Financial freedom sounds like a dream to most people, but the truth is, anyone can achieve financial freedom. Yes, you too can be debt-free and on the road to building a financially prosperous future for yourself and your family. And we have the insider secrets to financial freedom you need to know. Keep reading to find out how you can achieve financial freedom starting today.
What is Financial Freedom?
To be clear, financial freedom doesn’t automatically relate to becoming a millionaire. These are two different things. Achieving extreme wealth is, unfortunately, just not in the cards for everyone, but financial freedom can be. If you’re expecting financial freedom to mean you can buy whatever you want and never worry about it a day in your life, then you’re surely going to be disappointed. Financial freedom is the freedom from debt and the day-to-day cycle of working to live and living to work.
Financial freedom means you won’t anyone anything and you are free to spend your money as you wish. Financial freedom gives you the ability to control where your money goes and helps you sleep a lot better at night. So, let’s dive into the secrets to financial freedom.
Secrets to Financial Freedom
These secrets aren’t really kept hidden from anyone but they do come as a surprise to many people. If you haven’t received much financial training over the course of your life, then you may be really surprised to find out how easy it can be to achieve financial freedom. Here are the top secrets to financial freedom that can completely turn your life around.
1. Pay Yourself First
Before you get into spending your money, pay yourself first. The rule of thumb is to save 10% of your income every single paycheck. Put this money away and pretend it doesn’t exist. This money will build up over your lifetime to help you during periods of financial distress do you don’t wind up in debt, or it can serve as an excellent retirement fund. Remember, before you buy those shoes or buy yourself that new car, make sure you have paid yourself first.
2. Set Up Financial Goals
You need to have clear goals if you want to achieve financial freedom. How much money do you want to have saved by the time you retire? How quickly do you want your mortgage paid off? All of these financial goals can be calculated and put into a spreadsheet. This will ensure you reach those goals. You can keep track of every penny that goes in and out, and keep a record of how much you are saving. This will keep you from unnecessary spending, prevent you from accidentally overspending, and help you stay focused on your goals.
3. Pay Your Credit Cards in Full
A credit card isn’t a loan. It’s a way of building up credit. Leaving your balances to carry over from month to month is not a great way to run your finances. This will leave you caught up in a cycle of debt. Don’t put more money on your credit cards than you can afford to pay each month. Lingering balances can add up fast with compound interest. You can’t achieve financial freedom if you constantly owe money and poor credit will also affect you financially.
4. Spend Less
This is one of the hardest parts of achieving financial freedom but it’s really one of the most important parts. You should spend less. There’s no exact number to keep in mind. Just be sure to live below your means. This means that you can’t buy everything you want. Pretend you make 10% less than you actually do and ensure that 10% goes into your savings. Overspending will likely get you caught up in debt and make it difficult for your to ever achieve financial freedom.
5. Invest
Investing a little bit of money today can help you live a financially successful life in the future. If you invest wisely, you can grow your money substantially year after year. Investing in stocks or even in real estate can grow your wealth significantly if you do so correctly. Investments can take time to grow but they can also ensure you achieve financial freedom in the future. Investments should be seen as long-term goals as it can take years to see some real growth.
6. Get Informed
No matter how financially savvy you are, it is always a good idea to sit with a professional once or twice a year to analyze your finances. A professional financial advisor can help you keep track of you spending, help you invest wisely, and provide you with insight into market changes so you can manage your portfolio accordingly. Sound financial advice can make a world of difference when it comes to achieving financial freedom.
7. Start Saving for Retirement Immediately
You shouldn’t delay starting your retirement savings. You should start saving for you retirement from the day you begin working a full-time job. No matter the salary, save today. If you always wait for a better time to save, you will wind up at retirement without a penny to your name. Instead, start saving for your retirement today. Invest in RRSPs and get started on retirement savings immediately. When you reach a certain age, you won’t be able to work and earn more money if you need it. To truly achieve financial freedom, you need to save for the days when you won’t be able to work anymore.
8. Think Things Through
Impulse buying is one of the easiest ways to misappropriate funds. Before you spend your money, especially if it is a large amount, think it through first. This is the best way to keep you from overspending on non-essential items and can save you from financial ruin. If you truly want to achieve financial freedom, be sure to carefully spend every dollar you earn.
9. Set Up Automatic Savings
It’s human nature to skip a savings payment or two. To avoid missing your savings payments, set u automatic payments with your bank so you never skip a payment. It’s also a good idea to get the funds diverted to a savings account that you cannot easily withdraw from. This will eliminate the temptation to dip into your savings account and take funds out when you don’t really need to.
10. Keep Your Credit Score Intact
A good credit score can get you access to the lowest interest rates when it comes to buying a car or even securing a homeowner’s loan. Keeping your credit score in good shape can mean much more savings for you in the future. Low credit scores will likely get you stuck paying off very high interest rates. Be sure to pay all of your bills on time and avoid leaving balances on your credit cards for months at a time.
How Else Can I Achieve Financial Freedom?
The above-mentioned tips are excellent starters to getting on your way to financial freedom. But there are plenty of long-term habits you can also incorporate into your daily life to ensure you achieve financial freedom in your lifetime.
