TEN STEPS TO FINANCIAL FREEDOM BY 2023
Financial freedom. It may appear to be a plausible theory. In reality, though, it is feasible for everyone to succeed. And by anyone, I include myself, who formerly had tens of thousands of dollars in student loan debt. There is always a way to return to financial stability, regardless of current difficulties. Attempting a budgeting application may be the initial step.
In this essay, we will discuss the significance of financial freedom and provide several financial freedom suggestions, including a few that have worked for me.
What is Financial Freedom?
Financial freedom requires taking charge of one's money. You have a reliable source of income that enables you to live the life you choose. You are not concerned about paying your payments or unexpected costs. And you are not saddled with a mountain of debt.
It's about realizing that you need more money to pay off debt and perhaps expanding your income through a side business — we'll get to that in a moment. It also involves actively saving for emergencies and retirement.
10 Game-Changing Tips for Financial Freedom
1. Understand Your Current Situation
You cannot attain financial freedom without understanding your starting place. It might be discouraging to consider how much debt you have, how little savings you have, and how much money you need. But this is a critical move in the right direction.
Compile a list of all your bills, including your mortgage, school loans, auto loan, and credit card balances. Don't forget to add any money you may have borrowed throughout the years from friends or relatives.
Take a big breath now. And yet another. Then, add all the numbers together.
How much debt are you carrying?
Don't worry if it's a significant number; I'll cover several methods for paying it off later in this essay. If the number is little, congrats! Feel free to contribute your recommendations for financial freedom in the section comments below.
Next, examine the savings you have accumulated.
List all of your funds, including savings accounts, stocks, workplace stock-matching programs, business retirement-matching programs, and retirement plans. Then, we will include the recurring monthly income you get, such as wages, money from a side gig, etc.
Keep these figures in mind as we discuss the following If it's a large sum, don't panic; I'll discuss some strategies for paying it down later in this post to financial freedom ideas.
2. View Money in a Positive Light
Debt may certainly be quite disheartening.
But remember that money is a wonderful thing, even if it appears to be carrying a heavy load at the moment.
You deserve financial freedom.
According to Jen Sincero's You Are a Badass at Producing Money, people who do not make a great deal of money typically feel guilt when it comes to making money. Therefore, the greatest difficulty that many individuals have while attempting to get money is that they believe possessing money is undesirable. Many feel bad for possessing it and even more so for desiring it. Sincero stated on money, "We utilize it daily to improve our lives, yet we always seem to focus on the bad aspects of it."
Money is a requirement like to food and water. It enables you to purchase necessities and live the life you choose.
To attain financial freedom, you must view money as a tool to help you realize your ambitions, fuel your energies, and live a stress-free, enjoyable life.
Because if you have a bad attitude about money, you will unconsciously damage your chances of acquiring and retaining it.
3. Jot Down Your Objectives
Why do you need money?
Do you wish to eliminate debt permanently? Do you long to escape the 9-to-5 grind? Do you have a favorite place you've always wanted to visit? Are you putting money down for retirement, a wedding, or kids?
By connecting financial independence to an emotional goal, I was able to achieve it. My objective was to repay my college loans and save for my first home. In all honesty, it was a wonderful feeling to watch my debts diminish and my money grow.
I worked harder to earn more money in order to see a greater shift in my own finances as a result of my excitement at watching the numbers move. Would I have attained financial freedom if I hadn't attached it to an emotional goal? Most likely not. I was determined to eliminate my debt and leave my parents' home. This desperation propelled me throughout my entire journey.
Another intriguing event occurred. In February 2016, I jotted down a couple of my objectives on a scrap of paper:
- Earn $100,000 selling online items.
- Save $20,000 for a deposit on a home.
- Pay back $24,000 in student debts.
I ultimately misplaced the paper and entirely forgot about that document. A little over a year later, when I was already residing in my new residence, I discovered it in my notebook. Indeed, I had completed all three objectives. The Surprisingly was that I wasn't even actively considering those objectives.
You might not be able to achieve everything in a month. But a year is a considerable amount of time to achieve your objectives. Make sure your objective is related to a clear target number. You won't even realize it when you begin working towards these objectives.
