Financial freedom is a state of being where an individual or personal financer has complete control over their finances. His main intention is to allow them to live the life they wish without shortening his money sources.
Financial freedom also lies in earning enough passive income along with his main and side hustle to cover all expenses and being able to make choices based on personal fulfilment rather than financial constraints. Financial freedom often requires proper basic financial knowledge like saving, Tax and futuristic Income sources along with financial planning, smart budgeting, investing wisely, and creating multiple streams of income.
Financial Freedom has significance which allows every individual to enjoy their dreams, a comfortable lifestyle, and secure their future without too much stress about money or lack of money.
What is Financial Freedom?
In simple terms, Financial Freedom means having enough savings, financial investments and Cash in hand or Cash at bank to afford the things which are very important to a human life’s and his families too.
How to Reach Financial Freedom: 11 Best Habits to get it
1. Set Clear Financial Goals
Financial freedom is always starting from setting clear financial goals to achieve proper financial freedom. Without starting a proper financial goal there is no financial freedom. It starts by setting specific, measurable, achievable, relevant, and time-bound (SMART) financial goals. Along with financial goals, whether he was saving a certain amount, paying off debt, or investing in assets, having clear goals will give you direction and motivation to financial setups. In order to maintain a healthy financial setup you should keep;
- How much you should have in your bank account.
- Your Lifestyle or Ability of Purchases.
- Write down all amounts and deadlines carefully.
2. Create a Monthly Budget
A perfect and monthly budget will help you to track your income and expenses in order to stick to it. It is very easy to make a calculation about whether bills are paid and savings are on track. By creating a proper budgeting plan, you can discover where your money is going and identify areas where you can cut back on expenses to save more money. It is very difficult or impossible to gain financial freedom without making a proper monthly budget. Even after achieving financial goals, you still make a completely unique budget every month. It doesn’t matter how much money you have in your hand or bank account currently, just you need a plan.
3. Save and Invest Wisely or Diversifying
Saving money is a traditional way to gain financial freedom. It is very important to keep an ascertained amount of money by setting aside a portion of your income each month. There are numerous financial emergencies you may face, that’s why you should keep a certain amount to that, like medical emergencies or children’s education. Moreover, after saving money you have to focus on improving its value in order to diversify or invest your savings in assets that can generate passive income, like stocks, real estate, gold, digital marketing or a small business.
4. Pay off High-Interest Debt
Paying off credit cards is simply the best way to achieve financial freedom. As we know that high interest debts create a huge amount to pay the bank and it will create a huge loss and drain your finances. Student loans, mortgage loans and similar loans typically have much lower interest rates, paying them off is not an emergency. You should always focus on a plan to pay off high-interest debt as quickly as possible to free up more money for saving and investing. Timely payment or pay off debt will create a good credit rating.
5. Increase Your Income sources
Always focus on increasing your income streams, better to create more Passive income streams. Obviously, more income, more financial freedom and independence. Always look for opportunities to increase your income, either through asking for a raise at work, starting a side hustle, or investing in your education to advance your career. When you receive income from more than 2 sources you will happily clear all your high paying debts. The more money you earn, the more you can save and invest for your financial freedom.
6. Live Below Your Means
Life is very simple, when you expect nothing. It means when you want or expect things more, your expenses are also high. Lifestyle depends upon the human mind-set, when we focus on living a good life with less expectation and fashion then it is easier than you think and requires less money to lead a life. Many wealthy individuals developed the habit of living their life so simple. It is very easy to adopt a simple lifestyle and you have to understand things you need in your life and things which you want. Once you understand it you can make small adjustments that drive big gains for your financial health.
7. Diversify Your Income Streams
Once you successfully increase your income sources, then try to diversify your income streams. It is very important in the sense of improving your income as well as reducing the risk of loss too. Suppose if one income stream gives a loss, it will not much affect your overall financial health, because the rest of your income fills that loss gap. Therefore it is very dangerous to rely on a single source of income. To achieve financial freedom, consider diversifying your income streams in order to start a side business, investing in rental properties, or earning passive income through investments.
8. Stay Educated on Financial Issues
As a finance seeker and personal financier it is very important to keep updating yourself in the current finance and market fluctuations. Sometimes directly or indirectly market fluctuations affect your monthly or whole finances. Just focus on relevant changes in tax laws to ensure that all adjustments and deductions are increasing each year. Keep updating yourself in order to read financial news and magazines regarding fluctuations in stock market or Mutual funds and increase or decrease gold prices. Do adjust yourself in the investment portfolio accordingly.
9. Educate Yourself about Personal Finance
It is very important to educate yourself about major concepts like saving, insurance, budgeting, investing, and retirement planning. If you are not sure about Personal Finance or completely new to it, then better to hire a financial advisor to seek more information. Do not directly jump into the concept. Financial literacy is the key to making smart money decisions as well as to attain a good financial freedom. Never forget to take informed personal finance choices that will lead you towards financial freedom.
10. Protect Your Financial Future
Setting aside a portion of money in every month of your income will lead to some sort of protection which may occur unexpectedly in future like illness, disability, or job loss can derail your financial goals. During these emergencies it is important to protect your financial health and status by having an emergency fund, adequate insurance coverage, and a solid estate plan in place. If you fail to make a solid protection, then it is difficult to have a balanced financial freedom.
11. Stay Committed and Patient
Achieving financial freedom is a journey that requires commitment, patience, and discipline. Never give up on your goal. Yes, it will take some time to achieve and you should stay focused and try to keep track of your progress. With perseverance and determination, you can achieve the financial freedom what you desire.
Financial freedom is nothing but achieving success in life. Achieving financial freedom is not an overnight process, it requires an immense amount of focus, commitments and experiences to achieve. Definitely you will get it in order to implement these strategies consistently over time, you can take control of your finances and build a secure financial future for yourself.
