A GUIDE TO FINANCIAL FREEDOM
This guide to financial freedom will help look at your financial future. Consider your life goals.
- A home for your family
- Financial stability
- The ability to travel the world
What is keeping you where you are?
- Lack of financial focus?
- Fear of change?
- Not sure what to do?
- Have a hard time controlling your spending?
- Too comfortable being broke?
- Trying to impress others while hiding your financial stress?
You can decide to control your money today.
WHAT IS FINANCIAL FREEDOM?
Financial freedom is not worrying about money. In life, there are a lot of things that can cause stress but money is at the top of most peoples’ lists. This guide to financial freedom primary goal is for you to set up your financial future so your mature years will be worry-free when it comes to money.
Although it’s essential to have the freedom to retire whenever you want, some people confuse financial independence with retirement. But achieving financial independence does not require waiting till retirement.
Depending on your situation, having the means to pursue your passions and earn money from them will signify financial freedom. It can include quitting your 9 to 5 job to spend more time with your kids or building a business you’re passionate about.
FINANCIAL INDEPENDENCE VS. FINANCIAL FREEDOM
To properly work towards financial freedom, it’s vital to understand the difference between financial freedom and financial independence, which are sometimes used interchangeably.
The core concept of “independence” is crucial to financial freedom. It is the capacity to take care of your financial demands independently. A stable salary, the ability to pay all your debts, such as student loans or a mortgage, and substantial savings are all signs that you are financially independent. Investing will make your dollars work for you.
Although it is a necessary first step towards financial freedom, financial independence is not the ultimate goal. Financial independence is a long-term plan for building the life of your dreams.
“Success is being able to do the things you love doing, when you want to do it, where you want to do it, with whom you want to do it, as much as you want,” says Tony Robbins. This is the ultimate goal of financial freedom.
Is it possible to achieve financial freedom?
True financial freedom appears to be a distant dream for many individuals.
- Debt owed on student loans is at an all-time high. The state of the economy is erratic. It can be daunting to invest.
- We have a poor work-life balance, work longer hours, and earn less money.
- What is the answer to all of these improbable challenges?
- It involves accepting responsibility and implementing the desired adjustments.
Your current income is a result of your standards, not the market or the overall state of the economy, according to Tony Robbins.
It’s easier to put the blame on the economy and accept the status quo.
- Raising your standards, and putting effort into living the life you want is more challenging. But once you do, you’ll discover that achieving financial freedom is easier than you imagined.
Change can be hard because you will have to stop doing things you are used to but it will be worth it.
8 STEPS TO ACHIEVING FINANCIAL FREEDOM
Break down the steps to financial freedom by creating a massive action plan (MAP), so you can emotionally connect with your goal, and outline the possible ways to accomplish it.
1. Choose your number
How much financial freedom do you and your family need?
- One of the most vital steps to financial freedom is to consider your number or the sum of money that will enable you to achieve financial freedom.
- No single magic number exists. You might make a certain amount of money, allowing you to live comfortably, and pursue your interests. How much is that?
Analyze the situation immediately by considering your usual living expenses, a safety net for the future, unanticipated bills, and sufficient excess to avoid financial stress.
Write down a number that you feel is realistic, even though it might seem significant.
- What is your relationship with money?
- Should you only make enough to live on?
- Do rich people make you feel uncomfortable?
- Do think money is not important?
- How much do you now make?
- What things do you need to change to earn this sum of money?
2. Conquering your limiting belief that concerns money
Even those with sizable savings can worry about their finances. If you want to live the life that you dream of, you must conquer your money fears and constricting beliefs.
- Do you believe you will never be wealthy because no one in your family has ever experienced financial freedom?
- Do you think you lack the abilities or knowledge to generate enough income to achieve financial freedom?
- After learning about these concepts, you can replace them with more empowering ones, such as “I am a maker of abundance” or “I deserve to be financially free.”
- In order to achieve financial freedom you must overcome your conflicting beliefs.
- You might believe that money not is important but you work hard every day to earn it.
- Not having the money you need in a crisis situation keeps you up all night.
