What’s Financial Freedom?
Financial freedom means taking control of your finances. A reliable cashflow allows you to live the lifestyle you desire. You don’t have to worry about paying your bills or other unexpected expenses. You don’t have to worry about accumulating debt.
Recognizing that you have to make more money to pay off your debts and possibly increasing your income through a side business is key. We’ll get to that in a moment. Planning your financial future is about saving for retirement or a rainy-day.
10 Game-Changing Financial Freedom Tips
1. Understanding where you are
Without knowing where you are starting from, financial freedom is impossible. It can be depressing to see how much debt you have and how little savings you have. This is an important step in the right direction.
Make a list of all your debts, including student loans, mortgages, car loans, credit cards, and other debts. Include any money that you have borrowed from family or friends over the years.
Now, take a deep breath. Another one. Add all of the numbers together.
What amount of debt are you carrying?
Don’t panic if it’s a large number. I promise to share some ways I can help you lower that amount in the article. Congratulations if it is a small amount. Please share your financial freedom secrets in the comments section.
Next, look at how much money you have saved.
Make a list of all your savings, including stocks, retirement-matching plans, stock-matching program, retirement plans, and stocks. Next, we will add the recurring monthly payment you receive like salary, side hustle, and so forth.
These numbers will be helpful as you work through the next few financial freedom tips.
2. Take a positive view of money
It can be quite discouraging to have to deal with debt.
Remember that money can be a blessing, even though it may seem like a heavy burden at the moment.
You deserve to achieve financial freedom.
You are a Badass at making Money by Jen Sincero states that people who make less than a lot often feel ashamed when it comes to making money. The biggest problem many people face in making money, is feeling like they are bad for having it. Many people feel guilty about having it, and even more guilty for wanting it. Sincero said that money is something we use every day to improve our lives. Yet, we tend to be focused on its negative aspects.
Money is just like water or food. It allows you to buy the things that you need and lead the life you desire.
Financial freedom is possible if you view money as a tool that can help you reach your goals, fuel your energy, or allow you to live a stress-free lifestyle.
Negative views of money can subconsciously hinder your chances of getting it and staying there.
3. Write down your goals
Why do you need to have money?
Are you ready to eliminate debt? Do you want to get out of the 9-to-5 grind? Are you looking for a place to escape the 9-to-5 grind? Are you looking to save money for your kids or retirement?
Financial freedom was possible because I linked it to an emotional goal. My goal was to pay off student loan debt and save money for my first house. It was an exhilarating experience to watch my debt decrease and my savings grow.
The numbers changed so much that I was excited to see the results, I tried harder to make more money in order to make a larger impact on my personal finances. If I had not tied my financial freedom goal to something emotionally, would I have reached it? It’s unlikely. I was desperate to get rid of my parents’ house and pay off my debts. This desperation was what kept me going throughout my journey.
Another interesting thing happened. On a piece of scrap paper, I wrote a few of my goals in February 2016.
- Online sales of products can bring you $100,000
- Get $20,000 off your down payment
- Student loans up to $24,000 repaid
I misplaced the paper and forgot all about it. It was almost a year later that I discovered the paper in my notebook. All three of these things were accomplished. It was funny, though, that I didn’t even think about these goals.
It is possible to not achieve everything you desire in a single month. A year is a long time to reach your goals. You should tie your goal to a number you are aiming for. You won’t even realize it, but you will start working towards these goals.
Financial freedom is made easier by knowing exactly your goals.
4. Keep track of your spending
Tracking your spending is an important step towards financial freedom.
A tool such as Mint can be used to track how much you spend, what categories you overspend in, how much money you have in all your accounts and how much you owe.
Mint also allows you to set goals from within the dashboard. You can track your goals and see the exact month that you will need to reach them based on how much you have contributed. This will help you stay accountable and remind you to continue putting money in.
Mint helped me save money for my wedding fund goal after I used it for a month. Mint helped me keep focused on my goal, and motivated me to create more passive income to reach my financial milestones.
5. Take Care of Yourself
Most people have heard the phrase “pay yourself first”. If you don’t know what “pay yourself first” is, it means to put a certain amount of money into your savings account before you pay any other bills. Many people have made financial freedom a reality by paying themselves first.
You need to make sure you pay $1,000 each pay period. Then, any money left must go to bills. If you don’t have enough money to pay those bills, you will need to find a side income.
You can ensure that you are always investing in yourself by paying yourself first. You will only receive what you pay yourself first, which is usually not enough to allow you financial freedom.
There are other ways to pay yourself first. If your company offers a retirement savings plan, you may be able to request money to be withdrawn for your retirement. This way, you can invest in yourself and your future. This money is taken from your paycheck so that any money left can be used to pay your bills or for other expenses.
6. Spend Less
Warren Buffett bought a five bedroom home with five bedrooms for $31,500 in 1958 and has not moved from it since. His net worth? A staggering $90.3 billion. He can afford a larger and more luxurious home. His thriftiness may be what makes him one of the most wealthy people in the world.
Kanye West is not afraid to show off his wealth. He lives in a 20 million home. He was in debt $53 million at the time and decided to request Mark Zuckerberg for $1 Billion… via Twitter.
What is the difference between these two extremely successful gentlemen? Buffet never spent more than he had to and West doesn’t spend money he doesn’t have.
Many rich people don’t look like wealthy people. Zuckerberg literally wears boring jeans and a boring t-shirt every day.
You can get richer by buying less stuff.
