Achieving financial freedom is a big goal, but a goal that can be achieved through consistent efforts over time. Becoming wealthy is possible with the right formula and process. In this post, you’ll learn about steps to financial freedom and financial success. Make no mistake, financial freedom is quite a lofty goal, but is possible. If you decide financial freedom is what you want, there are a number of personal finance habits you can cultivate to become wealthy. Share with you a seven-step plan to get to financial independence – the ultimate personal finance goal.
What is Financial Freedom?
Financial freedom, or also known as financial independence, is the ability to do what you want with your time and energy without having to worry about money at all. Being financially free could mean having enough money saved up in bank accounts and investments where you don’t need to work anymore. Financial freedom could also mean owning a number of businesses which provide you with enough cash flow where you have your bills paid each month without having to work. Becoming financially free is something everyone wants deep down (whether they consciously know it, or subconsciously know it), but not everyone knows how to get there, or knows why it would be empowering.
What do you think? Wouldn’t it be great to be able to wake up each day and do what you are passionate about?
Step 1 for Financial Freedom: Build an Emergency Fund
What happens when the furnace or AC goes out in your house? What happens if your car breaks down, or you get sick? There are so many unplanned emergencies to account for.
Having a safety net will be beneficial for your financial well-being, and will also be great for peace of mind. Saving up 3 to 6 months’ expenses, or even having 5,000 saved is a great starting point for your emergency fund.
Step 2 for Financial Freedom: Pay off Consumer Debt
Debt sucks. Debt is a restriction on your life and does not allow you to live the life you want and deserve to live. Getting out of debt is possible by spending less money, and applying debt payoff strategies. After getting your debt knocked out, you can start focusing on offensively building your wealth.
Step 3 for Financial Freedom: Save 10% of Your Income
After building an emergency fund and destroying your debt, the next steps are to start saving. Take 10% of your income, and start saving it for the future. After paying off your consumer debt, take that money and start directing it towards investment and savings accounts for the future. Get your savings rate up!
Step 4 for Financial Freedom: Learn about Investing
Financial freedom isn’t going to come through investing in CDs. The only thing guaranteed about a CD is you are guaranteed to lose money due to inflation! (Okay, in some situations and rate environments they are okay – but not right now)
Do you want to be an active investor or a passive investor? Active investors should look at starting businesses or buying real estate. Do you want to sit back and watch your money grow without much work? Stick it in the stock market.
These questions are worth asking yourself. After figuring out your goals, next learn about the different fees, downfalls, and traps in your chosen market.
For example, paying a financial adviser 2% over 30 years could amount to hundreds of thousands of dollars lost! With this information, you can wisely grow your wealth and become wealthy over time.
Step 5 for Financial Freedom: Invest in Yourself and Grow Your Income
Your level of success will rarely exceed your level of personal development because success is something you attract by the person you become.
If you are looking to make more money and be successful, then you will have to work on yourself.
If you increase your income, you will be able to save more. By saving more, you will be able to increase your investments. All of these steps go back to investing in yourself and improving as a person.
Step 6 for Financial Freedom: Stay Consistent
Paying off debt and then going back into debt isn’t going to help on the way to financial freedom. Saving 5,000 in one year isn’t going to amount to much.
BUT, saving 5,000 a year for 30 years and investing it in something returning 5-7% a year can grow to hundreds of thousands of dollars.
Consistency is the key to everything.
Step 7 for Financial Freedom: Give Back
Giving you time, money, and knowledge can help others achieve their goals and dreams. We make a living by what we earn. We make a life by what we give. With these 7 steps, you will be on your way to financial freedom. However, if you are still struggling to get past step 1, below are 2 easy steps you can take for personal finance success.
2 Easy Steps to Take for Financial Success
However, there are two easy steps you can take for overnight financial success:
• Step 1: Track Your Income and Expenses
What gets measured gets managed. Knowing where you are financially is so important to financial success.
• Step 2: Be Consistent, and Learn with Books, Blogs, and Podcasts
As I said above, consistency and earnestness is at the heart of success in many areas. You need to keep your income and expenses accounting on a regular basis, and always ask yourself the Why question, why is our finances like this? What else can be improved in addition to constantly acquiring financial knowledge continuous investment Whether reading articles, reading books, listening to podcasts or watching videos will help build knowledge. as well as inspiring you to move towards financial freedom faster.