Knowing precisely what you wish to do makes reaching financial freedom one million times simpler.
4. Track Your Expenditures
Keeping track of your expenditures is a vital step toward financial freedom.
You may use a service such as Mint to track your spending, overspending, account balances, and debt.
Another nice feature of Mint is the ability to define objectives on the dashboard. You may track your objectives and know the precise month in which you'll reach them based on the amount of money you invest. Consequently, you are held accountable and reminded to continue contributing money.
After one month of utilizing Mint, I was able to save additional funds towards my new wedding fund goal. To reach my financial goals, Mint encouraged me to generate additional passive income by keeping me focused on my objective.
5. First Pay Yourself
Almost certainly, you've heard the phrase "pay yourself first" before. In case you haven't heard the term "pay yourself first," it refers to depositing a certain amount of money into your savings account before paying other expenses, such as bills. And the practice of paying yourself first has brought numerous individuals closer to financial freedom.
Why?
Because if you want to pay yourself $1,000 every pay period first, then you must pay your debts with whatever is left over. And if you don't have enough money to meet these expenses, you're compelled to find a second job to make up the difference.
By paying yourself first, you ensure that you will always save money to invest in yourself. By doing the reverse, you end up with whatever is left over, which is typically insufficient to help you achieve financial freedom.
You may also pay yourself first in alternative methods. For instance, if your employer offers a retirement savings program, you might request to withdraw funds for your retirement. Thus, you are investing in yourself and your future before anything else. The money is withdrawn from your paycheck, so whatever is left is money you may set away for bills and expenses.
6. Spend Less
Warren Buffett acquired a five-bedroom mansion for $31,500 in 1958 and has lived there ever since. What is his net worth? An incredible $90.3 billion. He can afford a larger, more costly residence. However, his thriftiness may be the reason he is one of the world's wealthiest individuals.
Kanye West, on the other hand, does not fear flaunting his wealth. He resides in a house worth $20 million. And at one point, with $53 million in debt, he decided to request $1 billion from Mark Zuckerberg... via Twitter.
What is the difference between the two extremely successful men? Buffet just spent what was necessary, whereas West spends money he does not have.
The fact is that many wealthy people do not appear wealthy. Every day, Zuckerberg wears the same basic T-shirt and pants.
Buying less items can help you accumulate wealth.
Spending less is advantageous for two reasons. First, you will have more money to save for financial freedom. Two, you will discover that you actually require far fewer material possessions to thrive, which will allow you to save more money.
This brings us to our next point...
7. Purchase Experiences, Not Items
Life is brief. It's not about saving all your money till you're 65 years old. You may appreciate life while you are still living.
The things that will ultimately help you live a more satisfied life are experiences, not material possessions.
And are the items you purchase contributing to your long-term happiness? Does the debt you have incurred by purchasing a lot of things make your life easier?
Let's now flick the switch.
What is your most joyful memory? What had you been doing? With whom were you?
Let's build similar memories in the future.
Perhaps you have a friend with whom you like exercising. Invite her over to workout at home to a free YouTube playlist.
Tonight is dating night. You wish for it to be unforgettable. Find a discount for a cool activity you've never tried before on Groupon.
You had always desired to visit Rome. You have been saving for a year in order to take your ideal trip. Enjoy your holiday without remorse. You did not incur debt to get it; you have earned it. Or, you may become a digital nomad and work while traveling the world.
Life consists of moments. The fondest memories result from meaningful time spent with loved ones. While certain goods (such as weekly family video game night) might help bring you closer to your family, the majority of them do not provide much value.
Spend no money. You are not required to pretend you have money.
8. Repay Debt
Some individuals may tell you that investing in stocks is more prudent than paying off debt. If you are an excellent stock picker, this may be accurate. However, if you have never invested in stocks before, you may incur more debt.
After making their final debt payment, a large number of people share a common emotion: relief.
Even if you have $30,000 in the bank and $50,000 in debt, you cannot call yourself financially independent. You remain $20,000 in the red.
Although paying someone else is less desirable than having money in the bank, it brings you closer to financial freedom.
There are two primary approaches to debt repayment: snowball and avalanche. Snowball is when the lowest debt is paid off first. A debt avalanche occurs when the debt with the highest interest rate is paid off first.
