Financial Freedom. It may appear to be a good theory. But the truth is that anyone can achieve it. And I mean anyone – including yours truly, who once owed tens of thousands of dollars in student loans. Whatever financial difficulties you are experiencing today, there is always a way to get back on track. Perhaps your first step should be to try a budgeting app.
In this article, we’ll discuss the significance of financial freedom and share some financial freedom strategies that have worked for me.
What exactly is financial freedom?
Taking control of your finances is the first step toward financial freedom. You have a consistent cash flow that allows you to live the life you desire. You’re not concerned about how you’ll pay your bills or unexpected expenses. And you’re not saddled with a mountain of debt.
It’s about admitting that you need more money to pay off debt and possibly increasing your income with a side hustle – more on that in a moment. It’s also about long-term financial planning, such as actively saving for a rainy day or retirement.
What exactly is financial freedom?
10 Game-Changing Financial Independence Strategies
1. Recognize Your Current Situation
You can’t achieve financial independence unless you know where you’re starting from. Looking at how much debt you have, how much savings you don’t have, and how much money you need can be a depressing reality. However, this is a significant step in the right direction.
Make a list of all your debts, including your mortgage, student loans, car loan, credit cards, and any other debt you may have accumulated. Don’t forget to include any money you’ve borrowed from friends or family members over the years.
Now take a deep breath. And another. Then add up all of the numbers.
How much debt do you have?
Don’t worry if it’s a large number; I’ll explain how to pay it off later in this article. Congratulations if it’s a small number! Please share your financial freedom tips in the comments section below.
Next, go over all of your savings.
Make a list of all your savings, including savings accounts, stocks, company stock-matching programs, company retirement-matching programs, and retirement plans. Then we’ll add any recurring monthly payments you receive, such as salary, side hustle money, and so on.
Keep these figures in mind as we go over the next few financial freedom tips.
2. View Money Positively
Debt can be very discouraging.
But keep in mind that money is a good thing, even if it appears to be a burden right now.
You deserve to be financially free.
People who don’t make a lot of money often feel ashamed when it comes to making money, according to Jen Sincero’s book You Are a Badass at Making Money. As a result, many people believe that having money is bad. Many people feel guilty for having it, and even more guilty for wanting it. According to Sincero, “we use money every day to improve our lives, yet we always seem to focus on the negative aspects of it.”
Money, like food and water, is merely a necessity. It enables you to buy the things you require and live the life you desire.
To achieve financial freedom, you must view money as a tool to help you achieve your dreams, fuel your energy, and live a stress-free life that you can enjoy.
Because if you have a negative attitude toward money, you will subconsciously sabotage your chances of earning and keeping it.
3. Make a list of your goals.
Do you want to get out of debt for good? Are you desperate to get away from the 9-to-5 grind? Is there a place you’ve always wanted to visit? Do you need to save for a wedding, children, or retirement?
I achieved financial freedom because I linked it to an emotional goal. My goal was to pay off my student loans and save for my first home. And, to be honest, it was a euphoric experience watching the debt fade away and my savings grow.
I was so excited to see the numbers change that I worked harder to make more money so that I could see a bigger change in my personal finances. Would I have achieved my financial freedom goal if I hadn’t linked it to something emotional? Probably not. I was desperate to get out of debt and out of my parents’ house. That desperation kept me going throughout my journey.
Another interesting thing occurred. In February 2016, I scribbled a few of my goals on a scrap piece of paper:
Earn $100,000 by selling products online.
Set aside $20,000 for a down payment.
pay off $24,000 in student loans
I ended up misplacing that paper and completely forgetting about it. And then, just over a year later, when I was already living in my new home, I discovered it in my notebook. Sure enough, I had completed all three tasks. The strange thing was that I wasn’t even consciously thinking about those objectives.
You may not be able to complete all of your goals in a month. However, a year is a long time to make progress toward your goals. Make sure your goal is tied to a specific number that you want to achieve. Believe it or not, you’ll begin working toward those objectives without even realizing it.
Knowing exactly what you want to achieve makes achieving financial freedom a million times easier.
