“Whenever we spend money instead of investing it, we are actually taking from ourselves—we are taking both the time we spend to make the money and the future freedom it can buy.”—Grant Sabatier
Financial freedom – this is what most human beings would like to be. To be able to live without worry about where money will come from and be able to live a comfortable life. It is something we would like to happen but achieving it well that is a different story altogether.
Financial freedom is defined as the state of having enough money to cover one’s living expenses for the rest of their life without having to work. It sounds like something that would be hard to achieve for the average Joe. However, with a plan and a commitment to following through, anyone can work towards financial freedom.
Here are some steps you should consider on your road to achieving financial freedom.
Create a budget
You need to know what you make (income) and where you spend it (expenses). By creating a budget you will be able to see where you can cut back on spending and also show you how much money you have available to save and invest towards your nest egg for the future. Here are different types of budgets you can use. Finances 101: How To Create A Budget And Different Budgeting Methods You Can Use
Struggling To Work Within A Budget? Here Are Some Tips To Help You
Pay off debt
High-interest debt, such as mobile loans, shylock loans and credit card debt, can be a major barrier for you on the road to achieving financial freedom. Prioritize paying off any high-interest debt as soon as possible to get it out of the way and free up more money for savings and investments. Here is how you can work on a debt plan. Personal Finance: Practical Steps To Get Out Of Debt
Build an emergency fund
Ideally, an emergency fund is a savings account that you can use to cover unexpected expenses, such as a medical emergency or a job loss. The best practice is to have saved at least three to six months’ worth of living expenses in your emergency fund so that when you need it you have it available and you don’t end up taking up debts to pay for things you could have planned for. Finances: The Importance Of An Emergency Fund
Finances: When You Should Use Your Emergency Fund
Start saving and investing
Saving and investing are key when it comes to financial freedom. A tip is to start by setting up automatic savings so that a portion of your income is automatically transferred to a savings account or your Sacco each month which means that it is gone before you can touch it (gone in a good way especially if you are the type of person to spend money if it is just sitting there where you can access it). When you become more comfortable with saving, you can start investing some of the money you have saved in different investments such as stocks, bonds, and real estate. Saving Or Investing, Which Way To Go?
Increase your income
If you want to have financial freedom you need to increase your income streams. Look for ways to increase your income – you can ask for a raise, do a side hustle, go back to school to gain new skills or have a consultancy. Saving Money Only Will Not Make You Wealthy. You Need To Increase Your Streams Of Income
Reduce your cost of living
The sad reality is that most people are living beyond their means. They spend more than they make or just have a balance. You need to be strategic and realise that the less you spend, the more you can save. You need to look for ways to cut down your costs and be able to save more. Things you could do here include moving to a more affordable house, cutting back on entertainment expenses, taking your children to less expensive quality schools, buying fewer but quality clothes, shopping in bulk at wholesalers and getting a cheaper car.
7 Budget Cut Ideas For Those Trying To Save More Money
Be hungry for knowledge about personal finance.
To achieve financial freedom, it’s important to understand how money works. Learn about personal finance by reading books, taking classes, or working with a financial advisor.
Financial Wellness: Understanding Your Finances Is The Key To Growing Your Wealth
This is something you do slowly over time so don’t expect to see results immediately. Building wealth and achieving financial freedom takes time and sacrifice. Be patient and don’t get discouraged if you don’t see immediate results. Stay focused on your goals and be consistent in your efforts to save and invest.
9. Black tax obligations
Many people are struggling financially because as part of a family they have financial obligations which are a heavy burden and sometimes prevent people from making any financial progress. It is important to have a plan when it comes to family obligations whether it is for you as an individual or you and your partner. Here are two articles on black tax to shine a light on how you can handle this. Here is one for the short term – Dealing With The ‘Black Tax’ and here is another for the long term – Dealing With ‘Black Tax’ Part 2: Building Generational Wealth To Break The Black Tax Cycle
“Believe that you are worthy of financial freedom. Do something you love and then all you ever have to do is be yourself to succeed.”—Jen Sincero, You Are a Badass at Making Money: Master the Mindset of Wealth
It’s important to remember that financial freedom is not necessarily about being rich, but about having the ability to live the life you want without having to worry about money. With a plan and a commitment to following through, anyone can work towards financial freedom. It takes time and discipline, but the benefits of having control over your finances, peace of mind, and the ability to make choices about how you want to live your life are worth the effort.
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