Develop Healthy Financial Habits
There is no way to achieve financial freedom if you have poor financial habits – unless you hit the $65 million jackpot. For most people, healthy financial habits are the safest and most secure way to achieve financial freedom. Spending and saving wisely shouldn’t be temporary tips you add to your to-do list. These healthy financial habits should be a part of your life from here on out. Unhealthy habits, like impulse spending, can land you in enough debt that it can derail your financial plans for years to come. Instead, prevent financial distress by spending and saving your money wisely.
Teach Your Children About Finance Early On
Developing good financial habits also sets a great example for your children. Spending behaviours are learned. If you are prudent with your money, your children will be, too. Talk to them about saving and investing. There are so many age-appropriate books you can use to teach them about investing their money early on in their lives. The sooner they learn to balance their budgets, the better. Healthy financial habits will ensure your child will also be on the path to financial freedom.
Work More
If you have the ability to take on more hours or add in some freelance work on the side, do it. The more money you can earn while you’re in good health, the more you can save. Earning more money is sometimes necessary to be able to achieve financial freedom. Start a side hustle or take on extra shifts whenever you can to increase your monthly income. Even a few hundred extras per month can add up to a lot of money over the years.
Prioritize Your Mortgage
It’s great to spend money on stuff and an occasional treat is perfectly fine. But be sure to prioritize paying down your mortgage instead, for example. The sooner you get that compounding interest off your back, the sooner you can achieve financial freedom. Paying off your mortgage should remain top of mind. You can only be financially free when you’re free of debts – even good debt.
Start a Business
If you have always dreamt of being your own boss, it may be the right time for you to start a business. You may need a small business loan to start and your company will take a few years to grow. However, a well thought out business plan can turn into a very successful and very profitable business. It can be very hard work but owning your own business can help you achieve financial freedom sooner. If you’re willing to make the sacrifice today for a better tomorrow, you may find that it was very worthwhile.
Invest in Experiences Instead of Things
If you are going to achieve financial freedom, you have to save. When you do spend, you should avoid wasting money on depreciating assets like fancy cars. Instead, invest in experiences like travel or a solid education for your children. Experiences can leave you with a lifetime of memories and even set you or your children up for a better financial future. It’s a good idea to splurge on things that offer value to your life over stuff.
Be Prepared for a Long Haul
If you think you can achieve financial freedom overnight, you’re sorely mistaken. It’s true that some people have become overnight millionaires, but this is a very unlikely scenario for most people. If you want to achieve financial freedom, you have to be willing to wait. You may have to hold off on some purchases to minimize your debt load or wait for your investments to grow. Either way, the path to financial freedom is a long one. You have to be willing to hang in there for whatever time is necessary for you to finish off paying your debts and for your investments to grow substantially.
Invest in Life Insurance
Life insurance is an important part of achieving financial freedom, not necessarily for you but for your children. Life insurance is usually a relatively affordable fee that can keep your children from falling into financial troubles after you’re gone. That sum of money can help them with whatever end of life expenses they incurred for you and can help them pay off their own debts as they raise their own families. Financial freedom isn’t just about the path to your retirement but the financial path for your children, as well.
Take Care of Yourself
Staying healthy and fit is important. Insurance premiums can be very high for people who are obese, smoke, or have other unhealthy habits. Besides, if you want to be around in the future to enjoy the money you have saved all your life, the you want to be healthy so you can enjoy those golden years. Your personal health should never take a backseat to anything else. Be sure to eat well, exercise, and see our doctor annually for checkups.
Getting Started on the Road to Financial Freedom
The oath to financial freedom can begin for your as of right now. There’s no time like the present. Now is the time to start planning your financial goals and strategies if you haven’t already. The first thing you can do is meet with a financial planner and see what you can do with what you currently have. They can also help you set up more attainable goals and help you achieve the financial freedom you want.
You can also start with your own spreadsheet to track your expenses and ensure you set up an emergency fund. This fund is for you to fall back on should you ever experience any financial hardships. This can prevent you from falling into debt.
Stay Debt-Free
A lifetime of debt can be the most limiting factor when it comes to financial freedom. As long as you owe money and are paying interest, you can’t save or be free to spend your money as you wish. Avoid getting into debt by planning ahead and building an emergency fund. If you happen to get struck with unexpected job loss or some other financial crisis, you can weather the storm with your emergency fund. If you have no choice but to accumulate some debt, prioritize paying it off as quickly as possible.
This could mean a little less fun and entertainment for a while but if you calculate how much interest you can save by paying you loans down faster, you’ll quickly see just how important it is to eliminate debt from your life. Try to consolidate your loans if you owe money to many creditors. This can help reduce your overall interest rates and help you pay down your debts faster.
When Can I Expect to Achieve Financial Freedom?
This can vary by person and by the situation. It depends on many factors like how much you can earn, how you spend, how you save, and how many dependents you have. Obviously, a bachelor can achieve financial freedom sooner than a single parent. Their lives are completely different. You have to look at your situation as unique. What is your timeline?
Set up a plan that allows you to still live reasonably well and be able to offer your family the necessities they need. This is the only way to set up a realistic goal. If you stick to your plan, you can achieve financial freedom by that designated time. If your financial situation improves as you move along in your career, you can always re-evaluate your financial plan with your financial planner and get to financial freedom even faster!