FINANCIAL FREEDOM: HOW TO MAKE IT YOUR GOAL

Money plays a big role in achieving financial freedom because it is necessary for human survival and advancement. It is a tool that helps you fight your daily financial battles. What is meant by “financial battles” are your financial obligations and expenses that hit your revenue and income. However, no matter how high or volatile your financial expectations can be, they can still not measure your financial status and freedom. Money is about our everyday existence—either you have it or you have it in abundance. If your finances are limited and insufficient, this is an indication that you are in a state of financial slavery or financial deficiency.

How would it feel to be financially free? Everyone’s idea of financial freedom is based on their objectives about money. Some would say it is having enough money to meet their basic needs and not worrying about paying their bills at the end of the month while still living luxuriously. Furthermore, in this article, the following two keywords may be used interchangeably, i.e., financial freedom and financial liberty, which are both synonymous in both the meaning and interpretation of financial wealth and money accumulation.

However, your preparedness is the only key to achieving this through the application of the fundamental rudiments of money management and financial discipline. Having enough extra money to pay for your living expenses is the definition of financial freedom. Being affluent and having a sizable bank account is not as important as having enough money to cover your expenses, as doing so will allow you to spend your valuable time on activities you enjoy rather than working long hours to pay the bills.

FINANCIAL FREEDOM CONCEPTUAL TECHNIQUES

For the majority of people, this means having sufficient funds (in the form of savings, investments, and cash) to sustain a specific standard of living as well as a retirement fund without being restricted by the requirement to earn a specific wage. Some claim that having wealth entails having the freedom to live your life as you like, free from outside disturbance or interference. The principles of financial freedom include the following:

Budgeting Calculator Concept

Firstly, Senator Elizabeth Warren popularized the 50/30/20 budget rule, which recommends allocating after-tax income into three areas of spending: needs (50%) and wants (30%), savings, and debt repayment (20%). To help you organize and manage your spending and savings—the crucial first step toward financial freedom—we have created an easy-to-use budgeting calculator.

Realistic Goal Concept

Financial freedom is an ambiguous term because four common themes make achieving financial security a realistic goal: increasing income, reducing or eliminating life’s expenses, preserving capital, and simplifying tax conditions. Knowing where one stands financially can help visualize targets for future success. Although it has been proven by many people that each person’s concept of financial freedom may be different, what matters is not what you earn but what you keep.

Maslow’s Hierarchy of Needs Concept

Take a glance at Maslow’s hierarchy of needs, and it becomes clear that following the traditional paths to success will not make you fulfilled. In the beginning, most of us only concentrated on getting help from friends and family or financial relief from debt. But as we mature, we start worrying about security, love, and esteem in the workplace.

Only once these needs are met can we finally get to a higher level. Self-actualization includes things like financial freedom and engaging work. It is also an important step in our life journey from childhood to adulthood. Money is important for all humans, but interestingly, it seems to affect people differently depending on where they go up Maslow’s hierarchy of needs in their life journey.

Budgeting and Estimating Concepts

Financial freedom is a goal that can be achieved in many ways. The first step towards financial freedom is to make a plan for the future. This includes creating a budget and estimating how much money you need for your desired lifestyle. It also includes saving up for emergencies and unexpected expenses, such as car repairs or medical bills. The second step is to create a plan to get more income, such as starting your own business or negotiating a raise at work. The third step is to save up the money you’ve made from taking these steps to reach your goal of financial freedom.

FIRE Concept

Financial Independence Retire Early (FIRE) is a program of intensive saving and investment to enable people to retire much earlier than would be possible with traditional budgets and retirement plans. Every expense should be evaluated in terms of the number of hours of work necessary to pay for it. To accumulate enough wealth to retire early, it is important to save a lot of money and live simply. Furthermore, we are not discussing retirement at the age of 55 years old.

