Most people think that financial freedom or financial independence is impossible to achieve. But for plenty of people it is certainly possible, it just takes discipline and following some steps.
Our personal finance situation is different for each of us. Some financial journeys will take longer than others due to individual circumstances, earnings or other factors.
But for anyone that wants to achieve financial freedom, I think they just need to follow these three steps:
Decide on your financial freedom goal
Financial freedom might mean different things to different people. To some it might mean saving up enough cash to have enough of a safety net to leave a current role and go for something that would make more money and/or be much more fulfilling.
For me it would mean making enough passive income to be able to afford my current lifestyle (or desired lifestyle) if I were to stop working. That doesn’t mean I must stop working, but it can give me the freedom to do what I want to do without needing a full time job to do it. But I love doing what I do, so I doubt I’d stop even when I reach my goal.
How are you going to get there?
Unless you inherit a big chunk of money or win the lottery, you’re going to have to grow your financial freedom fund yourself. How are you going to get there?
Well, there are two stages. The first is that you want to shovel as much money into your freedom fund as possible whilst not unduly sacrificing your life in the short-term. We are still living our lives, it’s not as though life only starts after being financially free. So make sure you spend a bit of money enjoying yourself.
In reality, you need to live below your means. In other words, spend less than you earn and invest the difference. There are plenty of elements to bulking up your budget savings, but it comes down to earning more, spending less, or both.
You need to put the money to work once you’ve started saving.
If you reinvest your dividends your financial freedom fund will grow even quicker.
Focus on your goal and track it
Both Warren Buffett and Bill Gates say that ‘focus’ is the key to being successful. It’s extremely easy to lose sight of financial goals. A few monthly expenses or regular “one-off” expenses can derail financial plans, sometimes it’s unavoidable, but sometimes it just requires good focus. As long as you are tracking well towards your goal then it’s okay to occasionally spend a little.
Invest in your mind
Yes, you heard it! Improve your mindset, learn a new skill, invest in your mind first if you want to see changes in your life