It can sound sort of a nice theory. But the reality is, it’s possible for anyone to realize. And that I means anyone – even someone who once had tens of thousands in student loan debt like yours truly. Regardless of what financial troubles you’ve got today, there’s always how to urge back to black. During this article, we’ll dive into the importance of monetary freedom and share some financial freedom tips, including a couple of that, working on behalf of me.
What is Financial Freedom?
Financial freedom is about taking ownership of your finances. You’ve got a dependable income that permits you to measure the life you would like. You aren’t worrying about how you’ll pay your bills or sudden expenses. And you aren’t burdened with a pile of debt.
It’s about recognizing that you simply need extra money to pay down debt and perhaps increasing your income with a side hustle – we’ll get thereto in only a moment. It’s also about planning your long-term financial situation by actively saving for a time period or retirement.
Understand Where You’re at
You can’t achieve financial freedom without knowing your start line. Watching what proportion debt you’ve got, what proportion savings you don’t have, and the way much money you would like are often a depressing reality. But this is often a valuable step in the right direction.
Compile an inventory of all of your debts: mortgage, student loans, car loan, credit cards, and the other debt you’ll have accumulated. Don’t forget to incorporate any money you’ll have borrowed from friends or relations over the years.
Now, take a deep breath, and another one. Then add up all the numbers.
How much debt does one have?
If it’s an enormous number, don’t freak out, I promise I’ll share some ways to pay that down later during this article. If it’s a little number, congratulations! Be happy to share your financial freedom tips within the comments below.
Next, take a glance in the least the cash you’ve got stored up.
Compile an inventory of all of your savings: savings accounts, stocks, company stock-matching programs, company retirement-matching programs, and retirement plans. Then we’ll add the recurring monthly payments you receive like salary, side hustle money, and so on.
Keep these numbers in mind as we run through subsequent few financial freedom tips.
Check out Money Positively
Debt can definitely be a touch bit discouraging.
But remember that cash may be a good thing, albeit it seems to hold tons of burdens immediately.
You need to achieve financial freedom.
“We use it a day to reinforce our lives, yet we always seem to specialize in the negative about it.”
Money is just a necessity like food or water. It helps you purchase the items you would like and live the life you would like.
To experience financial freedom, you’re getting to got to check out money as a tool to assist you to achieve your dreams, fuel your energy, and live a stress-free life you’ll enjoy.
Because if you view money negatively, you’ll subconsciously sabotage your chances of creating it and keeping it.
Write down Your Goals
Why does one need money?
Do you want to urge obviate debt for good? Do you want to escape the 9-to-5 grind? Is there an area you’ve always wanted to travel to? Does one got to but marriage, kids, or retirement?
When I achieved financial freedom, it had been because I tied it to an emotional goal. My goal was to urge out of student loan debt and buy my first home. And honestly, it had been a euphoric experience watching the debt dwindle and my savings rise.
I got so excited by seeing the numbers change that I worked harder to form extra money to ascertain a much bigger change in my personal finances. Would I even have achieved my goal of monetary freedom if I hadn’t tied the goal to something emotional? Probably not. I used to want to get out of debt and move out of my parent’s house. That desperation kept me motivated throughout my journey.
I ended up misplacing that paper and completely forgot about it. Then at some point, just over a year later, once I was already living in my new home, I found it in my notebook. Surely, I had accomplished all three things. The funny thing was that I wasn’t even consciously brooding about those goals.
You might not accomplish everything you would like for a month. But a year may be a while to form progress on your goals. Confirm your goal is tied to a selected number that you simply want to hit. Believe it or not, you’ll start working towards those goals without even realizing it.
Knowing exactly what you would like to realize makes achieving financial freedom 1,000,000 times easier.
Track Your Spending
An important step toward financial freedom is tracking your spending.
You can use a tool like Mint, which can allow you to skills much money you’re spending, which categories you’ve overspent in, what proportion money is altogether of your accounts, and the way much debt you’ve got.