You must decide what will suit you the best. However, I made use of the snowball effect as I worked to pay off my debt. It helped maintain my motivation. Since I was able to pay off my first debt, a $1,200 credit card balance, in only one month, the sense of success encouraged me to tackle a much larger, outstanding school loan.
And since credit card debt was no longer an issue, I would pay around three times the $300 minimum monthly. As opposed to the nine years allocated, it took me around three years to repay the student loans.
Paying off a large debt removes a tremendous burden off your shoulders. After paying off your debt, you watch your bank account balance increase. It's a great feeling to watch the number increase (even if you had to watch it decrease at first), and it motivates you to continue raising it.
9. Develop Additional Income Sources
So you're probably asking yourself, "My debt is far bigger than my income; how can I pay it off if I don't make enough?" at this point.
If you are serious about achieving financial freedom, you must sacrifice your blood, sweat, and tears.
Your 9 to 5 may not be sufficient. If this is the case, you must seek additional income outside of your existing position.
Some experts suggest having seven revenue sources. If you work from 9 a.m. to 5 p.m., you should be congratulated; just six more to go!
Now, there are two methods to consider your sources of revenue: active income (exchanging time for money) or passive income (money that can keep coming in, even while you sleep).
If you exchange your time for money, you are restricted by the 24-hour day. Here are a few passive income-generating activities:
- Become a freelance writer by searching ProBlogger for gigs.
- Assist a company owner via Upwork as a virtual assistant.
- Profit from acquiring new skills with online courses for entrepreneurs.
- Become a driver for Uber.
- Help with domestic chores on Task Rabbit.
- Obtain the occasional job on Craigslist.
- Still more!
If you don't have much time to commit to generating money, you can focus on boosting your passive income streams, such as:
- Shopify may be used to launch a dropshipping website.
- Shopify allows you to start your own personalised apparel business.
- Market valuable content (blog, ebooks, courses, webinars, audiobooks, podcast, apps).
- Become a partner marketer.
- Purchase property and rent it out.
- Invest in equities.
Fortunately, all seven of your revenue sources can originate from the same source. If you are an expert in e-commerce, you may, for instance, start seven different stores to make money. Remember that you do not need to begin with seven streams; you may work up to that number gradually.
10. Invest in Your Future
The final financial freedom suggestion is crucial. Assume you follow the advice and tips in this article to reduce your debt and boost your income. This may be sufficient to assist you right now. However, what if the unexpected occurs? Will you be well-prepared?
It's necessary to save money for emergencies, retirement, and (sorry to be depressing) in case you pass away, so that your loved ones don't go bankrupt paying for your burial, bills, and taxes. Okay, let's return to that joyful spot.
Whether you have a 9-to-5 employment, speak with your employer about creating a retirement plan, or check to see if deductions are currently being made. The deduction is made before the funds reach your account, so you never feel as though you are losing money. And it's very nice to check on your savings occasionally and watch them increase.
Additionally, you should save enough money for an emergency fund. Some experts suggest $10,000 is plenty, while others recommend six months' wages. Moreover, if you do not generate a substantial amount of money, these figures may appear rather expensive. Start with a target you can afford, such as $100 for the first month. And if you make more active or passive money, increase your objective to $500 each month, then $500 every two weeks, and so on. If you've overspent on credit and a large credit card payment is due, don't utilize your emergency fund; instead, pursue more active earning alternatives in order to pay it off more quickly.
The emergency fund is exclusively for unanticipated situations, such as a tree falling on your home, a vehicle accident that requires out-of-pocket payment, or a hospital visit.
By saving away funds for emergencies and retirement, you will be less likely to return to your current situation: hoping for financial freedom.
Conclusion
Financial freedom enables you to assume control over your finances and, more significantly, your life. It's about living within your means, being a bit thrifty, and spending money just on necessities such as food, housing, and yes, even vacations (relaxation is important too, you know). By implementing the advices financial freedom in this article, you will get closer to the financial freedom you deserve. Examine your finances, create new revenue streams, and pay off your debt, and you'll be debt-free in no time.
How close are you to financial freedom? Please let us know in the comments!