4. Monitor Your Spending
Tracking your spending is an important step toward financial freedom.
You can use a tool like Mint to see how much money you’re spending, which categories you’ve overspent in, how much money is in each of your accounts, and how much debt you have.
mint financial liberty
Mint also allows you to set goals within the dashboard. You can keep track of your goals and know the exact month you’ll be expected to reach the goal based on how much money you put in. As a result, you will be held accountable and reminded to continue contributing to it for yourself.
After using Mint for a month, I was able to save some extra money for my new wedding fund goal. Mint helped me stay focused on my goal and pushed me to generate more passive income in order to meet my financial milestones.
5. Pay Yourself First
You’ve probably heard the expression “pay yourself first.” But, in case you haven’t heard, “pay yourself first” means putting a set amount of money into your savings account before paying anything else, such as bills. And the act of paying yourself first has helped countless people get closer to financial freedom.
Why?
Because if you want to pay yourself $1,000 per pay period first, whatever is left over must go towards bills. If you don’t have enough money to cover your bills, you’ll have to work a second job to make ends meet.
By paying yourself first, you ensure that you are always putting money aside to invest in yourself. By doing the opposite, you only get whatever is left over, which is usually insufficient to help you achieve financial freedom.
You can also pay yourself first in other ways. For example, if your company has a retirement savings program, you can request that money be withdrawn for your retirement. That way, you’re putting yourself and your future first. The money is deducted from your pay, leaving you with money to put aside for bills and expenses.
6. Spend Less
Warren Buffett bought a five-bedroom home in 1958 for $31,500 and hasn’t moved out since. His net worth? A staggering $90.3 billion. He can afford a larger and more expensive home. But his frugal nature may be the reason he is one of the world’s richest people.
Warren Buffett’s financial independence
Kanye West, on the other hand, isn’t afraid to flaunt his wealth. He lives in a $20 million mansion. And, with $53 million in debt, he decided to ask Mark Zuckerberg for $1 billion… on Twitter.
What is the distinction between these two extremely successful gentlemen? Buffet did not overspend, and West spends money he does not have.
The truth is that many wealthy people do not appear to be wealthy. Zuckerberg literally wears the same drab t-shirt and jeans every day.
Buying less can actually help you get richer.
Two things happen when you spend less money. One, you’ll have more money to save for your financial independence. Two, you’ll realize that you actually need a lot less stuff to survive, which will allow you to save more money.
This leads us to our next point…
7. Purchase Experiences Rather Than Things
Life is short. It’s not about saving all your money until you’re 65. You have the right to enjoy your life while you are still alive.
The experiences you have, rather than the products you own, will ultimately help you live a more fulfilled life.
And, in the long run, do the things you buy make you happier? Is your debt from buying a bunch of stuff making your life easier?
Let’s now flip the switch.
What is your happiest memory? What were you doing? Who were you with?
Let us make more memories like that.
Maybe you have a friend who you enjoy working out with. Invite her over to work out to a YouTube playlist at home for free.
It’s date night. You want to make it unforgettable. Find a cool activity you’ve never done before on Groupon for a fraction of the price.
You’ve always wanted to visit Rome. You’ve been saving for a year to take your dream vacation. Go on that vacation guilt-free. You didn’t borrow it; you earned it. You can also become a digital nomad and travel the world while working abroad.
financial independence travel
Life is made up of moments. The best ones result from quality time spent with friends and family. While some products can help bring you closer to your family (such as weekly family video game night), the majority of them don’t add much value.
Spend no money You are not required to pretend to be wealthy.
8. Pay Off Debts
Some will advise you to invest in stocks rather than pay off your debt. Maybe if you’re an expert stock picker. However, if you’ve never invested in stocks before, you may end up with more debt.
Many people feel relieved after making their last debt payment.
You can’t really call yourself financially free if you have $50,000 in debt, even if you have $30,000 in the bank. You’re still $20,000 in the hole.
While paying someone else isn’t as glamorous as having money in the bank, it does bring you closer to financial freedom.
