Financial freedom is a coveted goal for many people. Being financially free means you live a life where your decisions aren’t affected by money or by the job that pays you.
You control your finances and you create your own wealth.
Unfortunately, most of us are stuck in our full-time jobs working ourselves to death for 20-40 years until we reach retirement.
Ready to break free? Here are 15 steps you can take to reach financial freedom:
1. Talk About It
How can you ensure that your journey to financial freedom will go smoothly? The first thing you can do is to talk about your future plans to the people closest to you — people who will directly be affected by your financial decisions.
It is important to have their emotional support as you embark on the journey towards financial freedom. It is not going to be a journey filled with unicorns and rainbows everyday. Eventually, you are going to meet bad days. When that happens, your inner circle is the one that is going to hold you up and keep you accountable for your actions.
Have your inner circle be on the same page as you. It can be a lot more empowering than you think.
2. Create a Plan And Set Your Target
Figure out how much money you need to attain financial freedom. If your annual expenses are around $50,000, multiply that by 25 to see how much you need to live comfortably for the rest of your life.
From henceforth, this number is your “freedom number”. How much do you need to save each month to attain this number?
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3. Set Realistic Goals
Now that you have an estimation of your freedom number — start making a plan for how you can achieve it.
Can you earn this money by working on your day job for 5-10 years? Can your business make this amount?
Do not be daunted by this number. Don’t underestimate your ability. Set a plan in motion. Break it down to simple, attainable goals and work on it one step at a time.
4. Make A Budget
Create a realistic budget based on your income. Don’t spend more than you earn in a month. If you have a job that pays you $2,000 a month, limit your expenses to under $1,000 or lower.
Budgets are hard to follow even for people who claim to be self-disciplined. So it’s totally okay if you don’t get it right the first few tries. Try to stick with your budget as much as you could and give yourself some flexibility to adjust as needed.
5. Track and Review Your Expenses
Do you know where you often spend your extra money? Is it possible that you’re overspending on things that won’t give you value in the future?
Tracking and reviewing your expenses may seem like boring chores that nobody has the time to do. But if you want to make the most out of every dime of your earnings, you need to be aware of how you spend your money.
6. Pay Off Your Debt
You can’t focus on saving your “freedom money” if you are pulled back by your debt. Interest rates and mortgages are going down for a couple of years now, so this might be a very good time to start paying off these debts off. The faster you can pay off your debt, the higher your chance of success.
7. Save Money By Cutting Expenses or Increasing Your Income
You’ve already made your budget — now, strategize… How can you cut expenses? Is there any monthly expense you can get rid of? How about subscriptions you don’t use or aren’t valuable to you anymore?
How do you increase your income? Can you apply for a promotion? Get a job in a better-paying company — or start a side hustle?
8. Create an Emergency Fund
Your freedom money is different from your emergency fund. Your emergency fund is money you’ll have to set aside for unexpected events. It should be a total of three to six months of your expenses and should be readily available when you need it.
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9. Invest Your Money
Investing is the fastest way to grow your money. Make your money work for you. Many people don’t invest because of the risk involved in the process. But there’s always a risk in everything.
You can choose to invest in things with lesser risk, and you can adopt investment principals that help you to spread the risk around.
The global inflation rate stands at 2.1%. That means that if you are just holding onto cash, you lose 2.1% of your money every year.
10. Consider investing in Real Estate
Investing your money in real estate is one of the best ways to grow your money. You don’t have to be a millionaire to succeed in real estate investing. The key is investing in the right knowledge
For more information on real estate investing, watch this video to learn how to create wealth with property even if you are not a millionaire guide.
11. Take Advantage of Free Money
Take advantage and make full use of your CPF. In a way it's free money given to you by the government.
Other kinds of free money include discounts from your suppliers or vendors.
12. Find someone to mentor you
Mentors are people you turn to for advice because they have the knowledge and experience you specifically need.
For example, if you wish to start a business, find someone who has successfully transitioned from his desk job to a successful business career.
Do not make the mistake of trying to learn everything all by yourself. Get a mentor who can show you the way to success.
13. Consider starting a Side Hustle
Make more money by starting a side hustle. You never know how things might turn out.
You can start by providing services as a freelancer or by starting an online business to sell your crafts and products.
There are so many ways to earn more money outside your full-time nine to five job.
You just have to be resourceful and creative to find time and energy to do it after 8 hours in the office.
14. Create Multiple Income Streams
Research other income-generating activities you can participate in.
The advantage of having multiple income streams is that you won’t have to worry about losing other income sources because you’ll always have another one to save the day.
Also, always have a plan B and plan C to fall back on in case things do not turn out to your expectation.
The key here is to be prepared.
15. Make Money with Your Passions
Do what you love doing and make money while doing so!
If you love writing and helping people, you can jump into freelance writing.
If you like drawing and creating art, you can sell your masterpiece online.
The easiest way to success is to focus your time and energy into things that excite you.
The Bottom Line
There are countless ways to become independent from your 9-5 job, but always remember to make sure you have a working and ready plan B and C if things don’t go as planned.
To find out how smart you are financially and see if you have the necessary financial IQ to ride out this coming recession, click the link below to watch the video
