Financial freedom is the ultimate dream for everyone. However, not many people achieve it in their lifetime. Here's a guide on how to achieve financial freedom.
Personal Finance

How to Achieve Financial Freedom

A huge number of Americans feel as if they haven’t achieved financial freedom. Money woes plague a huge number of families, with more than half the population living paycheck to paycheck as they struggle to keep their needs in check. 

While freedom from money concerns is a goal for everyone, most people aren’t sure how to achieve financial freedom. It takes a lot of work and smart habits in order to become financially free, and many don’t know exactly how to get started working towards this goal. 

What are some things you can do to help build your own wealth and stop being a slave to your nine-to-five? Read on and we’ll walk you through what you need to know. 

Get Organized and Make a Budget

Managing personal finances is an adult responsibility that many find difficult to grapple with. Keeping track of the money coming into and out of your account can be more difficult than many of us give credit for. However, getting organized when it comes to your finances is the first and most important step to reach financial freedom. 

The easiest way to get organized with money is to keep a budget from month to month. You want to be able to see how much money is coming into your account (not too difficult) and see how much is headed out. 

Add all your income on one side of a piece of paper. Ensure it’s the actual amount coming in, including all sources. On the other side of the paper, make a long list of monthly expenses that stay consistent from one month to the next.

This will include contributions to your health care, 401K, and auto insurance. It will mean your mortgage payment or rent, your utilities, and your subscriptions for phone, internet, and so forth. 

How much money do you have after these costs? You’ll need to divide them between other categories: food, entertainment, hygiene, etc. Make another section for savings, or money that you’ll put away and not touch.

Try to stick to the budget you create and cut down in certain areas if you’re spending more than you should. The more you can funnel towards your savings, the quicker you should be able to work towards financial freedom.

Don’t Carry Debt

Credit cards are a wonderful gift, but they can create habits in us that do not lead towards a healthy financial life. If you currently have credit card debt, working to relieve yourself of this debt can be one of the most important steps you can take to declare financial independence. 

Credit card debt builds with time. The more debt you have and the longer you hold onto it, the bigger your burden grows. Holding a debt on your credit card can make it impossible to build long-term wealth, as your savings will be continually funneled towards paying for the money you are borrowing.

You should make it your goal each month to pay off your credit card statement in full. If you can’t afford what you’re purchasing each month without leaning on credit, look to the budget you made.

What can you cut down on that will get you back where you need to be in terms of your allowance?

Credit cards can be great to get cash back and build your credit score, but you shouldn’t use them unless you can pay back what you owe in full.

The same goes for any loans you’ve taken out from banks or other financial institutions. The more money you owe, the bigger your debt becomes. It can be easy for these issues to snowball and lead to more financial problems. 

If you can get your debt paid off, you should have a clearer path ahead towards financial security.

Invest in Passive Income Sources

You can’t build wealth from your weekly paycheck alone, at least not quickly. Unless your salary is sky high, it can be hard to get the kind of money flowing into your account monthly that would make a huge difference to your life.

However, focusing your efforts on investing can help to change this. Passive income sources can help to add money to your account while you’re working elsewhere.

The most accessible form of passive income is profit that can be garnered by investing in the stock exchange. The value of stocks tends to go up over time, even if there are many rises and falls in the short term.

Putting money into stocks and taking it out many years later can lead to some massive financial gains, though there are always risks involved.

Investing in real estate can be even more lucrative. Running an Airbnb property, renting a small home to tenants, or offering commercial space to retailers offer the ability to make a massive amount of income.

This form of investing will, of course, require some money upfront. However, if you are able to afford the initial investment, the amount of wealth you can build in the long term can be well worth it. 

There are numerous advantages and benefits to real estate investing. You can view more here if you’re considering going this route with your own financial plan. 

Learning to Achieve Financial Freedom

Most people want to achieve financial freedom, but not too many people are aware of what steps they need to take to reach this goal. The above are just a few helpful tips and pointers on how to make financial freedom achievable.

Need more personal finance tips? Keep scrolling our blog for more.

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