Posted: Tuesday 28th August 2018
Financial freedom is a goal for almost everyone regardless of their age or current financial situation. To be financially independent does not mean to be necessarily rich. It means to have sufficient funds from passive income and not depend on your monthly wage to make both ends meet. In other words, if you are financially free, you can work your dream job for whatever repayment simply because you love it not because you need the proceeds from it.
In order to achieve true financial freedom, you need to have income which is higher than your monthly expenses. This said, you can be financially free even if you are earning $101 and your expenses are $100 and be absolutely trapped with a salary of $50,000 and an ever-growing debt.
So, how to become financially independent? The truth is that it is a process that cannot happen overnight (unless you win the lottery) and that takes time and a good financial plan. Here are a few tips that will help you reach financial freedom. You can choose which of them are the most suitable for you, however, if you try to stick to all of them you might achieve your final goal much easier and quicker.
There are many tips that can help you achieve financial freedom, however, there are three main factors that will facilitate your success in this undertaking:
Becoming financially independent is a process that is marked by several steps. You need to work hard in order to achieve it. As a starter, you need to start eliminating any debt that you might have. To that end, you need additional money. One of the ways to earn more is to either work overtime at your current job if possible or start a second job. Thus, you will be able to generate more income and cover some of your expenses. You will need to sacrifice some of your free time in order to get more in the future when you actually become financially free.
The other important step is to train your mind. There is a chance that when you start earning more money, you will be tempted to spend more and then end up with more debt than at the beginning. The other option is to feel lured by the idea of learning more and more. In this case, you are going to achieve just the opposite of financial freedom. You will get enslaved by the idea of money, which is to be avoided by all means.
In other words, you need to work both hard to make sufficient money that will eventually allow you to become financially independent and on the other hand, you need to learn how to control money and not let them be the most important factor in your life.
Once you are able to cover all your expenses, you should get into the habit of saving money. It is a good idea to start putting aside 10-15% of your paycheck. Eventually, that percent will grow to 50% and then when you have found the passive income to rely on, you will no longer depend on your job. At that moment you will be able to work the job you truly like without caring how much you will receive.
One of the easiest ways to achieve any financial goal is to consult a financial expert. The same goes for financial freedom. As the key to becoming financially independent is having a passive income that generates income for you with you being actively involved, you need to find the best option for this passive income. While there are several assets that can do the trick, consulting an expert will help you choose the best solution for you. As property investments, and more specifically rental income, are one of the most appropriate tools for additional income, it is a good idea to find a trusted partner who can help you learn more about property investments. Seed Property Consultants are a company specialized in property investments that can help you build a diverse portfolio, which corresponds to your personal needs and preferences. You will be able to share your expectations and work with experts in the filed until your dream is fulfilled. Contact us now and let our knowledge about property investments help you build the financial freedom that you are striving for. As a whole, working with a partner familiar with the best strategies and knowing how to avoid possible pitfalls is a much easier and safer way to get to your goals.
If you implement these three key ideas in your way of living and follow the tips below, you will be able to achieve financial freedom much easier and quicker. Do not forget, however, that you need to be persistent in order to become financially independent.
There are numerous good tips that can help you build your financial freedom. We have selected the best of them here. See what the experts advice:
You won’t be able to truly understand money and manage your finances unless you are financially literate. Hence, it is worth investing some of your time and money in order to acquire that knowledge. Whether you will buy some books to read or enroll in an online course, you can only benefit from the skills you will learn. You will have a different approach to money and the financial situations related to them. You will learn to find new opportunities for investment and growth. You will learn how to add value to the things you do while making money as well. At the end of the day, you will be equipped with the right tools to embark on the way to financial freedom and eventually achieve it.
It is easier to map your road to financial freedom if you have a clear financial plan. There are a few steps that you need to complete in order to elaborate a robust plan that will lead you to financial freedom.
The first step is to get a clear idea of your current financial situation. You should start by checking where you stand at the moment. Make a list of all the assets that you own. Obviously, this will include your house and car, but also any other property or valuable items such as jewelry, for example. If you have any special hobbies or collections, note that they can be an asset as well. Note your annual income too. Then you need to list all your current debt that includes mortgage, credit card debt or consumer debt. See whether your income exceeds your expenses. If that is so, then it will be much easier to achieve your financial freedom. If you have significant debt, you will have to work harder but still, it is not impossible to become financially independent.
The next step is to start tracking the way you spend your income. You can use different apps that can help you with that or simply keep a journal of what you have earned and what you have spent.
Once you are aware of your spending pattern it is time to set up a budget and learn to live by it. Cut spending for items that are unnecessary.
Start saving. Try to put aside little money every month. You can start with 10% of your paycheck and then increase it over time. Put the money aside at the very moment you get them and then work with the rest in accordance with the budget you have already set up.
Set a series of realistic goals. Start by something like – “I want to cut my expenses by $200 this month”, then think where you want to stand at 5 or 10 years and start working towards achieving those goals. Never forget to celebrate each milestone that you reach.
Consider the best option of additional income that will actually give you the desired financial independence. No matter which form of investment you will choose – more traditional or alternative, make sure to consult a financial expert who will help you with financial advice.
This tip may seem a bit awkward but once you have formed a financial plan it is of extreme importance to actually work on it in the long term. Start eliminating your debt. Get into the habit of paying all your credit card bills in full at the end of the month. Make a budget and really stick to it – using an app is a smart way to do it. Look at your prospective income and expenses in order to forecast how much money you will be left with at the end of each month or year.
There is a great chance that you have too many clothes, for example, that you actually don’t need. Consider selling them if possible and next time limit the numbers when you go shopping. The same goes for the toys of your kids and any other item. You need even to consider downsizing your home. Perhaps you will be just as ok living in a smaller house, while your expenses will be much lower. If you have 2 cars, think about selling one or not owning a car at all. These are significant expenses and if you reduce them, you can end up with more cash at the end of each month.
In order to really achieve financial freedom, you need to invest your savings so that they can generate income for you. You can choose between various traditional options such as property investments, options, bonds, bank products, etc. There is also the possibility to select cryptocurrency, art or wine as your alternative source of income.
Starting a business different from your main occupation is also a clever idea for additional income. Your aim, however, should be that in time you only get revenue from the business activity without being actively involved in it.
To be financially free means to be able to meet an unexpected expense without that ruining your monthly balance. One of the ways to do that is by establishing an emergency fund. In the ideal case, you will have sufficient funds to cover a full year of your usual expenses. This cannot be achieved in a whip but is done gradually. You can open a separate bank account for this purpose and even consider an automatic transfer of 10 or 15% of your income towards this fund. The overall idea of the emergency fund is to have sufficient money to cover an unexpected expense. This can be a car repair or health issues or anything else that can go wrong.
Last but not least, create the right mindset towards money and financial freedom. You have to think positively about money and see opportunities rather than obstacles. Once you start perceiving money as just the means and not the final goal, you will manage to achieve financial freedom. Get to realize that it is not necessary to earn tens of thousands per month in order to claim that you are financially independent. Your overall goal is to earn more from an alternative income than your expenses. In order to feel free, you should not be constantly thinking about this or that bill and how to cover the next mortgage payment.
Understanding the true meaning of financial freedom (link to article Why is Financial Freedom So Important? (And What Does It Really Mean?) is of paramount importance in order to achieve it. Set realistic goals and celebrate each of your milestones on the way to financial freedom. Never forget that it comes with the right state of mind – when you are really able to control money and never let them take over you.