You are aware of the feeling when you panic seeing an unexpected hefty car repair bill. How will you pay it? Will you take out small personal loans with bad credit or will you pay for them without thinking much?
If you have enough saved funds, you will not even remember how much you paid for the car repair bill next month.
In case of an emergency, whether an unforeseen house repair or a medical emergency, it barely affects your finances. Or else you treat such emergencies like a small hiccup, and then you have already attained financial freedom.
Suppose you are all set for the next likely pandemic or recession smacks. Then, you have already created safety money net for yourself and your family.
But if you think that you don’t fall into either of the categories, then it is high time you create a financial cushion for yourself and your family.
When a money crisis hits you, then having financial freedom lets you focus on other vital things in life instead of worrying and managing your family’s next meal.
By now, you must have felt the sense of having true financial freedom and how it affords peace of mind irrespective of any circumstances.
Paying for hefty car repairs, other bills, and medical emergency is a small part of the financial freedom picture. It is way more than meeting emergencies without hiccups.
Financial freedom is nothing but to take control over your funds. It is a state of having enough income to allow you to lead a lifestyle you always wanted without worrying about the bills or enough capacity to manage an abrupt outflow.
This term is not about being a millionaire who has oodles of money. But it is about having the proper control over your income to achieve a better financial present and having an amazing future.
If you want to gain a financially peaceful state, then the below are some essential steps that you need to take in your quest to achieve financial freedom.
The primary step towards achieving your goal is to start by gauging your current financial situation. In this step, you will calculate:
Simply put, you need to understand your financial statement, including your income, liabilities, expenses, and assets. Once you have a figure, the next step in your financial voyage will be writing the long-term and short-term goals.
Nothing can move forward without a strong goal. You need find out why you are looking to make more money and achieve financial freedom. Your goal can be:
Your goals can be one or two of these mentioned above. You need to have a purpose first. Once you have it, things will be easier for you as there will be an objective in your head.
Take a paper or write it down in a spreadsheet, according to your preference. Now jot down the top 4 or 5 goals you target to realize in the next 5 to 10 years.
Make sure that goals are realistic, achievable, time-bound, and specific. For instance,
Strategizing to accumulate $2,50,000 by the end of the year 2050.
This goal is smart, specific, realistic, time-bound, and achievable.
The next vital step is to track your spending. You can use a notebook or excel sheet to do it. Many people use money tracking apps that are available online. It helps track and categorize your spending automatically, including shopping, eating out, travel, etc.
Tracking your expenditure is a significant step towards achieving financial freedom. This helps in revealing pointless expenses that you do with impulse purchasing. A thoughtless purchase of anything is considered to lose control over funds and puts a big obstacle to realizing your goal.
It is more than essential to track your expenses and stay in control religiously.
People who are jobless take instant loans for the unemployed to look after their expenditures and save funds to attain financial freedom.
Putting a particular amount of money towards building savings or investing before paying bills, rent, discretionary expenses, etc., is defined as ‘paying yourself first.
This process has helped numerous people to get closer to their financial freedom goals. The primary reason why this trick always works is that you are forced to manage your expenses with the balance you get after deducting the saving amount.
If the amount for savings is not enough, you have to take some strict action towards ascending the figure. You can reduce your expenditure after making minor tweaks to your regime. You can also pick a side hustle to boost your income and attain financial freedom.
Money is saved through your earnings. But if you invest it, you can earn more than what you make.
We tell you to totally alter or compromise on your lifestyle but make smart financial decisions. You should aim to spend your money smartly and have control over your buying urges.
You can save money smartly from various methods and more creatively.
For example, you can make food at home instead of eating out. If you don’t know cooking, then learn it. This will not only be fun, but you will save a lot of money.
You can also opt for auto-debit for paying credit card bills so that you don’t have to pay for the late payment charges. A non-essential item can wait for some time. You just need to control your impulse buying behavior.
Paying off the debts can help you come closer to your goal, i.e., financial freedom. Because paying debts helps you to have more money saved each month. Right now, a big portion of your income is going straight towards paying the minimum or large payments of all debts.
Imagine this money can increase the balance in your savings account. Closing off any sort of loan can remove a considerable weightage and a financial obligation from your shoulders.
Either pay off all the debts with the help of instalment loans with no credit check direct lenders only or adopt other techniques to clear it. There are two accepted techniques to pay off the debts, i.e., snowball and avalanche.
In the snowball method, you attack the debts having the lowest interest rate. Then once it is cleared off, you jump to the next lowest one. Whereas in the avalanche technique, you get rid of those debts having the highest rate of interest. Both methods work well. You need to pick one that suits your situation the best.
Expanding your money and income sources while moderating the spending level is one of the quickest ways to reach your financial freedom goal. You are required to advance your career or enlarge the success of your business.
You can elevate your career by learning new skills and adding valuable experience. If you are running a business, then work on its growth and profitability strategies to attain greater heights.
An increase in income level can get you close to your financial goal.
Most people work 9 to 5, and the pay might not be adequate to achieve financial freedom. You should look beyond your current job to increase your income.
Many financial experts advise individuals to discover at least 5 sources of income. If you have a job, then well done, you have one income source. Now you will identify the rest of the four revenue sources.
You can trade your money or choose a work that requires you to work less and pays you decently. You can become a freelancer, drive, babysit, design logos, or whatever you think is easy for you.
You can think of investing your money as it is a great way to generate more income. You need to see what works best for you.
Financial freedom is different for different people. For some, it is a state where you don’t worry about any potential money challenge, and for some, it is taking an early retirement without worrying about funds.
Attaining financial freedom is not easy, but if you follow all the above steps. You can realize this goal very soon.
If you want to have a happy retirement, have enough money to cover all inevitable and unexpected expenses, and live comfortably without straining your financial front. Then take vital steps towards realizing this aim soon.