There are two main ways to pay off debt: snowball and avalanche. When you snowball, you pay off the smallest debt first. Avalanche is when you pay off the debt with the highest interest rate first.
avalanche debt financial freedom
You must decide what works best for you. But when I was working to get out of debt, I used the snowball effect. It helped keep me motivated. Because I was able to pay off my first debt, a $1,200 credit card bill, in less than a month, the sense of accomplishment motivated me to tackle a much larger, lingering student loan.
And, since credit cards were no longer an issue, I would pay roughly three times the meagre $300 minimum payment. In the end, it took about three years to pay off the student loans instead of the nine years I was given.
Paying off a large debt relieves you of a huge burden. After you pay off your debt, the amount of money in your bank increases. It’s an amazing feeling to see the number rise (even if you had to watch it fall at first), and it keeps you motivated to keep growing it.
9. Find additional sources of income
So, at this point, you’re probably thinking, “My debt is much higher than my salary; how can I pay it off if I don’t make enough?”
If you want to achieve financial independence, you must be willing to shed some blood, sweat, and tears.
Your 9 to 5 job may not be enough. If this is the case, you must step up your efforts and look for work outside of your current position.
Some experts advise having seven different sources of income. Congratulations if you have a 9 to 5 job; only six more to go!
You can now look at your sources of income in two ways: active income (trading time for money) or passive income (money that can keep coming in, even while you sleep).
When you trade your time for money, you are constrained by the hours of the day. Here are some side jobs you can do to supplement your income:
Find work as a freelance writer on Pro Blogger.
As a virtual assistant on Upwork, assist a business owner.
Learn new skills and monetize them by taking online courses for entrepreneurs.
Become an Uber driver.
On Task Rabbit, you can get help with household chores.
Pick up the occasional job on Craigslist.
And much more!
If you don’t have a lot of time to devote to earning money, you can concentrate on increasing your income streams with passive income, such as:
Starting a drop shipping online store with Shopify
Create your own custom clothing business on Shopify.
Profitable content should be sold (blog, eBooks, courses, webinars, audiobooks, podcast, apps)
Become an affiliate marketer.
Purchase real estate and rent it out
Invest in stocks
Fortunately, your seven streams of income can all come from the same source. For example, if you’re an ecommerce expert, you could earn money by opening seven different stores. Remember, you don’t have to start with seven streams; you can gradually work your way up to it.
10. Invest in Your Future
The final financial freedom tip is critical. Assume you follow the advice and recommendations in this article to get out of debt and grow your savings. That may be sufficient to assist you right now. But what if something unexpected happens? Will you be ready?
It’s critical to save money for rainy days, retirement, and (sorry to be morbid here) in case you die to ensure your family doesn’t drown in funeral costs, debts, and taxes. Let’s get back to that happy place.
If you have a 9 to 5 job, talk to your boss about adding a retirement plan, or see if you’re already getting deductions for it. The deduction is deducted before it reaches your account, so you never feel like you’re losing money. It’s also fun to check in on a regular basis and see your savings grow.
You should also save money for an emergency fund. Some experts recommend $10,000, while others recommend six months of your salary. And, to be honest, if you don’t make a lot of money, those figures can appear quite high. Instead, begin with a manageable goal, such as $100 for the first month. As you earn more active or passive income, raise your goal to $500 per month, $500 bi-weekly, and so on. If you’ve overspent on credit and have a large credit card bill, don’t use your emergency fund; instead, focus on increasing your active income opportunities to pay it off faster.
The emergency fund is only for unplanned emergencies such as a tree falling on your house, a car accident that requires you to pay for out of pocket, or a hospital visit.
By putting money aside for rainy days and retirement, you’ll be less likely to end up back where you started: wishing for financial freedom.
Conclusion
Financial freedom can help you take control of your finances and, more importantly, your life. It’s about living within your means, being a little frugal, and making sure your money is spent on things you really need, like food, shelter, and, yes, vacations (relaxation is important too, you know). By following the financial freedom tips in this article, you’ll be one step closer to achieving the financial freedom you deserve. So examine your finances, create additional sources of income, pay down that debt, and you’ll be debt-free in no time.
How close are you to financial freedom? Let us know in the comments!