Another cool thing about Mint is that it allows you to line goals within the dashboard. You’ll keep track of your goals and know the precise month you’ll be expected to hit the goal supported what proportion money you set in. Thus, keeping you accountable and reminding you to stay putting money towards it for you.
After using Mint for one month, I managed to save lots of some extra cash towards my new wedding fund goal. Mint helped me stay focused on my goal and pushed me towards creating more passive income to hit my financial milestones.
Pay Yourself First
You’ve probably heard the expression “pay yourself first” before. But just in case you haven’t, “pay yourself first” means putting a selected amount of cash in your bank account before paying anything, like bills. And therefore the act of paying yourself first has helped countless people inch closer to achieving financial freedom.
By paying yourself first, you guarantee that you’re always putting money aside to take a position in yourself. By doing the other, you simply get whatever is left over, which usually isn’t substantial enough to assist you to experience financial freedom.
You can pay yourself first in other ways too. For instance, if your company features a retirement savings program, you’ll ask to possess money withdrawn for your retirement. That way you’re investing in yourself and your future first. The cash gets deducted from your pay so everything that’s leftover is money that you simply can forget for your bills and expenses.
Buy Experiences Not Things
Life’s short. It’s not about hoarding all of your cash until you’re 65. You’re allowed to enjoy life while you’re alive.
Ultimately, the items that’ll assist you to live a more fulfilled life are going to be the experiences you’ve got, not the products you own.
Don’t spend money you don’t need to pretend that you simply have money.
Pay off Debt
Some people will tell you it’s wiser to take a position your money in stocks rather than paying off your debt. If you’re an expert stock picker, maybe that’s true. But if you’ve never invested in stocks before, you’ll finish up with more debt.
A lot of individuals feel an equivalent thing after finishing their last debt payment: relieved.
Paying off an enormous debt lifts a huge weight off your shoulders. After paying off your debt, you see the quantity of cash you’ve got within the bank rise. It’s an awesome feeling watching the amount climb (even if you had to observe it fall at the beginning), and it keeps you motivated to continue growing it.
Create Additional Sources of Income
Okay, so at now, you’re probably thinking, “My debt may be a lot quite my salary, how am I able to pay it off if I don’t make enough?”
If you’re serious about financial freedom, you’ve needed to sacrifice some blood, sweat, and tears.
Your 9 to five won’t cut it. If that’s the case, you would like to step it up and appearance for money outside your current job.
Some experts recommend having seven streams of income. If you’ve got a 9 to five job, congratulations, you’ve got one, only six more to go!
Now, you’ll check out your sources of income in two ways: active income (trading time for money) or passive income (money which will keep coming in, even while you sleep).
If you trade some time for money, you’re limited by the hours of the day. Here are a couple of side jobs you’ll do to earn a lively income:
* Become a contract writer finding jobs
* Help a business owner as a virtual assistant with jobs
* And more!
Invest in Your Future
The last financial freedom tip is a crucial one. Say you follow the recommendation and proposals during this article, get out of debt, and grow your savings. Which may be enough to assist you out immediately? But what if the unexpected happens? Will you be prepared for it?
It’s important to line aside money for rainy days, retirement, and (sorry to be morbid here) just in case you die to assist ensure your family doesn’t drown paying for your funeral, debts, and taxes. Okay, now let’s revisit thereto happy place.
The emergency fund is merely for unplanned emergencies sort of a tree crashing onto your house, a car accident you would like to buy out of pocket, or a visit to the hospital.
By setting aside money for rainy days and retirement, you’ll be less likely to finish up back to where you’re now: wishing for financial freedom.
Financial freedom can assist you to take ownership of your finances and, more importantly, your life. It’s about living within your means, being a touch frugal, and ensuring that cash is spent on belongings you actually need like food, shelter, and yup even vacations (relaxation is vital too, you know). By following the financial freedom tips during this article, you’ll inch closer to achieving the financial freedom you deserve. So take a glance at those finances, build additional streams of income, pay down that debt, and before you recognize it you’ll be free.