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Finance

Understanding the Road to Financial Freedom

It’s an understatement to say that all of us want to be financially free, but not everybody understands or considers the necessary steps and hard work that this requires. It’s important to consider that when we talk about financial freedom, it’s all about understanding money, figuring out where you want to be financially, and doing everything in your power to get there.

We know that this might be a difficult thing to achieve. In our everyday life, we face challenges including the constant rise of gas prices, inflation, and even the social situation that our country is going through. We live in a world where we feel like we don’t have the time to think ahead, the power to plan our lives, and the ability to become better versions of ourselves.

That is why we want to emphasize what financial freedom is and what it can do for you. As MoneyFit defines it, “Financial freedom is having enough savings, financial investments, and cash on hand to afford the kind of life we desire for ourselves and our families. It means growing savings that enable us to retire or pursue the career we want without being driven by earning a set salary each year. Financial freedom means our money is working for us rather than the other way around.”

But what does this mean for us as human beings? It means that we can take control of our situation, take a step back to understand our goals, and work hard to achieve them. When most people consider the steps to achieving independent wealth, they tend to get confused and think that financial freedom is just having enough money to not depend on a salary anymore. It’s not as easy as that. It’s all about sitting down with yourself and making smart decisions with the money you already have to keep generating more sources of income. To put it simply, anybody can win the lottery. It takes a certain amount of skill to turn that into generational wealth.

Our goal today is to share with you the first four steps that you should take into consideration to start your journey toward financial freedom. Once you implement these changes into your life, you are likely to see some solid results in your wallet.

Set Life Goals

The first step to achieving financial freedom is to do a self-evaluation. Figure out where you are and where you want to be. We understand that this is easier said than done. Consider starting small by evaluating your personal goals, your close relationships, and what plans you have for your future.

When it comes to setting your goals, write everything that you can down on paper for future reference. Where do you see yourself in your desired lifestyle? How much money will you need to achieve it? Is there a deadline that you have in mind? Once you set concrete and tangible goals, you will be better positioned to create a path or a road map that will help you achieve them.

Make a Budget and Track Your Spending

You don’t realize how much money you are spending until you track it. Necessities, such as food and shelter, as well as unnecessary retail therapy or a night out on the town, can all add up.

While in our reckless youth, the mindset may have been to spend whatever money we made having fun. This may be fun in the moment, but this is not a strategic path toward financial freedom.

By creating a weekly or monthly budget, you will have a more realistic idea of how much money you are spending on your current lifestyle. You should take into account your household income, monthly bills, debts owed, and living expenses. This may seem daunting, but once you get used to it, you will see an improvement in your finances.

Always Invest Your Money

There is more to accumulating wealth than simply saving all of your money. Placing your assets into smart investments such as stocks, property, businesses, and even newfound opportunities such as cryptocurrency and NFTs can help you grow your financial profile considerably faster. According to Adnan Feroz, author of Beyond Riches with Income Properties: The 90/90 Strategy to Making it BIG as a Real Estate Investor, “Most people don’t understand that if they focus only on [growing their savings], they will actually never be able to get financially free.” He goes on to say, “I’ve failed enough times in life but because I had the right mindset, I’ve been able to move forward. Making money isn’t hard, changing your mindset is.”

You should consider the different options that are available and see which one is right for you. We highly recommend seeking financial guidance from a trained professional before making any decisions on your investment portfolio.

Have Different Sources of Income

The hustle should never stop. Placing all of your eggs in one basket when it comes to setting up a financial path is a terrible strategy. Long gone are the days of loyalty from both parties of a business relationship: employers and employees. Each side of the desk is only valuable until they are not. Don’t get caught blindsided and start building up income streams from things like freelance gigs, stock investments, or even second jobs. 

Jeff Rose, of Good Financial Cents, echoes this statement by stating that, “If you read many stories about entrepreneurship, you’ve probably noticed that most entrepreneurs have multiple streams of income.” Just like anything else, the key to financial freedom is learning from those who have achieved it before you.

With these tips in mind, you will be much better positioned to achieve financial freedom. We wish you the best in your financial journey.

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