What is financial freedom? Financial freedom is the ability to make choices without high financial stress. For many people, it involves being able to choose whether they want to work, when they retire, and make purchases when they want. With financial independence, you can take control of your life rather than be controlled by your financial situation.
While financial independence may sound like a far-off dream, it might not be as difficult as you think. In this article, we’ll look at how to achieve financial freedom with seven practical steps.
Steps To Financial Freedom
When looking at financial freedom, it’s important to set goals that are realistic and achievable. These goals can help you plan your long-term finances, and meet your short-term financial needs. Many of these steps can be slowly implemented over time too, helping you to reach the financial growth you desire.
Set Your Personal Financial Freedom Goal
In order to start planning for financial independence, you need to identify clear goals for yourself. First, identify what your long-term goal is. This can include retiring early, having enough saved to meet any unexpected emergency, or having savings to take vacations each year. Next, decide how much you need to save in order to make this goal a reality. Finally, you need to decide what date you want to reach your goals by.
By doing this, you can set intervals of time and the amount you want to save at each interval. This will make the goals feel more achievable, and you can keep track of your progress using goal sheets.
Track Your Monthly Expenses
Expenses can add up quickly, and you might not even notice what some of your highest expenses have become. Financial planning and analysis of monthly expenses can help you keep up with your spending habits. By identifying your highest expenses, you’ll also be able to cut expenses down as needed to meet your goals and move the next steps to financial freedom.
Pay Off Credit Cards in Full
Credit card debt can be tricky to handle. While you can recover from it, it’s easier to get ahead of credit card debt before it begins. Be intentional about paying off the full credit card balance in full each month. If you’re in credit card debt or struggling to avoid it, seek professional financial and investment advice to help with your financial situation and begin your journey of financial freedom.
Have Sufficient Savings
The next step to financial freedom is having sufficient savings. You’ll want to make your cash flow plan work so you can have enough savings to meet any anticipated or emergency expenses you can have. This can include saving for college, a dream vacation, retirement, and more.
This is another way that tracking your monthly expenses can be helpful. By tracking your expenses and cutting down on excess spending, you can put that money toward saving for your financial independence.
Look For Additional Sources of Income
A quick search online will come up with dozens of articles about side hustles. Additional sources of income are a great way to grow your savings and meet your financial goals. These sources of income can be in addition to your full-time job or your full-time course load if you’re a student.
Choose a side hustle that interests you or that you feel you can make time for. Some examples include freelance writing, becoming an Uber driver, selling designs on Etsy, and more!
Educate Yourself On Financial Issues
Understanding your financial situation and being educated on financial issues is important for you to be financially prepared. This can include being aware of what emergency expenses could come up, learning about investment opportunities, and determining what you need for retirement. It can also include learning about national economics and keeping up with them to be prepared for any financial situation that occurs.
Get a Financial Advisor
A financial planning advisor is a great option if you want financial independence but need help identifying or meeting your financial goals. A financial advisor can guide you in how to achieve financial freedom on your own timeline, making the process easier. They can also help you make smart money decisions and remove the stress that surrounds financial planning.
Financial Freedom Key Takeaways
Now that you know what is financial freedom and the steps to financial freedom, it’s important that you begin working toward these goals. The sooner you begin on your financial freedom journey, the more time and flexibility you will have to reach your intended goals. If you need financial planning consulting services or advice, schedule a free financial review with us today!