Achieve Financial Freedom may sound like a good theory. But the truth is that anyone can achieve it. And I mean anyone-even those who once had tens of thousands of debts, as you really do. Whatever your financial problems today, the first step to solving them may be trying budget management.
In this article, we will dive into what is financial freedom? and how to achieve financial freedom in your life, and share some financial freedom tips that really worked.
What is Financial Freedom?
Financial Independence does not mean that you are very rich, it means that you do not have to think about money in your daily life. Financial freedom is the state of having enough income and assets to live the rest of your life without working or being dependent on others. Passive income is the income that you earn without doing a job for which you do not have to do any work.
How To Achieve Financial Freedom in 5 Years?
Debt should ideally be repaid first from personal income. Debt reduces your monthly income, in addition, hinders financial health in your savings and investments. You have to repay all your existing debt within 5 years and you are not allowed to take out new debt. But you should not spend all your income on repaying the loan. Along with the loan, you also have to save and invest.
Tips To Achieve Financial Freedom
See How Much Debt You Have
You cannot achieve financial freedom without knowing your starting point so you have to understand it first. It can be a depressing reality when you look at how much debt you have, how much savings you don’t have, and how much money you need. But this is a valuable step in the right direction.
Make a list of all debt for mortgages, mortgages, car loans, credit cards, and other cumulative debts. Remember to include money borrowed from friends and family over the years.
Start Looking At Money in a Positive Way
Debt can definitely be a little daunting. But keep in mind that money is a good thing, even if it seems like a lot of work now. People who don’t make much money often feel embarrassed about making money. The biggest obstacle many people encounter when trying to make money is that having money feels bad.
Many people feel guilty about having it, and even more about wanting it. Money is just as essential as food and water. It helps you buy what you need and live the life you want. To experience financial freedom, money must be seen as a tool for realizing dreams, replenishing energy, and enjoying a stress-free life. Because when you look at money negatively, you unknowingly interfere with your chances of making and keeping it.
Write Down The Goals You Want To Achieve
Have you ever wondered why you need money? Do you want to get escape from 9 to 5 jobs? And do you want to visit such a place? Do you require to save for retirement?
Firstly, write down the goals you want to achieve. When you write down your goals and see or read them over and over again, you work hard to achieve your goals. And you early achieve financial freedom in your life.
Track Your Expenses
A key step toward financial freedom is tracking your spending. If you want to achieve financial freedom, you need to keep a close eye on your expenses. It is important to understand that unnecessary expenses can put a dent in your savings. Before buying anything, ask yourself if you really need it or not.
If you think you don’t need something, then stop buying it immediately. Try to cut down on frivolous expenses such as eating out, shopping, and entertainment. All you need to do is honestly increase your savings while reducing your debt.
Pay Yourself First Before Others
You have the first right in your earnings. You should always pay yourself first. Just as you give money to the shopkeeper for goods, the landlord for home rentals, to the government for tex, you also need to give money to yourself.
When you start a new job or business, you will receive an advance payment. You should save this money since this is your hard-earned cash and you shouldn’t give away free money. After you have paid yourself first, you can use the rest of the money to cover your daily expenses. Remember, once you have saved enough money, you should invest it.
For this, you must first make a budget you have figured out how much money you bring in and how much you spend. So you can manage your expenses and can also avoid unnecessary expenses. A budget helps you plan your finances and figure out how much money you have coming in and going out.
A budget also gives you a clear picture of where the money goes. Once you have created a budget, try not to let yourself go over your spending limit, otherwise, your financial situation might worsen.
Buy Experiences Not Things
You are allowed to enjoy your life while you are alive. But life is too short so don’t waste it doing and buying useless things. Have you ever thought about how long the things you buy keep you happy? And if you have taken debt to buy that thing. So will that thing allow you to be happy in your life?
Buy experience not things, experience makes you successful in your life. You can read books to get experience, books are the world of knowledge, in which very experienced people share their experiences in their life. Experience makes easier your life and achieving financial independence.
Pay All Debts To Achieve Financial Freedom
Debt is the biggest obstacle to your success. You need to decide what works great for you. But firstly you clear your all debts. Repaying a huge debt takes a huge burden from your shoulders. After paying off your debt, you will see an increase in the amount you have in the bank. It’s a great feeling to see the numbers increase, which motivates you to keep growing.
Build Additional Sources of Income
The greatest thing you can do in your journey to financial freedom is to create additional sources of income. If you are serious about financial freedom, then you need to sacrifice for it. Your 9-5 may not cut it. In that case, you need to step it up and look for money other than your current job. Some experts recommend having more streams of income.
Now, you can see your sources of income in 2 ways: active income (job time for money) or passive income (money that can keep coming in, even while you are sleeping).
If you job your time for money, you’re limited by the 6-8 hours of the day. There is some side work you can do to earn an active income:
- You start a blogging website
- You Become a Freelancer and find jobs
- Help a business owner as a virtual assistant
- Obtain new skills via online courses for entrepreneurs and monetize
If you don’t have a lot of time to devote to earning income, you can focus on boosting your income streams with passive income:
- Starting a dropshipping online store
- Start your own custom clothing business
- Sell profitable content (blog, ebooks, courses, webinars,
audiobooks, podcasts, apps)
- Become an affiliate marketer
- Buy properties and rent them out
- Invest in stocks and mutual funds
Save For Retirement
It’s never too early to start saving for retirement. As soon as you start earning, you should begin putting some of your earnings aside for retirement. While many people believe that they will live off their investments until they retire, this isn’t entirely true.
Most people end up running out of money and have to work well past their retirement age. Therefore, you should set aside a certain amount of money each year to ensure that you are financially ready when you retire.
Invest For Your Future
The last financial freedom tip is a key one. Invest in your future that help to achieve financial freedom in your life. Whenever you are investing your money, you should only invest in things that are long-term investments.
Short-term investments are risky and may result in losses. Consider your investment goals first before choosing a particular stock or fund. Make sure that you stick to your strategy and avoid panic selling whenever you feel that the market is about to crash.
Final Thoughts To Achieve Financial Freedom
Financial freedom can help you take ownership of your finances and, more important, change your life. It is about living within your means, being a little spartan, and ensuring that money is spent on what you really need, such as food, shelters, and of course vacations.
I am sure if you follow the financial freedom best tips in this article. So you will be one step closer to the financial freedom you deserve. So look at those finances, build additional sources of income, repay those debts, and invest money and you will achieve financial freedom in your life.
If you have any queries related to achieving financial independence, then ask us by commenting below.