Path to Financial Freedom

Posted on by

“Real wealth is not about money. Real wealth is: not having to go to meetings, not having to spend time with jerks, not being locked into status games, not feeling like you have to say ‘yes,’ not worrying about others claiming your time and energy. Real wealth is about freedom.” James Clear

Financial freedom is about taking ownership of your finances. You have a dependable cashflow that allows you to live the life you want. You aren’t worrying about how you’ll pay your bills or sudden expenses. And you aren’t burdened with a pile of debt.

Financial freedom and wealth can mean many things to many people. But a cornerstone of your  personal financial freedom is your ability to financially support yourself and your family now and in the future.  Thus, financial freedom has to be personal. So, dream big and get specific about your goals.

Consequently, money and accumulating wealth aren’t everything and they won’t make you happy and financially free on their own. Money is a tool that, depending on how we use it, can bring much joy to your lives or it can bring destruction, according to Jim Rohn. You need to be aware of all the possibilities it offers as well as the pitfalls.

Some of the most amazing things have been done because people had the financial resources to fund them—businesses have been built, schools started and philanthropic charities founded that have accomplished much good. On the other hand, friendships have been ruined, illicit gains profited and lives destroyed—all over money.

If you had the financial resources you needed to take control of and improve your life, how would you live your life? Reaching this kind of financial freedom is a respectable and admirable goal, but first you must understand what that really means to you.

What does financial freedom look like. According to Dave Ramsey, it can looks something like:

  • Freedom to choose a career or venture you love without worrying about money
  • Freedom to take an international trip or a bucket list vacation every year without it straining your budget
  • Freedom to purchase or pay cash for a new luxury sports utility vehicle or beach residence
  • Freedom to respond to the needs of others with outrageous generosity
  • Freedom to retire a whole decade early from a job and career that no longer provides enjoyment and reward

When you have financial freedom, you have options. You don’t have to wonder if your bank account can handle replacing your hot water heater or buying groceries for a someone who just lost her job.

Real financial freedom isn’t just about getting out of debt, doing what you want or reaching an specific amount. It is about the number of days you can survive without you earning income from your hours of labor, and still maintaining your standard of living. According to Forbes, the levels of financial freedom are:

  1. Not Living Paycheck to Paycheck. The first level of financial freedom is building up an emergency …
  2. Enough Money to Quit your Job (for a bit) Financial freedom is all about making work an option. …
  3. Enough to be Financially Happy and still Save. This is a bit more about enjoying your life and having …
  4. Freedom of Time. What many people desire is more flexibility with their schedules. Freedom of time …

Living below your means is a key step in financial freedom.  Even some of the wealthiest people in the world started out by living below their means, that is, not having a new car, not having the biggest house or condo in the best neighborhood, and cooking at home a lot more than eating out. It’s a time-honored millionaire secret. Living below your means isn’t a permanent state; it’s intended to allow you to put more money aside into savings or into investments that will make you more money.

There are important actions that serve as building blocks for your financial freedom and economic well-being:

