WHAT IS FINANCIAL FREEDOM?
Financial freedom is when you have enough cashflow to truly live the life you desire without depending on your paycheck. It is the point at which you truly have full ownership of your finances. However; let’s not get it confused with financial independence, because although they are very similar in nature, there are a few key differences.
HOW THAT DOES DIFFER TO FINANCIAL INDEPENDENCE?
Financial Freedom: Financial ability to act or spend without hindrance or restraint. Financial freedom is when you have built up enough savings, investments, passive income, and cash to live the life you truly want. When you reach financial freedom, you are not a slave to money. You have unrestricted access to the money you need in life.
Financial Independence: Money is not the first factor in making your life decisions. You are independent because you are building a strong financial foundation. Financial independence means money doesn’t control and influence decisions. Financial independence is when you have the ability to retire early and still maintain your current lifestyle. This is the point at which you have enough money coming in to cover your current expenses and no longer need to wait on a paycheck.
STEPS TO FINANCIAL FREEDOM
CREATE YOUR CENTS PLAN
You must know:
Where you are spending your money
How many accounts you have.
How many credit cards are open.
Any outstanding debt unpaid.
How you want to live your life with money.
LIVE WITHIN YOUR MEANS
Track your spending, cut back where you can, and only purchase that which you can truly afford. Be sure to include all of the absolute necessities along with a few items you want so that you don’t feel financially deprived.
PAY OFF YOUR DEBT
Debt is a hindrance to your financial freedom. That’s why it is important to eliminate all of your debt in order to achieve true financial freedom. Paying off your debt not only allows you to free up extra money, but it also allows you to increase your net worth
SAVE AND INVEST
Saving will be of special importance while on the path to financial freedom. However; this will require some sacrifice especially since we live in a society that encourages us to spend.
Your savings account may consist of an emergency fund in which you use for emergencies only. The deposits should be automated so that when a paycheck hits your account, a certain percentage of that paycheck is automatically deposited into your savings account.
Your investment accounts should work in a similar way so that funds are automatically deposited into your accounts.
For both your savings and investment accounts, start with a savings goal, and then increase it over time.
PLAN FOR THE FUTURE
Obtaining health insurance, term life insurance, disability insurance, etc. is going to be critical during this time. As we grow older, the rates tend to increase for the different types of insurance we need. So, grab those now and lock in the rates while you are still employed.
SEEK REPUTABLE INDUSTRY PROFESSIONALS Nobody on earth is well-versed in all areas of life. So, in order to truly reach your goal of becoming financially free, it is important to seek out reputable industry professionals to ensure that you are on the right track.
Get ready to turn your financial dream into your financial reality. You will thank yourself later!