The idea of financial seems like a great theory to many people. Even most of those who believe that financial freedom is truly achievable often don’t know what to do to get there. The great news, however, is that anyone can become financially free – including those with huge financial troubles at the moment.
But What Exactly Does Financial Freedom Mean?
Different people have different explanations for what financial freedom is. But what they all agree on is that people who are financially free have taken ownership of their finances. Financial freedom has to do with having reliable cash flow so you can live your desired life. It means not being overburdened by debt, and not worrying whether you’re able to cater for all your bills. It’s about having a solid long-term financial plan and actively increasing your savings.
So How Do You Become Financially Free?
The path to financial freedom does not have to be unnecessarily long or complicated. By taking the following guidelines, you can get there much more quickly than you expect.
1. Understand Your Current Financial Status
The journey to financial freedom must begin by knowing your starting point. How much debt do you have? Do you have any savings? How much money do you need? The answers to these important questions can help you know what direction you need to take.
Make a list of the debts you’ve so far accumulated. Include all the money you’ve borrowed from relatives and friends over the years. After you’ve added the figures, take a look at your savings. These numbers give you a real picture of where you are.
2. Adopt A Positive View Regarding Money
People who usually don’t make lots of money often look at having money as a bad thing. But regardless of your financial woes, you should always know that money is good. You shouldn’t feel guilty for wanting more money, or having a great deal of it. After all, you need money to enhance your life. Money is ultimately a necessity, just like food. Once you adopt a positive view about money, you stop subconsciously sabotaging your opportunities of making and keeping it.
3. Make A List Of Your Financial Goals
Everyone needs money for certain reasons. Some want to get out of debt. Others want to escape formal employment. Still, others spend more time with their families. Once you tie down financial freedom to a goal that excites your emotions, it becomes a lot easier to achieve it. As you watch your debts shrink and your savings increase, you get motivated to work even harder.
4. Keep Track Of Your Spending
Having a clear idea of where all your money is going is a major step towards becoming financially free. Some people opt for a zero-based budget, while others are a bit more fluid with their cash. Regardless of what option you take, just make sure you keep an eye on where the money goes. There are currently many tools you can use to help you, some of which are free. Tracking your spending helps you stay focused on your financial goals.
5. Always Pay Yourself First
Always, be sure to set aside a specific amount of money for your savings account before you use the money on anything else, including bills. It’s one of the best strategies for becoming financially free. If you put $500 per month towards your savings account, for instance, you make sure that you’re accumulating money that you can invest in yourself. Another way to pay yourself is by asking your employer to put a certain percentage of your money towards your retirement savings account. This way, you’re investing in your future before paying anything else.
6. Spend Less Than You Make
A common trait among the world’s wealthiest people is that they are strictly frugal. Always avoid spending more than you need to do. When you spend less, you’ll have a higher amount of money to set aside towards your financial freedom. Frugality also helps you realize that you can still live comfortably on less stuff than you thought you needed.
7. Pay Off Your Debt
Some people believe that it’s best to invest your money rather than use it to get out of debt, be wary of taking that route. What if the investment fails? You could end up in way more debt! So find ways to start decreasing your debt as early as you can. The sooner you are free from a pile of debt, the earlier you can start to have your money working for you. You can choose between paying off your smallest debts first and paying off those with the highest interest rates.
8. Find Additional Ways To Make Money
Financially free people often have multiple streams of income. If your debt is higher than your salary, you need to look for creative ways outside your day job to make money. Some financial experts recommend having at least seven sources of income. How money do you currently have? Try to have as many sources of passive income as you can. Passive income is money that comes in even when you’re not actively looking for it.
9. Plan Your Time In Advance
When you plan for each day before it happens, you become more precise about everything you need. You can do it the night before. Over time, you’ll find that you have more self-control, even when it comes to your financial habits. You could, for instance, plan how much you’re going to spend for the day, the month, or the year, and how much you’ll save to draw closer to financial freedom.
Achieving financial freedom is something that anyone can do, provided they set their hearts on it. All you need is adopt a set of habits that’ll get you there, like spending money on what you need, setting aside money for your savings, paying off your debt and finding more streams of income. Start today and before you know it, you’ll have more control of your finances and, even more importantly, your life.