Besides the Blockchain, cryptocurrencies, and NFTs, financial freedom is among the most popular topics dominating contemporary conversation. More and more people are investing their time and energy on financial literacy with the sole aim of achieving this so-called financial freedom. But what exactly does financial freedom mean?
According to a Forbes article by Toby Mathis, financial freedom may “look a bit different from one individual to the next” but “the common denominator is the control and freedom to choose to do what you wish.”
This description is closely similar to what the author of the popular financial prosperity book— RichDad, Poor Dad— defines as financial freedom. According to Robert Kiyosaki, financial freedom is “the freedom to be who you really are and do what you really want in life.”
There are many other definitions of financial freedom but they are all variations of the same fundamental precept; financial freedom involves overcoming financial challenges that can essentially put you under bondage in the form of endless financial problems.
For instance, you cannot be financially free if you are burdened with enormous debt that your current income cannot pay. Similarly, one cannot attain financial freedom if their monthly or annual expenses exceed their monthly or annual income.
As such, without attaining financial freedom, you are bound to always play catch up with your finances. You will not be able to pay your utility bills on time, comfortably cover your children’s education, or pay for quality healthcare.
Instead, you will always be borrowing to cover expenses and this will hurt your chances of building long-term wealth.Therefore, it is important for everyone to aspire and work towards attaining true financial freedom.
The following are some of the strategies you can use to achieve financial freedom:
Failing to plan is planning to fail. This is a very clichéd statement but one that is vital to achieving financial freedom. This is because a budget allows you to meticulously plan your expenditure according to how much you earn.
That way, you can allocate various needs appropriate portions of your income. This helps you to track your expenditure and as a result, you will be a better financial manager by sealing any wastage loop holes in your spending. As such, saving brings you closer to financial freedom.
Having a budget sets you off on a path to better financial management. This is because once you have the reigns of control on your finances, you can start actively building the machinery you need to achieve financial freedom
Therefore, once you have a clear budget that helps you to minimize impulsive, unnecessary spending, you must develop a savings plan.This is because a savings plan will allow you to set aside money to finance your long-term financial freedom goals.
Having clearly-defined objectives is crucial to achieving financial freedom.This is because defining your goals helps you to be specific and intentional about what you are working towards to avoid confusion, distractions, or deviations.
Having clear financial freedom goals also helps in setting savings targets.Therefore, brainstorm, research, and consult widely in order to establish what your financial freedom goals are and then write them down with a clear plan for achieving them.
Anyone who has achieved financial freedom will tell you that accumulating actionable, financial knowledge is crucial to financial success. Therefore, take your time to learn everything can about proper financial management—from budgeting and saving to investing and debt management.
You can do this by reading a lot of financial freedom goals, attending seminars, and even attending financial coaching sessions. You can also get financial knowledge from your mentors. Whatever you do, just do your best to know as much as you can about finances and how to handle them. It is vital to realizing financial freedom.
Once you have outlined your financial freedom goals, met your savings targets, and expanded your financial knowledge, it is time to take the next and probably the most important step towards achieving financial freedom; investing.
Investing is important in your journey to financial freedom as it enables you to grow your money at a compoundable rate as opposed to a salary which is linear. Investing also gives you more time to work on other things as it frees you from always having to work to earn each single penny.
So take your time to explore widely and research extensively the best investments you feel can work for you. Whether you want to trade stocks, invest in cryptocurrencies, or venture into retail, do your due diligence and conduct market research to ensure the investment is feasible.
For instance, if you are interested in stock trading or crypto, you can source for information on stocks and crypto on a trustworthy, investment platform that offers the two. Once you are convinced that the investment is feasible, you can then begin investing in your preferred area.
Proper debt management is crucial to achieving financial freedom. This is because contrary to what many people believe, debt is not necessarily bad. Good debt that is used to acquire assets and build wealth always pays off itself without causing the debtor financial trouble.
On the other hand, debt accrued to finance liabilities is what hurts people’s long-term financial freedom goals. Therefore, ensure that you pay off any outstanding debt accruing interest. Once you’ve done that, make sure that any debt you take is used to invest and acquire assets. That way, you will be able to leverage debt to achieve long-term financial freedom.
Financial freedom doesn’t have to be the preserve of a few people. Rather, it is an attainable goal that requires nothing more than focus and discipline. Therefore, make a decision to achieve financial freedom today and by following the steps outlined above, you will be there in due time.