If you have ever been faced with a financial emergency where you didn’t have the money to cover it, it undoubtedly left you feeling frustrated and out of control of your situation.
Or worse, it left you scrambling to secure even more debt against your better judgment to remedy the issue. Only to then find yourself stuck in an endless cycle of repeating the process until you’ve lost all hope.
And it affects everyone, no matter your income.
You must therefore understand the need to try to achieve financial freedom for your peace of mind. However, if you’re like many, including me at one point, then you may not fully understand what that actually means or how to achieve it in your own life.
If you are someone trying to build financial freedom, then please consider the following article a good place to start.
What’s Financial Freedom?
In short, financial freedom means having enough funds stored up to afford the things you and your family want, including a nice retirement, without the need to depend on a salary.
It also means that you are protected against unexpected events that may plague you in the future, such as a natural disaster, widespread disease, and more.
In some cases, it can also mean having enough money or investments amassed to leave behind the gift of financial freedom to your loved ones for generations to come.
No matter your reason for wanting financial freedom, it provides many benefits, including:
The Benefits of Financial Freedom
Less Worry, More Peace
Sadly, in an endeavour to have a better lifestyle, a lot of people run up their bills until it over exceeds their income. They soon find themselves having to work overtime or second jobs to fulfill their obligations, thus causing them to feel weighed down by their debt.
Hence, the main benefit of financial freedom is it frees you from creditors, while still allowing you to enjoy the lifestyle and job you want with more confidence.
In fact, an article published in Psychology Today states that security is a basic human need, so all you need to do is allow it to guide the financial decisions you make each day.
This way, you don’t have to live in survival mode. Which keeps you in a constant state of distress, not knowing if a change may occur in your finances that will prevent you from being able to take care of yourself or your dependents.
It also gives you the freedom to choose if you want to work or not, knowing your bills are already taken care of whether you do or you don’t.
More Control Over Your Time
Not having to work also gives you more freedom over how you spend your time. For instance, you may choose to only work part-time while you pursue your goal of starting your own business or non-profit to manage.
So another benefit of financial freedom is it literally buys you time to do the things you really want. You don’t have to be bothered about what you missed out on because you had to work to pay your debts, which left no time to go after the things you truly wanted.
It Enables You to Make Smarter Choices That Align With Your Values
Working a job because you need the money also means following someone else’s objectives you may not necessarily agree with, Thus putting you in a questionable position to afford your lifestyle.
In other words, when you are financially burdened, it can cause you to make desperate decisions that can leave you frustrated by your choice.
However, financial freedom frees you from becoming a prisoner to the job to pay your bills. You are free to choose a career that suits your values and that you feel good about working.
It Helps You Avoid High Interest Rates
Quite often, credit cards, consumer loans, etc. come with high-interest rates that can make it harder to make your payments should you ever get into a financial bind.
With financial freedom, however, you have the cash to fund your purchases; hence, you don’t have to pay to borrow someone else’s, thus keeping more money in your pocket, which can then be used to help build your own wealth.
What Does It Mean to Achieve Financial Freedom?
Ultimately what financial freedom is, looks different for each person, depending on their reason for wanting it.
So begin by asking yourself, “what does financial freedom mean to me?”.
Some examples might be, you want to retire early, you want to be able to donate more to charities, or you want to be debt free, or you want to set up your children in their first home, or you just want to maintain a nice roof over your head, etc.
Next, ask yourself “why is achieving financial freedom is important to me?”.
Until you are clear on what is motivating you to financial freedom, you will struggle to achieve it, especially when the inevitable curve balls are thrown at you by daily life.
Finally, jot down your life goals to help put them in perspective, so you can actually see what you want and when you want them. Seeing these on a daily basis will help to spur you towards your objectives.
Once you have determined your reason for trying to achieve financial freedom, you next need to understand how to accomplish it using your current income, which we will now go over.
How to Build Financial Freedom
Even if you have a low-income, self-employed, or not a college graduate, you still have access to the same financial techniques that have been used for years to help make people and their families wealthy.
In fact, some things you can be doing right now to help generate wealth in your own life include:
Set a budget
Add up all your household income and then decide on a reasonable spending plan and stick to it.
This way, you won’t spend more money going out than you have coming in. This will help free up extra money and also ensure all your debts are paid. You can then live at a comfortable level without stressing over your finances, which is a key goal to wealth building.
Meanwhile, the extra money you saved by budgeting can then be used to start a base for building your finances, so you are covered in a financial emergency, can do the things you really want, and more.
Only take on good debt
Student loans, mortgages, and other loans of these types typically have a low-interest rate compared to other forms of debt, especially if you have good credit, so they won’t strain your finances as much.
They are also considered good debt because, unlike buying a car or similar asset that begins to depreciate as soon as you buy it, so you actually lose money, an investment in yourself or property is expected to increase your earning potential, which puts you closer to meeting your financial goals.
Live on less than your income
Along with sticking to a strict budget to help free up extra funds for wealth building, many wealthy people also live frugally or below their means to help save even more financially.
To live below your income simply means you only buy what you need today in order to make more luxurious purchases in the future, once you have amassed your wealth.
One of my mottos – Sacrifice in the short term, for long term rewards.
Another commonly used method of the wealthy is to bargain for most of their products or services. If you don’t ask you don’t get, and getting discounts on things you want to buy can net thousands a year in savings.
Pay yourself first
Paying yourself first also helps ensure you have additional money to dedicate towards building your great financial future. It can be done simply by setting up automated deposits from your paycheck or checking account to a designated account, so you never miss it.
You should also make full use of your employer’s retirement plan, so they can match your contributions to help save more towards your retirement.
Investing helps grow your cash, so your net worth is continuously increasing over time. You make money whilst you sleep.
However, be sure to do your research to determine the best investments for you. You can start investing with very little money, some investments have buy-ins of $5 or less, so it’s easy to get started. Some real estate or other crowd funding platforms start from around $50 – $100.
Try to invest or save something every month if you can, even if it is just $25.
Make your things last longer
Taking care of your things, including your clothes, your car, your home, and everything in between, helps prolong their life. You therefore don’ have to replace them as often, thus freeing up more money that can instead go towards becoming financially free.
Even taking care of your health and body can help save on prescription costs, insurance costs, hospital costs, and more that can be used to save towards your net worth.
Certain illnesses can also cause you to retire early, which can lower your monthly payments, thus hindering you from the life you planned as part of your financial freedom.
Stay up to date with financial news
Once you’ve entered the world of money management, you should stay up to date with financial news, which sites like money.com can help you do.
The more knowledge and information you obtain, enables you to continue to make the right moves whilst growing your portfolio.
My Final Thoughts on Why Should People try to Achieve Financial Freedom
In the end, like losing weight requires self-discipline, trying to achieve financial freedom is no different. So I encourage you to make a conscious effort to improve your financial situation. One day you will look back and be very happy you did.
Being financially free has enabled me to do what I want, when I want in my life, and it is such a blessing, one that I really want you to have.
It won’t be easy. Nothing great in life comes easy, and nothing that comes easy is great. Stick with a consistent plan over a decent amount of time, and you will be able to obtain the dreams you want.
I would love to hear from you now please.
If you are already on the path to being financially free and would like to share your story, please feel free to leave a comment. What advice would you give to someone else on the same journey? Please let me know about your successes and challenges below.
Thank you very much and have a great day.