Every working individual, want to attain that financial freedom and stable life. Where we no longer have to worry about credit card bills, mortgages, debt, student loans, house loans, and so on and on.
About 8/10 Americans living paycheck to paycheck with almost nothing in their savings account. And here generates the need for a financially stable life.
What is Financial Freedom?
The definition of financial freedom can vary people to people.
For some, it can be doing what they love without worrying about money.
For some, it can be buying anything they love without looking at a price tag.
But in General, When your life’s decisions are no longer influenced by money or money is no longer the point of concern. You can do whatever you want without the thought of money. This is what actually financial freedom is.
Becoming financially independent is a temptation and it can surely be achieved with a little bit of concern and effort towards money.
We learned about financial freedom. Now let’s get on the STEPS TO ACHIEVE FINANCIAL FREEDOM
1. Create an Emergency Fund
No matter if you are living paycheck to paycheck or you are playing in millions, an emergency fund should be your priority if you want to attain financial freedom.
You cannot master your money without thinking about emergency funds. An emergency can happen with anybody at any time and might end up clearing up all your savings.
Emergency funds not only support you in tackling down the situation financially but also provide a comfortable cushion.
2. Pay off Your Debt Fast
Debt can be devastating to your financial condition. It cannot provide you financial stability until they are settled.
The only way to deal with debt is to pay them off as quickly as possible. Because the more time you take the more amount you have to pay. You can adopt any of the ways to pay off your debt:-
a) SNOWFALL METHOD
It is the method of tackling with the lowest amount of debt first. Basically paying off debt from smallest to largest amount.
b) AVALANCHE METHOD
This is the method of tackling and paying off the debt with the highest interest rate first. It is basically more money-saving.
3. Analyze Your Spending in regard to your earning
Analyzing your spending not only gives you a solid idea about how your money is behaving but also gives you an opportunity to manage it.
Managing your money can keep you ahead and you can master your finance with so much easy. Remember managing money is an important step to financial freedom.
Following are the ways you can manage your money:-
a) Make a Monthly Budget
b) Stick to your budget
4. Save up to 6-12 Months Of Expenses
If you already have a saving of worth next 6-12 months of expenses then you are already ahead of 70 percent of Americans financially. Saving your 6-12 months of expenses can provide you huge financial security.
So why do we need to save money for 6-12 months of living expenses?
You might end up losing your job and what if you have nothing in the wallet. Or maybe you want to quit that job you hate, and you know your savings can serve you financially until you get another job.
5. Create at least one flow of Passive Income
Creating some mediums of passive income can seriously help you in the long run. An average millionaire has 7 streams of income. All you need to do is just create another one.
Passive income is a long term automated cash flow which can serve you as your retirement plan. Passive income not only makes you richer fast but also help you to achieve financial freedom leaving behind all money related concern
You can also check out our 20 Passive Income Ideas for 2020.
6. Spend on Assets, not on Liabilities
Spend on something which in return makes you money, not on one who needs money. Prefer spending your money on something that can make you even more money in the future.
Assets generate a new source of income that will carry for a longer period. Robert T Kiyosaki, one of the top financial gurus always focuses on generating assets.
Rich don’t work for money. They work for assests.
Following are the best income-generating assets you can think about:-
a) Real Estate
c) Dividend Yielding Stocks
d) Rental Property
7. Start Investing
My all-time favorite when it comes to putting your money to make more money for you. Investing money can be both fun as well as your long time financial support.
Dont Save Money Just To Save Money, Save Money to Invest
Investing a small proportion of your income every month in the stock market or your preferable niches can be a financial boost for the rest of your life. You can invest in your retirement plan, your child’s college fees, and literally for everything. All You need to do is to start investing as soon as possible.