Ahh freedom. Sounds amazing doesn’t it? Would you believe me if I told you that you can achieve it just as much as anyone else can? No really, you can! Okay, let’s back track a little. What exactly is financial freedom? Generally speaking, having financial freedom is being in control of your finances. For example, having a built-up savings account, not being worried about a sudden expense, and being debt-free are all great examples of financial freedom. Having enough finances so that you are not living paycheck to paycheck is financial freedom.
Now that we have covered what it is, how can you achieve it? It’s actually easier than you think.
Determine what financial freedom means to you. It could mean paying off the mortgage on your house, paying off all debts, saving X amount of dollars, or a combination of all three. Whatever your idea of financial freedom is, begin to establish those goals with a time frame and plan. For instance, in five years, I want to have my house paid off and to do this, I will pay more than the monthly mortgage.
Setting goals for yourself with a time frame can help guide you and motivate you because you have a tangible thing that you want to achieve. If your goal is simply “financial freedom”, there is nothing you can specifically achieve. You will question what financial freedom means. You will find yourself lost and unable to attain this goal. A tip for achieving financial freedom is establishing legitimate goals that you can cross off a list that lead to financial freedom.
Budget your time and money
Time and money are extremely valuable. Time to audit it and budget both these precious items. First, write down everything you do during the day; this includes work, chores, screen time, sleeping, literally everything. Figure out what you’re spending your money on and begin tracking it. Notice unnecessary expenses and determine a plan to cut back on those expenses. If you use your time and money wisely, you have the potential to achieve financial freedom.
Spend below your means
Many wealthy individuals, such as Warren Buffet who is worth $84.9 billion, spend well below their means. Even with millions or billions of dollars, individuals like Warren Buffet live very budgeted live. Mark Zuckerberg wears the same outfit every day: a t-shirt and jeans and he is worth billions, so it is not impossible to spend less than what you make. I know, I know, sometimes we want to splurge and treat ourselves and while that’s fine, but you need to think long-term. The more you save, the more you can put towards your financial freedom. You do not need to look rich and prove that you are rich. Which would you rather: having nice things but drowning in debt or being a modest spender with little to no debt? If you chose the first option, you are going to live a stressful life with the risk that everything you own could be taken away at any point in time. If you chose the latter, you are on the road to freedom!
Ah savings. This topic is discussed in depth in another blog article (https://www.northernpeakfinancial.com/blog/why-you-should-care-about-saving-money) but I will touch upon this concept in a broad sense here. With every paycheck, after your bills are paid, you should be setting aside money to put into your savings. Look into retirement plans that you can invest in, other investment vehicles, or high interest savings accounts so that it is harder to access your savings funds. If your money is tied up in an investment vehicle, you are less likely to spend it. Removing the money from an easy access location as fast as you can will help prevent you from spending it.
Overall, saving can be challenging but if you take beneficial measures ahead of time, you can stop yourself from spending the money when you receive a paycheck.
Pay off debt in full
One habit that’s worth getting into is paying your debts in full. What does this mean? If your credit card statement is $350 with a $35 minimum, pay the full $350 not just the minimum! By just paying the minimum, you are potentially doubling or tripling what you owe due to interest. If you cannot afford to pay the amount on you credit card, consider cutting back on unnecessary spending to make the payment more affordable. Reducing your credit card debt and paying it in full has the potential to give you a better chance at financial freedom.
Financial freedom is not out of arm’s reach. If you take precautionary measures from the start, you have the ability to do it!