- You get payday loans, bank loans, and family loans, just to make ends meet.
- You are overburdened by debt but you tell yourself money is not important.
- Visit the past to see where your issues with money came from and how it worked out for those who influenced your money mindset.
3. Organize your finances
Use this technique to examine your finances critically and find any errors that require correction.
- Do you have a lot of debt?
- How many credit cards do you have with high-interest rates?
- Do any of your bank accounts have outstanding debts?
- Do you know your numbers?
- How much money comes into your household every month
- Do you how much you spend every month
- What can you sell to relieve some of your burdens now?
If you owe someone money, especially with a high-interest rate, a significant portion of your monthly income will go to that person. If you receive a bonus or pay increase, pay your debt immediately.
- Pay off your smallest debt using the snowball approach, then begin paying down the next one.
- You’ll have more money each month, and more peace of mind once you’ve eliminated your debt.
- Create a monthly budget to track every dollar you make and spend.
4. Create a short-term savings strategy
Financial freedom won’t happen overnight, so as you implement your strategy, you should have a reserve set aside to cover financial surprises. You’ll have more money to budget each month and put towards savings once you’ve paid off your debt.
- You can use the additional funds to feed your money-making machine when you have a six-month emergency fund that can cover any eventuality, such as a sudden loss of income or significant medical expenses.
- If you feel that you don’t make enough to save, you are probably wrong.
- Reduce your food bill, and eliminate things you should not be eating to save money.
- Give up bad habits to save money.
- Stop eating out, cook at home that will save you more money than you think.
- Automate your savings every paycheck, even if you start with $20 dollars.
Having this emergency money is practical and essential for your mental well-being. When you have financial security, you can take more chances and say yes to things that will make you happy without worrying or feeling guilty about it.
5. Do the math
Before you purchase anything do the math. Math helps you to understand the numbers and what the item is really costing you in the long run.
- Know your interest rate, if it’s too high, you might want to reconsider the purchase.
- Ask yourself why are you buying this item, do you really need it?
- Can you get something that is less expensive and still fits your needs?
6. Are you making enough money?
Are you settling for what you have when you need more?
- This is a poor vs abundant mindset
- Even though I can barely cover my bills, I don’t feel like looking for another job, working two jobs, or starting a side hustle.
- If you live in a city like Los Angeles, homeless people are everywhere. If you don’t make enough money, and your landlord raises your rent, what do you do?
7. Thinking about getting a student loan or increasing your already existing loan?
- Do your research before deciding what field of study you are going to pursue.
- What is the maximum you can earn?
- How many years do you need to study to earn the maximum amount of money?
- What will the degree cost in the future with interest, and other expenses?
- Can you find a way to get it without taking out a loan?
- Do you really need a degree to get the work in this field? For example, most entertainment production jobs do not require a degree but some people still go to film school. AFI one of the most prestigious program cost 63,575 dollars for people who graduated in 2022. The degree does not guarantee them anything but the debt will follow them regardless
8. Ways to increase your income
We live in a time where you can make money from almost anything. There is the gig income where you can make extra money but is not a feasible long-term plan. Why? If you only focus on making money from a job or self-employment, that will limit the amount of money you can earn over time. There are other ways to make money.
- Create a personal brand using social media and earn money through ads and sponsorships
- Got a talent like drawing, baking, sewing, etc? Sell your work on a website, social media, or Etsy
- Teach others your talent by creating an online course on Skillshare, or Udemy, or selling it on your website.
- Start investing slowly, you are probably going to spend money on things you won’t remember, instead, let your money work for you.
Unfortunately, a lot of people make bad decisions about their financial future because they want to impress other people. But, you may not know your friends and family’s real financial situation. People hid things that they feel embarrassed about.
Financial freedom is about having the flexibility to make the most of your life without depending on a job or paycheck. It has nothing to do with wealth, power, or prestige. You can eventually become financially free by aggressively managing your money and taking advantage of compounding interest. But, there is nothing wrong with wanting to create wealth to leave for future generations.
You can achieve any financial goal you desire but you must put a plan in place and follow it.