Most FIRE supporters aspire to retire in their 40s or even earlier. If you are frugal, can set aside a sizeable portion of your income for retirement savings and investments, and have a can-do attitude, adopting a FIRE lifestyle may be the best path to financial freedom. There’s a strong probability that some components of the FIRE movement can accelerate the achievement of your financial goals, even if you have no interest in fully adopting them.

HOW TO MAKE FINANCIAL FREEDOM YOUR GOAL

Ask yourself what kind of finances free you up. It might not be cash, but it could be time, limiting debts or burdensome investments, or DIY retirement planning instead of paying another investment company for retirement plans through an IRA or 401k. If we know what steps lead us to financial freedom, then it’s just finding ways that we can take those required steps faster with less cost and/or risk than anyone else, and as others face difficulties, we will already have achieved our goal. These are steps that can lead you to attain financial freedom:

Full Financial Independence (FFI)

The first step towards financial independence is having enough money to get started. The day people get out of their comfort zone and start working on their financial freedom can be described as the day they get more serious about money than they did about earning it. It is a process of controlling your income and expenses so that you can enjoy the life you want without having to bug your email at the end of the week asking for a pay raise. You need to make sure you have a good amount of savings before you start investing. If you don’t have any money saved up, then you should start saving now!

Auxiliary Fund Creation

A method known as “auxiliary fund creation” enables a company to produce extra funds to support its operations. Finding ways to produce income unrelated to the primary business is the goal of auxiliary fund generation, which can take many different forms. The sale of goods and services that are not directly associated with the primary business is one typical method of generating supplementary funds.

The sale of advertising space, the leasing of space to outside companies, or the sale of services unrelated to the primary good or service are examples of this. The purchase of other enterprises is another method of generating supplemental income. If you make enough money on your own to cover your costs, you are financially independent.

Investing

A fantastic approach to building your money and putting it to work for you is through investing. Finding the right investment strategy for you might be challenging because there are so many possibilities available. Stock investing is one alternative. Stocks are a means to own a piece of business and are typically a successful investment. Stocks in profitable businesses or businesses with strong prospects are available for purchase.

You can start investing as soon as you have some money saved. Start modestly, preferably with $100 increments. You will eventually achieve financial freedom as you invest more and more. There is nothing significantly better and no more tried-and-reliable method. Investing is the best and most reliable approach to increasing your money. Now is the time to conduct your study and determine whether you will take the most crucial action.

Debt

Debt is something we all struggle with. Whether it’s student loan debt, credit card debt, auto loans, or medical bills, it’s hard to get out of debt and stay out of debt. I recommend using a cash system where you pay off everything with cash instead of charging things on your cards. Student loans, mortgages, and similar loans usually have a much lower rate of interest than credit cards and retail store cards, making them less dangerous to your finances. With credit cards, you might end up amassing thousands of dollars worth of high-interest debt. Debt, after all, insinuates obligation and even bondage, both of which counter the idea of financial freedom.

Retirement Plan

You’re going to want to save for retirement as early as possible. Your retirement plan should not only cover you while you’re working but should also be able to help you after you retire. A retirement plan is a financial arrangement that provides income during retirement. There are many different types of retirement plans, including employer-sponsored plans, individual retirement accounts, and annuities. A retirement plan is a financial plan that allows you to save for retirement and often receives tax benefits.

There are many different types of retirement plans, including 401(k)s, 403(b)s, IRAs, and pensions. A 401(k) is a retirement savings and investment plan that employers offer. A 401(k) plan gives employees a tax break on the money they contribute. Contributions are automatically withdrawn from employee paychecks and invested in funds of the employee’s choosing (from a list of available offerings).

Emergency Fund

An emergency fund is one of the most important financial tools you can have in your arsenal. It can help you weather difficult times, and help you get back on your feet quickly. Here are a few tips on how to create and save an emergency fund:

1. Start with a goal. Decide how much money you want to put aside each month, and make sure you are saving at least 10% of your income.
2. Make it automatic. Set up a savings account that automatically deposits all of your paychecks into the account. This way, you won’t have to think about it, and you will be more likely to stick.

