It is possible to achieve financial freedom. But it takes time and consistent efforts. This post highlights a few steps that you can take to attain financial success and freedom.
What Is Financial Freedom?
What exactly is financial freedom and why should you care about it?
It simply means being able to use your energy and time however you want without being concerned about money. It is also referred to as financial independence.
It may mean having enough investments and savings so you don’t have to work. Or owning several businesses that bring in enough cash flow to cover your monthly expenses.
This is something that everyone wants—whether they admit it or not. The problem is knowing how to achieve that.
7 Steps to Financial Freedom
If you have heard about the 7 steps to financial freedom, you have probably heard one of two versions (or both). There is one by Tony Robbins and another one by Dave Ramsey.
7 steps according to Dave Ramsey:
- Create an emergency fund worth $1000.
- Clear your debt with the debt snowball.
- Save about three to six months of living expenses.
- Use 15% of your household income to invest into pre-tax retirement and Roth IRAs.
- College fund for kids.
- Pay off your home early.
- Create wealth and give back.
7 steps according to Tony Robbins:
- Become the investor, rather than a consumer.
- Don’t invest before you know the rules.
- Amass knowledge to win.
- Decide on asset allocation.
- Come up with a lifetime income strategy.
- Model hedge funds portfolio.
- Have fun and share.
7 Steps to Financial Freedom for You
Everyone’s financial situation is different. It is not easy to come up with a one-size-fits-all strategy. Hopefully, this will make sense to you.
Create an emergency fund: When it comes to personal finance success, an emergency fund is crucial. Unplanned emergencies don’t announce their arrival. So always be prepared.
Pay off your consumer debt: Debt restricts you. You cannot live the way you want to. Spend less and use the surplus to pay it off.
Save 10% of your earnings: Having cleared your debt and set up an emergency fund, you can now start saving. Direct 10% of your earnings to a savings account and use the money for investing.
Educate yourself about investing: Learn as much as you can about investing to know what suits you.
Invest in yourself: work on developing yourself too.
Be consistent: keep saving, don’t sink back into debt and continue growing your wealth.
Give back: always be willing to share your wealth, time and knowledge with others.
2 Steps for Financial Success
The above steps may seem difficult and a long-term thing. But there are two actions you can start taking today and you will see the results almost immediately.
Monitor your income and expenses: where are you financially? Know how much you are making and what you are spending it on.
Learn: take the time to learn about personal finance and be consistent in your actions.
Time Is Money: Financial Independence Retire Early