  1. Understand Where You’re At–You can’t achieve financial freedom without knowing your starting point. Looking at how much debt you have, how much savings you have, and how much money you need is an important first step.
  2. Look at Money Positively–You deserve to achieve financial freedom. And, money is simply a tool that helps you buy the things you need and live the life you want. To experience financial freedom, you have to accept money as a tool that helps you achieve your dreams, fuel your energy, and live a stress-free life you can enjoy.
  3. Write Down Your Goals–To achieved financial freedom, it must be tied it to an emotional goal. Make sure your goal is tied to a specific number that you want to hit. Believe it or not, you’ll start working towards those goals without even realizing it. Knowing exactly what you want to achieve makes achieving financial freedom a million times easier.
  4. Track Your Spending–An important step toward financial freedom is tracking your spending. You can use a tool like Mint, which will let you know how much money you’re spending, which categories you’ve overspent in, how much money is in all of your accounts, and how much debt you have.
  5. Pay Yourself First–“Pay yourself first” means putting a specific amount of money in your savings account before paying anything else, such as bills. And the act of paying yourself first has helped countless people inch closer to achieving financial freedom. By paying yourself first, you guarantee that you’re always putting money aside to invest in yourself.
  6. Spend Less and Save More–By spending less and saving more, two things work in your favor. One, you’ll have more money to put aside for your financial freedom. Two, you’ll learn that you actually need a lot less stuff to survive, which also helps you put aside more money.
  7. Buy Experiences Not Things–Life’s short. It’s not about hoarding all your cash, you’re allowed to enjoy life while you’re alive. Ultimately, the things that’ll help you live a more fulfilled life will be the experiences you have, not the stuff you own. Life is made up of moments. The best ones come from quality time spent with friends and family. And, don’t spend money you don’t have to pretend that you have money.
  8. Pay Off Debt–Paying off a debt lifts a massive weight off your shoulders. After paying off your debt, it will leave you with more money to save and invest. There are two main methods of paying off debt: snowball and avalanche. Snowball is when you pay off the smallest debt first. Avalanche is when you pay off the debt with the highest interest rate.
  9. Create Additional Sources of Income–Some experts recommend having seven streams of income. If you have a 9 to 5 job, congratulations, you have one, only six more to go! Now, you can look at your sources of income in two ways: active income (trading time for money) or passive income (money that can keep coming in, even while you sleep). If you only trade your time for money, you’re limited by the hours of the day. And remember: you don’t need to start with seven streams, you can build up to it over time.
  10. Invest in Your Future–The last financial freedom tip is an important one. What if the unexpected happens? Will you be prepared for it? It’s important to set aside money for rainy days, retirement, and to help ensure your family doesn’t drown paying for your debts, and taxes if you die. Save money for an emergency fund. The emergency fund is only for unplanned emergencies like a tree crashing onto your house, a car accident you need to pay for out of pocket, or a visit to the hospital. By setting aside money for rainy days and retirement, you’ll be less likely to end up back to where you are now: wishing for financial freedom.

There is freedom in not having to worry about paying your bills, taking care of your family or planning for unexpected expenses. But most Americans don’t have an unlimited supply of money. That doesn’t mean you can’t enjoy financial freedom–you just need to plan and think carefully about how best to use, grow and safeguard the wealth you have.

Good financial practices and habits can be learned, and small regular steps can move you along your path to financial freedom. The good news is that every step you take can help build long-term wealth for you and your family.

According to federal government website “mymoney.gov”, making the most of your money starts with five building blocks for managing and growing your money. The “MyMoney Five” are:

  1. Earn – Make the most of what you earn by understanding your pay and benefits.
  2. Save and Invest – It’s never too early to start saving for future goals such as a house or retirement, and even small amounts can add up.
  3. Protect – Take precautions about your financial situation, accumulate emergency savings, and make sure you have the right insurance.
  4. Spend – Be sure you are getting a good value, especially with big purchases, by shopping around and comparing prices and products.
  5. Borrow – Borrowing money can enable some essential purchases and help build credit, but interest costs can be expensive. Remember that if you borrow too much, you will have a large debt to repay.

It is important to ensure your own financial freedom.  So, it is up to you to take charge of and responsibility for ensuring your financial freedom. Financial freedom can help you take ownership of your finances and, more importantly, your life. It’s about living within your means, being a bit frugal, and making sure that money is spent on things you really need like food, shelter, and even vacations (relaxation is important too, you know). By following the financial freedom tips, you’ll inch closer to achieving the financial freedom you deserve.

References:

  1. https://blogs.va.gov/VAntage/53310/53310/
  2. https://www.oberlo.com/blog/financial-freedom
  3. https://www.success.com/rohn-5-money-principles-you-need-to-know/
  4. https://www.forbes.com/sites/davidrae/2019/04/09/levels-of-financial-freedom
  5. https://www.daveramsey.com/blog/what-is-financial-freedom
  6. https://www.success.com/10-meaningful-quotes-about-achieving-financial-freedom
  7. https://www.moneywise.com/a/millionaire-habits-you-should-be-copying
Advertisements