Financial freedom is a lifestyle which allows you to do what you really want, pay off debts, secure in the knowledge that your basic outgoings are covered by self-generated income, rather than income earned from work.
It sounds like the impossible dream for most people, but financial freedom can be easily attained than you might think. While you don’t have to trim your expenses to reach this goal, it won’t hurt, but by following these ten key steps and watching both your income and expense streams, you too can be financially free.
10 Steps to Financial Freedom You Deserve
1. Live Within Your Means
This sounds straightforward and is usually easier said than done, but you are never going to achieve financial freedom if you continue to live beyond your means and increase your debt every month.
Draw up a list of your regular earnings and expenses, set a limit on your spending money and be strict – if you are seduced to blow your budget, first ask yourself if you really, truly need the item, and then, if the honest answer is yes, work out what you will forfeit in order to make it affordable. You can read our handy guide on how to budget here.You will never achieve financial freedom if you continue to live beyond your means.Click To Tweet
2. Save Any Lump Sums
Resist the temptation to spend any financial gifts – that includes Christmas or birthday presents, inheritances, bonuses or tax refunds – and instead put it in savings. It is money that you weren’t expecting, so you won’t miss it.
3. Have an Emergency Fund
Having an emergency fund is very important. That way you don’t have to go into debt when the proverbial rainy day happens – when the car fails its MOT or the boiler breaks – but don’t forget to top it up after you’ve dipped into it.
4. Pay Yourself First
Set up a standing order to pay yourself first each month so that a fixed amount (ideally 10% of your earnings) is automatically put into your savings account before you do anything else. Automatic savings is an effortless, yet effective, way to save money and attain financial freedom.Automatic savings is an effortless, yet effective, way to save money.Click To Tweet
5. Review Your Debts and Savings
It may take about an hour to move your credit card balance or set up a new savings account, but each time you do this you will benefit from introductory rates, and you could potentially save a lot of money over the next couple of years before you need to review it again.
6. Earn More Money
Whether that’s through decluttering your home and selling the surplus, walking the neighbour’s dog, working a second job or taking on additional duties or hours. Any additional income should be saved not spent as it won’t have been included in your monthly budget. Check out our handy guide on 15 Simple ways to earn money on the side.
7. Make Passive Money
Earning more money is a great way of bringing in extra income, but the best way to financial freedom is to create wealth while you sleep.
If you start a successful website or blog, you can make money from online advertising, a second property will earn a regular wage through rental income, an artist earns ongoing royalties on a picture, book or piece of music created years earlier, owning shares in a company will pay dividends, while wise investments also earn you interest.
8. Shop Around
Channel your shopaholic tendencies on getting the best for your money, rather than buying a new handbag, dress of pair of boots.
Are your savings earning the best interest rate? Is your money working hard enough?
Have you got the best deal on your insurances, mortgage, mobile phone package, television or internet? What might have been a good deal last year, may well have been a welcome offer and now you find you are paying a premium.
Sometimes just the threat of leaving will make your current provider reduce their prices to keep you, so it’s always worth trying.
9. Use All Opportunities
Don’t just focus on spending and saving money, think outside the box and consider other ideas such as creating a money-generating website, building and selling a profitable business, investing in up-coming companies or finding other ways to generate extra income.
Don’t, however, be tempted with “get rich quick” pyramid sales schemes – they are usually a painful mistake to make and exceedingly unlikely to make you a millionaire overnight.
10. Stop Procrastinating
You won’t be financially free by just reading this article, nodding sagely and continuing as normal. Start today!
What changes will you make to get on the road to financial freedom? You can leave your comments below. We’d love to hear from you!