Two things work in your favor when you spend less. You’ll be able to save more money for your financial freedom. You’ll also discover that you really don’t need as much stuff to live, which will help you save more money.
This brings us to our next point…
7. Purchase Experiences, Not Things
Life’s short. It is not about hoarding your money until you reach 65. It’s okay to live your life as it is.
The experiences that you have will make your life more fulfilling, not what products you own.
Are the things that you buy making your life easier in the long-term? Is it worth the debt that comes with buying so many things?
Let’s now flip the switch.
Which is your most happy memory? What did you do? What were you doing?
Let’s make more memories like this.
Perhaps you have a friend who loves working out. Invite her to join you for a free workout to a YouTube playlist.
It’s date night. It should be memorable. You can find a unique activity that you have never done on Groupon at a fraction of the cost.
You have always wanted to travel to Rome. You have been saving money for the year so you can go on your dream vacation. You can go on your vacation guilt-free. It wasn’t something you owed, it was something you earned. You can also become a global nomad to travel the world and work abroad.
Every moment is precious. Quality time with family and friends is what makes the best moments. Some products may bring you closer to your loved ones (e.g. weekly family video games night), but most don’t offer much in the way of value.
Spend money that you don’t need.
8. Repay your debt
Many people will tell that it is better to invest in stocks than paying off debt. Maybe that’s true if you are an expert stock picker. However, if you have never before invested in stocks, you might end up with more debt.
Many people feel the exact same after paying off their last debt.
You can’t call yourself financially free if you have $50,000 in debt. There are still $20,000 left in the hole.
Although paying someone else isn’t as glamorous than having money in the bank it can bring you closer towards financial freedom.
Two main ways to pay off debt are snowball and avalanche. When you pay off the smallest debt first, snowball is it. Avalanche refers to when you pay off the highest interest debt.
It is up to you to choose what works for you. When I worked towards debt-free, the snowball effect was a great option. This helped me stay motivated. The feeling of accomplishment after I had paid off my first debt, $1,200 credit card bill, within a month helped me get motivated to tackle another, larger student loan.
Credit cards weren’t an issue so I paid three times the $300 minimum payment. It took me three years to pay off my student loans, instead of the nine I was given.
You can lift a lot of weight by paying off large debts. You will see your bank balance rise after paying off your debt. It’s an amazing feeling to see the amount grow, even if it was falling at the beginning. This keeps you motivated and energized to keep growing it.
9. Add additional sources of income
You’re probably thinking now, “My debt is much more than my salary. How can I pay it off?
Financial freedom is possible only if you are willing to give up some of your blood, sweat, or tears.
It might not be enough to make ends meet with your 9-5 job. You might need to look outside of your job for income.
Experts recommend that you have seven streams of income . Congratulations if you already have a 9-5 job. There are six more!
You can now look at your income sources in two ways: passive income (money that comes in even when you’re asleep) and active income (time you trade for money).
You can’t trade your time for money if you don’t work enough hours. These are some side jobs that can help you earn an active income.
- Find freelance writing jobs on ProBlogger
- As a virtual assistant, you can help a business owner with jobs on Upwork
- Learn online courses for entrepreneurs to acquire new skills and monetize
- Become an Uber driver
- Help with household chores on Task Rabbit
- You can find odd jobs on Craigslist
You can increase your income streams by focusing on passive income streams if you don’t have the time.
- Shopify allows you to start a dropshipping eCommerce store.
- Start your custom clothing company at Shopify
- Sell profitable content (blog, ebooks, courses, webinars, audiobooks, podcast, apps)
- Join as an affiliate marketer
- Rent out properties you own and buy them
- Invest in stocks
Your seven streams of income may all be from the same source. If you are an ecommerce expert, one example of your streams could be from the creation seven stores. You don’t have to start with seven streams; you can increase your income over time.
10. Invest in your Future
This is the last tip to financial freedom. If you apply the tips and suggestions in this article, you can get out of debt and increase your savings. This might be enough for you right now. But what happens if something unexpected happens? Are you prepared?
To ensure that your loved ones don’t drown in the cost of your funeral, taxes, or debts, it’s important to have money set aside for rainy days, retirement, as well as for (sorry for being morbid). Let’s go back to the happy place.
Talk to your employer about adding a retirement plan to your job. Also, check to see if deductions are already being made for it. You don’t feel like you are losing money because the deduction is taken out before it reaches your account. It’s also very cool to monitor it and watch your savings grow.
You should also save enough money to cover an emergency fund. Experts say that $10,000 is sufficient, while others recommend six months. These numbers can seem quite high, especially if you don’t have a lot of income. Instead, set a realistic goal of $100 per month. As you earn more passive or active income, increase your goal to $500 per month to $500 bi-weekly. Don’t spend too much on credit or have a large credit card bill. Instead, focus on generating more income opportunities to pay the debt down quicker.
The emergency fund can only be used for unplanned situations like a tree falling on your home, a car accident that you have to pay out of pocket, or an emergency visit to the hospital.
You’ll be less likely not to go back to the place you are: saving money for retirement and rainy day expenses.
Financial freedom allows you to take control of your finances, and more importantly, your entire life. Financial freedom is about living within your means and being frugal. It also involves making sure you only spend money on the things you need, such as food, shelter, and vacations. (Relaxation is also important). You’ll be closer to financial freedom if you follow the financial freedom tips provided in this article. Take a good look at your finances and start building income streams. You’ll soon be debt-free.