5 Simple Steps Towards Personal Financial Freedom

Alright then, are you looking for financial freedom? We all need financial freedom at some point in our lives. Let’s be honest here. There is nothing more peaceful than having money in your pocket and a good health/personal life. In order to get there, we have to be financially disciplined, nothing comes free you see.  We all work hard, our asses off from Monday-Friday, so why just waste money on buying something that’s really unwanted and at least right now in our lives. 

Now, please don’t get me wrong here, buying new stuff is not bad, and buying stuff for your kids or wife isn’t bad, but knowing how much to spend and your budgeting for it is all that makes or breaks the deal. That’s something to note down. This is something that I talk about all the time on this blog after all the title of this blog is Personal Finance Freedom 🙂

You don’t have to make a ton of money to be rich, small easy steps can get you there. All you need is disciplined small investments over longer horizons/time periods. You can get there, give it a try. We discuss many aspects of financial freedom at Personal Finance Freedom. You are more than welcome to check our other articles on our site. In this article, let me talk about the 5 Simple Steps towards Financial Freedom. Let’s get started. 

Understanding Financial Freedom: Liberating Your Finances for a Flourishing Life

Financial freedom is a state of financial well-being where an individual has the capacity to make choices that allow them to enjoy life, pursue their aspirations, and create a secure future—all without being unduly stressed about money. This concept goes beyond just having a substantial income; it revolves around managing and leveraging finances in a way that aligns with personal goals and values.

Key Elements of Financial Freedom:

Income that Exceeds Expenses:

Financial freedom begins with earning more than you spend. This surplus creates the foundation for saving, investing, and building wealth over time.

Minimal Debt:

Individuals on the path to financial freedom aim to minimize and eventually eliminate high-interest debts. Being debt-free provides greater flexibility and reduces financial stress.

Robust Savings:

Building a robust savings cushion is crucial. This emergency fund acts as a financial safety net, offering peace of mind during unexpected circumstances.

Investment Strategies:

Beyond savings, financial freedom often involves strategic investing. Investments can generate passive income, contributing to financial stability and growth.

Budgeting and Expense Management:

Understanding where money goes is key. Budgeting helps allocate funds purposefully, ensuring that spending aligns with priorities and goals.

Multiple Income Streams:

Diversifying income sources can enhance financial resilience. This may involve side hustles, investments, or multiple streams of income to bolster financial security.

Retirement Planning:

Financial freedom includes preparing for the future, and retirement planning is a significant aspect. Building a retirement fund ensures a comfortable and secure life after active employment.

Mindful Spending:

Financially free individuals are mindful about their spending. They make intentional choices, focusing on value and long-term benefits rather than instant gratification.

Financial Education:

Knowledge is power. Those on the journey to financial freedom invest time in learning about personal finance, investment strategies, and wealth-building principles.

Quality of Life:

Ultimately, financial freedom is about enhancing the quality of life. It allows individuals to make choices based on personal fulfillment rather than financial constraints.

Achieving financial freedom is a dynamic and personalized journey. It’s not necessarily about amassing vast wealth but rather about gaining control over one’s finances and using them as a tool to live a fulfilling life. It involves careful planning, disciplined execution, and a commitment to continuous financial education and improvement.

5 Simple Steps Towards Financial Freedom

1. Set Realistic Financial Goals

It’s very important that the first step you take towards your financial freedom is realistic, true, and correct in every term. Set realistic goals and be optimistic about it. There are various calculators out there to help you figure out how much you need to save to achieve what and at what age.

Figure out the amount you feel is comfortable for you at retirement depending on the lifestyle you want to lead. Then progress each month with a fixed plan to achieve it, yes it’s as simple as it sounds. We just have to stick to the plan that’s it. It’s not rocket science.

Remember, emergency funds need to always be kept apart all the time for the unexpected, so make sure your savings every month or bi-weekly is that amount which you should not touch whatever the situation may arise.

