Nearly everyone wants to become wealthy at some point in life. Financially free is a state of mind and a journey most people strive for at some point in their lives. Financial freedom means owning enough savings, investments, and cash on hand to allow you to do the things you want. It means having the ability to retire or pursue a dream career without being tied down by an annual salary each year. We want financial freedom and the opportunities it brings along with it – like being able to go on more vacations, save more money, find bigger houses or apartments, or buy the new car we’ve always wanted. There are many paths toward achieving financial freedom, even though it typically means working towards becoming free from work and earning income through passive sources that require minimal effort to maintain. Becoming financially independent is a journey; here are some tips to get you started.
10 Steps To Achieve Financial Freedom
1. Set Life Goals
What’s financial freedom to me? It’s a general goal, but why don’t we get specific? Let’s put down on paper how much I should have in the bank account and what kind of lifestyle this entails. Being specific about your goals increases the likelihood of achieving them! Follow SMART strategy to set a goal.
2. Avoid Bad Loans
What are Bad loans? When it comes to the concept of a loan, many things get lost in translation. Many people think that once they’ve paid off the principal and interest of their loan, they have successfully escaped any lasting financial woes. This is far from the truth as any loan expert will tell you. Any item purchased on credit and depreciates over time is a bad loan. Take for example cars; when you purchase one you need to make sure that it’s always running at optimum capacity or else you could find yourself in trouble.
Loans can be good in different ways. A good loan pays off on your investment thanks to the interest you’re charging on it. It enhances your property’s value over time and even takes care of the mortgage cost itself! Home and education loans are an example of this category. A home always appreciates at price, if bought wisely with proper research in a good location, and will supersede the interest cost too. The percentage of people making a true loss while selling their property is negligible. The added advantage of taking a home loan is also the tax benefit you get under a couple of sections. There are subsidies available on affordable housing too.
Generally, bad loans are more expensive than good loans. So, to avoid enslaving yourself from paying high monthly debts, please relieve yourself of the high-interest-rate loans which are eating away your month’s pay and giving no returns other than being depreciated day by day.
3. Build Independent Income Assets
Independent income means sources of regular payments that do not require you to work. They give you returns in exchange for your time for money. Owning a rental property may be a source of independent income, although opportunities often run the risk of being broken into (likelihood of theft) or infested with pests (possums, termites). If you have enough of an independent income stream where you can cover all your living expenses, additional wants (entertainment), and investments – such as those used in real estate – then congratulations! You secured your financial future at this point.
4. Pay All Your Dues In Full
Consumer debt is a big no-no for anyone with aspirations of becoming wealthy. Given that your debt has an interest rate higher than the average, getting out of them quickly is a priority so I suggest you pay these off first before moving on to anything else. Then again, student loans and mortgages are not easily avoidable. That’s why it’s best to keep these as low as possible before committing too much money as it would be fantastic if you can pay off this debt as early as possible.
5. Develop New Skills
Everyone gets to make money based on the value they are able to deliver. If a person adds more value to the enterprise, he/she will get paid more. By improving your skills, you become valued. Taking the time to understand your skills and develop and improve them can help you increase your value. The easiest way for this to happen is for you to start showing off some expertise in one area or another so that people take notice of what you have been able to accomplish and recognize your worth there as an expert.
In simplest terms, a skill set refers specifically to someone’s general range of abilities and skills that they can use in order to do well at their job-related tasks or otherwise achieve professional goals. As an entrepreneur, it’s always important that you remember that improving your own personal skill set is likely going to be more beneficial when seeking out new career opportunities than sharpening up the usual boring traditional corporate ones like networking tips and interview responses.
6. Take Care Of Your Things
Taking good care of your home and your possessions makes everything from automobiles and lawnmowers to shoes and clothing last longer. Imagine if you did not have to buy clothing and shoes as often as you do. You could hold on to your car longer, spending less in the process. Maintenance is the key to saving money.
7. Create Budget
Even if you think money management is easy, making a monthly household budget plan can help you foresee your financial commitments, payments, and liabilities which will enable you to ensure that every bill is paid on time. Maintaining a monthly household budget is a proven way to stay on top of your monetary responsibilities, whatever they may be. When creating a budget, you need to assess how much money you earn every month versus how much money it costs each and every month to live. Budgeting your money routinely clears up your objectives and bolsters your willpower by allowing you to avoid the temptation to spend lavishly.
8. Live Below Your Means
Mastering a frugal lifestyle means not having to compromise on the amount of happiness you get out of life with each action that you perform. Often, people living in simpler means are happier than the average consumer who’s lost in the rat race of hedonism and excess. One does not need to make extravagant purchases to feel satisfied or content. By making wiser purchases, one can reap greater rewards from possessions than what society often suggests as an appropriate level of investment. A frugal lifestyle is simply when one takes advantage of his or her resources and finances in order to purchase only necessities while avoiding superfluous items or overpriced services along the way. Frugality is achieving maximum value while minimizing expenses and getting the most bang for your buck!
I know that negotiating for purchases and services might make you feel a bit anxious as it is an act that is generally frowned upon as people tend to misinterpret that they are being “cheap” if they negotiate. However, I am here to tell you today that this couldn’t be more wrong! Negotiating may in fact open the door to thousands of dollars in savings each year, especially if you do so with smaller merchants and by purchasing in bulk or by creating repeated transactions with them.
10. Take Care Of Your Health
Everyone wants to avoid getting sick. From taking additional steps to managing your diet and exercising in order to maintain good health, it takes dedication from everyone involved. Sometimes a healthy lifestyle is not enough, and one has to work extra hard at recovering from their ailments with medical intervention or even professional treatment such as regular physical rehabilitation. A lot of companies have limited sick days for exactly those reasons – so you may be marked absent for any health problems that stay long-term. If you neglect your diet and refuse to exercise for instance, then eventually obesity can become an issue that will severely affect your insurance premiums, among many things.
There’s no one-size-fits-all definition for what financial freedom means. That’s why it’s important to find clarity for yourself personally on what you believe constitutes true financial freedom. By actively managing your finances and using the power of interest, you can eventually achieve financial independence. Financial independence isn’t about being rich – it’s not about fame or prestige – it’s about having the flexibility to make the most out of your life while actively enjoying each moment.