How to make a financial freedom plan – eight tips to help you get started
Are you on track to achieve financial freedom? Find out what it really means and get eight tips to help you make a plan to achieve it.
Consider some of your most important life goals. You wish to live in a lovely house. You want to be able to support your family. You want to be able to travel the globe and have amazing adventures. What’s keeping you from pursuing these goals?
Almost always, the problem is money. While you might be able to attain some of these goals over time, you’ll need to create financial freedom to achieve them all while staying in a solid financial position.
What is financial freedom?
One definition of financial freedom is having the financial stability to do whatever you want with your life without worrying about money. Financial freedom means being able to take amazing trips without having to worry about missing work. It is purchasing the home of your dreams while still having enough money to pursue your other interests.
Some people associate financial independence with retirement, and while being able to retire whenever you choose is important, financial freedom does not have to wait. Depending on your circumstances, financial freedom may imply the ability to pursue your passions and turn them into a profit.
It could mean not relying on a 9-to-5 job so you can spend more time with your children or support your partner while he or she works to establish a business they are passionate about. Financial freedom entails connecting with your core values and having enough money in the bank to sustain those values without worrying about paying the bills.
Eight tips to help you start achieving financial freedom
Financial independence will not come about by a sliver of hope. It will take discipline and commitment, as well as a series of specific steps to make this goal a reality. It also requires financial confidence.
The following eight tips will help you achieve financial independence and avoid costly financial mistakes. They will also put you on the right track to making early retirement a reality.
1) First and foremost, learn how to manage your finances
If you don’t have a financial strategy, you won’t be able to get ahead. Instead, at the end of each month, you’ll be left wondering where your money went! That is not financial freedom; rather, it is a formula for financial ruin. If you’re married, be sure you and your partner are on the same page when it comes to money. If you’re single, find someone to hold you accountable.
If you’re living paycheck to paycheck, it’s hard to accumulate money. Before the month begins, give each dollar a name and keep track of your expenditures. You may always alter the amount in each category if you frequently overspend or underspend in specific areas. Budgeting is essential for getting your finances in order.
2) Set life goals
To you, what does financial independence entail? A general desire for it is too broad a goal, so narrow it down. Make a list of how much money you should have in your bank account, the lifestyle you want to lead, and when you want to accomplish it. The more detailed your objectives, the more likely you are to achieve them.
Then, working backwards from your current age, set financial milestones at regular intervals. Put the target sheet at the front of your financial binder and write everything down properly.
3) Make a complete payment on your credit cards
Credit cards and other high-interest consumer loans are bad for developing wealth. Make it a habit to pay off your entire debt every month. Student loans, mortgages, and other comparable debts usually have lower interest rates, so repaying them is not a pressing need. Paying on time builds a high credit rating and will continue to do so.
4) Make savings automatically
Pay yourself. Enroll in your company’s retirement plan and take advantage of any matching contribution opportunities. It’s also a good idea to set up an automated withdrawal for an emergency fund that may be used for unforeseen costs, as well as an automatic donation to a brokerage account or similar account.
Ideally, the money should be taken the same day you receive your paycheck, so it never comes into contact with your hands and you are completely free of temptation. Keep in mind, though, that the suggested amount to save is a hot topic of discussion. The practicality of such a fund might be a concern in various situations.
5) Build an emergency fund
It isn’t difficult to save for a rainy day, especially when you consider how much you pay to creditors when you have a balance. What would you do if you lost your job? Or your house is destroyed by a natural calamity, or you get ill. The credit card company will not assist you; instead, they will increase your interest rate and make your problem worse.
Anything may happen, and it’s your fault if you don’t have a reserve, especially if you overspend each month. Begin with a modest aim of saving $1,000, then work your way up from there. Start by putting aside enough money for an additional month’s light bill if you’re truly suffering. Anything is preferable to nothing.
6) Continually educate yourself on money
Every year, review any relevant changes in the tax rules to ensure that all adjustments and deductions are maximized. Keep up with financial news and stock market events, and don’t be afraid to make changes to your investment portfolio as needed. Knowledge is also the best safeguard against those looking to make a fast profit by preying on inexperienced investors.
7) Reward yourself
When you accomplish all your goals, don’t forget to reward yourself. This will encourage you to continue putting money aside whenever you can. Aim to create smaller, short-term objectives in addition to the major ones, since they will yield faster results and keep you motivated. Saving money each week for a trip in six months, for example, will keep you motivated to put money away.
8) Stay positive through hard times
This is a simple one. It may be tempting to abandon your objectives, throw in the towel, and revert to old behaviors on certain days. Don’t give up. You’ll make it. Just take your time.
For the vast majority of people, achieving financial independence does not happen quickly. Sure, you can inherit a large sum of money and be financially independent. However, for the vast majority of individuals, obtaining financial independence quickly is simply not achievable. I
t requires time, dedication, and a constant search for new methods to earn and spend more actively. That can undoubtedly shorten your path to financial independence, but you never know what life will throw at you or what hurdles you’ll encounter.
Financial freedom is about more than money – it’s living your best life
The greatest thing you can do is find out why you want to attain financial freedom, make a strategy, and manage your money more effectively. You’ll soon realize that financial independence is about more than simply money; it’s about living your best life.
Robert McMillen is an entrepreneur, finance professional, consultant, and passionate writer at Instant Loan Online. For many years using his industry knowledge and experience he has helped his clients to create more wealth and reduce costs.
Photo by Hanneke Laaning