There is no doubt most of you reading this are quite familiar with the term financial freedom. It’s a goal I’m actively pursuing and something most would like to achieve in their lifetime.
We’ve also all have experienced an unexpected and expensive bill, whether that is a medical emergency, car repair, etc. It can set you into panic mode, especially when you might be struggling already to pay your other bills.
Been there. A few times actually.
But if we were to fully obtain financial freedom, that bill would be less worrisome and we can easily move on from it. Sounds nice, right?
Financial freedom is not something that will happen overnight, but it is extremely possible. Even if you currently think it won’t happen, it definitely can.
While it is nice to have money and being able to pay unexpected bills, financial freedom is not actually about the money or possessions you can buy, it’s about living your best life.
What is Financial Freedom?
Based on my short introduction, it’s safe to say you probably can conclude how financial freedom is defined.
But before we move further, I wanted to quickly put a definition behind it so we are all on the same page.
So what is financial freedom? It essentially means that you get to make life decisions without being stressed about the financial impact because you are prepared. Instead of money and finances controlling you, you are the one in charge.
Financial Freedom is About Living Your Best Life
Thanks to the digital age and social media, we see thousands of images of people flashing new cars, clothes, traveling, houses, etc.
It’s easy to get wrapped up in the finer things in life and having money can get you those things. If having money to purchase fancy things is why you are pursuing financial freedom, you’re in it for the wrong reasons.
Yes, being able to travel and having a nice car is fine. I like those things too, but financial freedom is less about the material things you can buy and more about living your best life.
You might be thinking, “Having more fancy possessions and material things is living my best life, duh!”
Hopefully, that is not your mindset. Possessions and material things only lead to temporary happiness, the goal of financial freedom is long-term.
For me, living your best life means a few things:
- Less stress and worry about finances
- The freedom to choose what time to wake up (no alarms!) or when to work
- The ability to travel and take a vacation without racking up credit card debt to pay for it
- Getting to spend more time with family and friends, instead of constantly chasing a paycheck to cover expenses
- If I lose my job, can I cover the expenses for a while?
- Being able to start a passion project, help others, etc.
Having money in the bank or invested is, of course, a part of financial freedom, but the above is how I see it.
Now, this can be slightly different for you. Maybe financial freedom is having enough money in the bank to retire early, maybe it’s living the remainder of your life completely debt free, etc.
No matter what your reasoning, it should always be about living your best life, not the actual money.
Financial Freedom Tips: How to Achieve It
When you are financially independent or free, you have a lot more options. You don’t have to wonder if your bank account can handle groceries, job loss, unexpected repairs, etc.
Right now, I wouldn’t say I’m completely financially free like I’d like to be (getting there!).
But others might say that I am. Since 2014, I’ve paid off most of the roughly $50,000 in total debt (Student loans, car, and credit card) and saved/invested just shy of $60,000.
For the first time in my life, I’m at the point where I’m not worried about unexpected repairs, bills, or if for some reason I had lost my great full-time gig. I’ve created a decent money-buffer for myself which has also allowed me to travel and experience some cool places this year.
And you know what? It’s entirely possible for anyone to do the same thing. I come from a zero background in finances (other than knowing your very basics) and I’m excited about the results I’ve seen so far.
Below are a few financial freedom tips that helped me and can help you live your best life.
If you want to fully change your financial future and hit that independence, you need to accept responsibility. Own up to your financial mistakes and understand your money decisions greatly affect your wealth in the future.
It’s completely okay to make mistakes or not be financially savvy, but take charge and own up to it all. This will greatly impact your financial IQ and mindset to reach your goals.
Learn how to manage money
If you don’t understand where your money is going or how to control your spending, you’ll find that financial freedom will not be possible. The challenge is, a lot of people let money control them and it can spiral out of control.
Take charge and don’t be afraid to face the numbers.
- Track your net worth with Personal Capital. It’s free and trusted by millions of people to keep track of their net worth, personal spending, and any investments.
- Know how much money you bring in and how much goes out. You can catch a lot of overspending or places to make cuts to get more money back in your pocket.
- Develop a budget to help you stay on track and adjust as need over time. You should be spending about an hour each week with your budget. It’s your new best friend.
Set financial goals
Just as important to learn to manage your money, you want to set financial goals for yourself. Otherwise, what are you actually trying to achieve?
If you do not have goals to reach, why would you stick to your plan for financial freedom? If you reach one of your goals, set a new one and keep going.
Initially, my finance goals were to have enough money to not worry about an unexpected expense and retire by 45. I’ve reached my first goal, so I switched it to hit $100,000 in savings.
This keeps me on my game and having goals can help you work harder towards yours.
Pay yourself first
This was one key step that helped me and got me into a different mindset. You’ll see me mention this often in other posts, but it’s so important.
Typically, when we get our paychecks or money we focus on paying our bills, any debt, etc. first. While you, of course, you want to pay these on time, what happens?
You pay these bills, then need money for groceries and gas, and then what’s left? Sometimes you might use that leftover for entertainment or buy something for your home/apt.
Your savings gets neglected. Instead after budgeting, immediately move a percentage to your savings first. And stick to that rhythm.
Live below your means
If you want to obtain a life of financial independence and freedom, you need to live below your means.
It’s a challenge for a lot of people, but also a number one reason most people are broke or have little savings. We want to keep up with our peers, have the latest car, upgrade the size of our house/apartment, etc.
All these things put a strain on your financial goals. Stop worrying about what others have or trying to upgrade to the next best thing. Stay within your means and your pockets will thank you.
ABL – Always Be Learning
You might have heard of ABC for sales – Always Be Closing. Well, we can play on that with ABL – Always Be Learning.
If you want to reach financial freedom and live your best life, you need to keep learning.
It doesn’t matter if you become a financial master in your lifetime, continue to read books and personal finance blogs to help you gain further insight. There is always something new or another perspective about money that may help you achieve your goals.
I’m constantly reading new blog posts from some of my favorite sites and I re-read books I’ve already completed. So many times new nuggets of information were overlooked.
Never stop learning.
Republished with the permission of InvestedWallet.com.
Steve handles the operational side of Rockstar by keeping the systems running smoothly, social media accounts active and curation buttery smooth. He also answers to the name “Do-It-All Boy”.
Steve is also the founder of ThinkSaveRetire.com – a site where he shares ideas and techniques on how to retire from your 9-5 job and start to enjoy the virtues that life has to offer outside of full-time work. Life is about more than fluorescent lights and gray cubicles!