Having an emergency fund is extremely helpful as well as being able to pay off high-interest debts. An emergency fund can consist of anything from $1000 to $5000 based on how much risk you take in your investments.

Pay Off Credit Cards

Credit cards are great for getting convenience items and making purchases. However, they are bad for building wealth. Make sure you pay them off every month plus interest. You can pay off your credit cards in a few different ways to reduce interest charges and raise your credit score. One choice is to make full monthly payments on your credit cards.

In addition to saving you money on interest payments, doing this will lower your credit score. Another choice is to use a credit card with 0% interest for a set amount of time, like 12 months. While doing so would speed up your debt repayment, it will also harm your credit rating. Keep your debt levels low and pay off your credit cards in full each month if you want to maintain the highest possible credit score.

Insurance

Make sure you are adequately protected before making a significant investment in insurance. Consider looking into several insurance policies (life, home, and auto) to determine which one suits you the best. Insurance can shield you and your loved ones from unforeseen expenses. Without insurance, you might have to pay yourself for things like medical costs, property damage, or lost wages if something happens.

There are numerous forms of insurance that you can want. Insurance for life, health, cars, homeowners, pets, and property may be necessary. Additionally, you can purchase insurance to shield yourself from monetary losses, such as those caused by losing your job or having a fire damage your home. A specific incident, such as a car accident, is protected against when you get insurance. To keep the policy in effect for a longer period, you normally pay a monthly premium.

Trust Fund Investment

A trust fund is a legal entity that contains assets or property on behalf of a person or organization. Trust funds are managed by a trustee, who is named when the trust is created. Trust funds can contain money, bank accounts, property, stocks, businesses, heirlooms, and any other type of investment. Trust funds have been around for centuries and have been used by families and businesses to save for future needs.

Historically, trust funds were used to save for children’s college educations, retirement, and other long-term needs. Today, trust funds are often used to save for specific, short-term financial goals. For example, a trust fund may be used to save for a child’s wedding or to cover costs associated with a major life change. There are a few things to keep in mind when setting up a trust fund. First, make sure the trust fund is set up in a way that is legal and tax-advantaged.

Set Yourself Goals and Other Accomplishments

There is no one best way to be successful. What you prioritize and the objectives you set for yourself are what count. Some people might believe that having a life goal is unnecessary or something that can be easily accomplished. However, one of the most crucial things you can do for yourself is to have a life goal.

A life goal is something you set for yourself and wish to accomplish. It can be anything, from developing into a successful businessperson to becoming a well-known musician. You must have a clear idea of what you want from life and what you’re willing to accomplish in a given amount of time. Any goal you set for yourself should be able to give you financial freedom and independence.

Save More Money

There are a few things you can do to aid in your efforts to save money. Making sensible financial decisions should be your priority. Focus on using your money to buy things that will truly help you achieve your goals, rather than spending excessive amounts of money on things that aren’t necessary. It’s also critical to be knowledgeable about strategies to cut costs every month. You could, for instance, make an effort to stay within your means or choose less expensive options. Finally, remember to take advantage of any savings opportunities that may present themselves.

Ensure you Stay Healthy

Taking care of your body will not solve your cash problems, but it will help facilitate productivity, which is crucial in building your financial safety net. When you invest in your health, you lower your risk of developing sickness, which means fewer visits to the doctor and, therefore, fewer expenses. If you have good health, you can radiate positivity and happiness to better deal with people and live longer. These are vital elements you need to achieve financial freedom.

Financial Advisor

Financial advisors can help their clients save money, grow their wealth, and protect their assets. A financial advisor can help you identify your investment goals, assess your current financial situation, and recommend a plan to achieve your goals. A financial advisor can also help you manage your money and protect your assets from risks such as inflation, market volatility, and investment scams. Even if you haven’t started accumulating wealth yet, getting professional financial advice will help you avoid issues by educating you and guiding your decision-making.