Also, before you begin with all the planning, keep aside 3-6 months of money you need for basics like rent, mortgage, food expenses, grocery, gas and utilities in your checking or savings account and make sure you don’t spend that so that you don’t have to touch your invested amount in anyways.

2. Track Every Dollar You Spend

All I mean to say here is, each one of us will have that habit be it shopping, buying new tech products, travelling so on and so forth. I am not saying don’t buy anything for yourself, yes we all need to be pampered every now and then or else whats life, but you need to keep a track on your spending habits.

Remember that every penny saved counts towards your financial freedom at the end of the day. Nobody is going to give you money when you need it, it’s you who work hard for the money you have, try not to waste it unless it’s really required.

Try to save and invest today,  it may look a small amount now but tomorrow when you see the returns you will be amazed.

Just think for a sec, if you started saving from the age of 15 or 18 to whatever you are today, calculate this with the compounded returns on MF’s, stocks, ETF’s the returns will be astonishing and it’s true.

3. Always Aim At Being Debt Free 

You can save more when you are debt-free and have fewer deductions when you get your pay its as simple as that.  The more you get paid the better your lifestyle gets. So debt and repayment pay an important role in our lives.

Debt can be anything from the mortgage, car instalments, credit cards to a line of credit. I know that many of us are living paycheck to paycheck and it’s not easy paying off that mortgage or credit card bills in a month or two or in a few year’s time.

All I am saying is work out a plan to be debt-free if not today then set a date and move forward toward achieving it. Set realistic goals and stick to them. Everything is possible it’s just that we need to be focused and organized. That’s it!

4. Keep A Track Of Your Finances

This one is really very important.

We are so busy with the everyday lives that we tend to forget to keep a track on our bank accounts, charges levied on bank accounts, credit card charges, interest charges we have and how much we use it on a daily basis.

The point here is to keep a track of all the credit cards you have, does it come with an annual fee involved, if so how much, do you really need it, if not then close it. Why do you need 10 cards when you have good 2 or 3 cashback or points cards?? Also, it’s less burden to keep a track of the bills.

The other point is sometimes interest charges are silently increasing when we don’t pay our bills on time or pay half. Keep track of this. Also if you have an overdraft facility in your bank account, do a check on it if you really need it or not, close it otherwise.

Also, keep track of your checking account and the minimum balance required to avoid account charges.

5. Think About Automating Your Finances

It’s always convenient and easy if you automate things. It’s hassle-free, manual errors free and keeps you focused on other important segments in life.

Examples of automating stuff like as soon you get you pay-check transferring a small amount to your savings accounts, paying off that minimum monthly credit card amount, adding pre-authorized credit card to your wireless account etc.

These small steps can lead to bigger things and when you turn back and see Its one step that we need to start with to see a huge benefit at some point. The interesting thing about this is that you avoid paying penalty or interest charges. It’s easy and it requires some initiation and determination that’s it.

Invest today and just wait for 6 months to 1 year I am sure you will be inspired to invest more in seeing the returns of growth and dividends. Please invest in the right methods or stream, not every stock or mutual fund/ETF is good. Read, research and invest. Also timing to invest is important.

I hope this article helps someone out there and inspires towards attaining financial freedom be it after 10 years or 15 years or 20 years from now, the corpus that one needs then to lead a comfortable lifestyle.

Conclusion

Financial Discipline and freedom are very crucial in our stressed-out busy lifestyles. You definitely deserve to lead a happy retired old age. In order to achieve that, you gotta be consistent is saving money and a disciplined investor. 

Getting into savings and investment mentality early in one’s career can go a really long way by the time you are 35 or 40. 

You can really grow money with simple means using the many automated savings instruments out there. I have also covered a lot of topics on this blog. Do check them out. 

Finally, I wish you the best with everything going on in your personal finance space. Do remember to invest small but consistently and wait for the returns. Please let me know your thoughts and comments below. Thanks for reading.