also, sharing what you’ve learned to help other people reach their goals can be rewarding.
Take Care of Your Health
You have worked hard to achieve financial freedom, earning a stable income. Now, it’s time to prioritize your mental and physical health. Doing this will reduce stress and keep you active, allowing you to engage in enjoyable activities.
What Is the Difference Between Financially Free and Financially Independent?
Financially free and financially independent are two terms that are often used interchangeably, but there are distinct differences between the two concepts. Let’s break down the definitions and characteristics of each:
Financial Independence
Financial independence refers to the state where an individual is able to meet their financial needs without relying on others. It means having the freedom to organize one’s own life and make decisions without needing help from other people.
The following are characteristics of a person who is financially independent; Having a productive source of revenue, such as a job or a business, in order to meet financial obligations, being in a position to pay all of one’s bills, including one’s rent, utility bills, and any outstanding debt, keeping a savings account for use in times of crisis and unanticipated costs, having a plan for one’s retirement and being able to continue living the same way after retiring.
Financial Freedom
Financial freedom is the ultimate goal, and it goes beyond financial independence. It refers to when an individual has complete freedom and flexibility in their financial choices and lifestyle.
The following are attributes of those who are financially independent; having no outstanding debt and having a secure financial position, having the ability to deal with unanticipated costs without experiencing anxiety, having the autonomy to select the kind of life one wishes to lead, which may mean lavishing money on one’s own expenses or devoting time to one’s interests and hobbies. Also, being able to retire early or work on one’s own terms without being constrained by financial obligations is a desirable goal for many people. Individuals who are financially free are in a position to take pleasure in life, pursue their ambitions, and still have the financial security necessary to do so.
Ten Quotes to Motivate You as You Work Towards Financial Freedom
- “You must gain control over your money, or the lack of it will forever control you.” ~ Dave Ramsey
- “Wealth is not about having a lot of money; it’s about having a lot of options.” ~ Chris Rock
- “We make a living by what we get, but we make a life by what we give.” ~ Winston Churchill
- “An investment in knowledge pays the best interest.” ~ Benjamin Franklin
- “Without continual growth and progress, such words as improvement, achievement, and success have no meaning.” ~ Benjamin Franklin
- “Wealth is the ability to fully experience life.” ~ Henry David Thoreau
- “More important than how we achieve financial freedom is the why. Find your reasons why you want to be free and wealthy.” ~ Robert Kiyosaki
- “Twenty years from now, you will be more disappointed by the things you didn’t do than by the ones you did.” ~ Mark Twain
- “If we command our wealth, we shall be rich and free. If our wealth commands us, we are poor indeed.” ~ Edmund Burke
- “To achieve what one percent of the world’s population has (Financial Freedom), you must be willing to do what only one percent dares to do. Hard work and perseverance of the highest order.” ~ Manoj Arora
Conclusion
Financial freedom involves having a financial cushion, allowing individuals to have a safety net of savings, investments, and cash to cover basic living expenses and maintain a lifestyle without relying on traditional jobs or careers. It also allows individuals to pursue any career or retire without being solely motivated by earning a specific salary. Anyone can achieve financial freedom despite their current financial freedom as long as the can discipline themselves and follow the steps to achieve it.