Education On Business World

The majority of people who have achieved financial freedom are essentially current in both the business and financial worlds. Keep up with recent financial news and stock market developments, and don’t be afraid to adapt your financial investment portfolio accordingly. The best defenses against engaging in risky business decisions and becoming a victim of business scammers are knowledge and judgment. Make sure you are aware of the credit limit on your credit card to prevent overspending. You should remain informed of such information. Your ability to maintain awareness of your business and investments should be boosted by financial freedom.

Difference Between Finacial Freedom and Financial Independence

While they’re often used as synonyms in the personal finance community, there’s a distinct difference between financial freedom and financial independence. Financial freedom is the mindset that allows you to live the life you want. It’s the ability to live your life for yourself and not for a boss. You might still need to work, but you have enough savings that you can live life on your terms. If your job is stressing you out, you can find another job without fear of where your next meal will come from.

You are free to do things like travel and buy cool stuff. You don’t feel the confines of money because you’ve set up your finances to work for you. Financial independence is the number in your bank account that allows you to leave work forever. It provides you with financial security. Essentially, you’re financially independent and can step out of your job without fear of repercussions. All of your living expenses will be covered, regardless of your earned income. It’s a much more defined term because it looks at the financial aspect of your lifestyle.

Financial And Asset Management

Financial freedom permits you to keep up with financial news and stock market developments and doesn’t hesitate to rebalance your investment portfolio as necessary. The strongest defense against individuals who intimidate naive customers to make a quick buck is knowledge. Make sure you are aware of your credit limit while using your credit card to prevent overspending. It is up to you to be aware of these facts. Be ready to lose money occasionally, but don’t get upset if you do.

We always make poor financial choices from time to time. Learning from these blunders will help us better manage our funds in similar situations in the future, which is a crucial component of prudent money management. Contact a financial advisor for support once you have amassed a sizeable amount of wealth, whether it be fixed assets (such as property or anything that cannot be quickly converted into cash) or liquid assets (such as cash or other items that can be easily converted into cash).

Threats That Face Finacial Freedom

Money is a powerful tool. It can help us buy things we want, pay our bills, and save for our future. But money can also be a source of stress and a threat to its management if it is insufficient. We can worry about how we’re going to afford college, how we’re going to cover our bills, and how we’re going to save for retirement. Financial freedom is the ability to live without fear of financial insecurity. It’s the ability to have enough money to cover our basic needs and enjoy our lives. Financial independence is the stage of financial freedom when we’re able to live without relying on external sources of income.

Another way to achieve financial freedom is by starting your own business, which may take a lot of hard work and sacrifice but can be very rewarding in the end. You can also create passive income streams by investing in property or stocks, which will generate income for you even when you are not working on them yourself. This type of passive income stream does not require any active work from the investor’s side, and therefore it is easy to do while still having other responsibilities like a job or family life. The threat here is the incompetence of your fund manager and business manager, who can drain your investments.

Another potentially bigger problem happens when you run out of assets to convert into cash before you die. If you go through all your assets too fast, you will be left with nothing to pay for your bills. Most financially free households use a combination of both of these methods. They may receive independent income from social security, from a business, or from dividend-paying securities they have invested in, but they also probably have accumulated enough assets in the stock market and the housing market to provide them with financial security, knowing they have plenty to fall back on if necessary.

Conclusion

Financial freedom is a topic that many people are interested in. It is an objective that people work toward achieving. There exist various methods to attain financial freedom. Investing your money and seeing it grow over time is one of the most popular methods. By using this approach, you will eventually have more money to invest and earn more money from it. Achieving financial independence is essential. You have the freedom to do as you please, whenever you please, and with whoever you please.

The concept of financial freedom can be attained by following these simple steps: Keep an eye on your expenses, cut them down, increase your income, and then set aside money for investments. Do you currently have everything on your list completed? Then inquire as to whether you can perform each task on this list. Your responses will probably be either affirmative or negative. If you can save money, manage your credit, and reduce your debt, your chances of obtaining financial freedom drastically increase. Not to mention the amazing sensation of being debt-free, you will be better equipped to support your family and yourself.