What is financial freedom? How to achieve it?
Before we delve into understanding how to achieve financial freedom, I would like to ask you a question. What emotions does your heart feel when you think about money?
Freedom?
Confidence?
Lavish lifestyle?
Sense of security?
More time to indulge in hobbies and creative pursuits?
Do you feel any of these emotions when the concept of “money” pops up in your head? And tell me — aren’t all such sentiments, directly or indirectly, have some connection to money?
Well, you get the freedom to choose your lifestyle; you feel more confident when you have money in your pocket; you feel secure and get more time to spend on your hobbies if you have enough money to meet your needs. Am I correct?
Money has the power of invoking the deepest of emotions. It is a necessity. We all work for money.
However, do we ever realize that money has imprisoned our lives? Do we actually have the freedom to control our finances and live the way we want to? Are you dependent on your 9 to 5 job to give yourself an amazing trip?
What if I say — you have unlimited wealth within your reach? You have the freedom to live a life that you imagined in your dreams.
And that’s true. I’m going to introduce you to a prodigious concept — Financial Freedom.
Financial freedom defined
What is the real meaning of financial freedom?
Is it the same as that of financial independence? What do you think?
Well, both these terms might give the impression of being similar, but they are not. Let’s understand how they’re different.
Financial independence is the ability of an individual to earn his or her own money and fulfill the necessities without depending on the other person. So, a financially independent person has sufficient wealth and enough income that she can easily pay off her living expenses.
On another note, financial freedom means attaining a financial position that allows you to gain control over your life choices and not be in any kind of financial imprisonment.
You might think that one needs to be exceptionally rich in order to attain financial freedom. Wrong!
Actually, achieving financial freedom is more about having enough money at your disposal to cover all your expenses and being able to do things you love. It’s about buying that expensive dress for yourself; taking that adventurous trip to Ibiza without burning a hole in your pocket; for having sufficient time for your family and friends.
That being said, everyone has his or her own notion of financial freedom.
What are the benefits of financial freedom?
Over the years, the importance of attaining financial freedom has only strengthened. People, nowadays, have become more focused on the benefits that come with financial liberation!
As per a survey conducted, over 70% of people living in India experience stress daily. Most of them cannot cope with a huge number of work hours and the daily struggle of earning bread.
As human beings, our basic need is comfort and pleasure. We like nothing that gives us stress and pain. So, having a good amount of money provides us with a sense of security and keeps us away from the constant worry of being financially stable.
Financial freedom is a tool that can transform our dreams into reality. Let’s face it — ain’t life becomes better when we have money on the table? Surely, it does!
And the most unstated importance of financial freedom is that it helps you crystallize your desires that are actually floating in your heart.
Here are some of the key benefits of accomplishing financial freedom:
– Social status: once you climb the ladder of economic stability, your social status improves on its own. People look towards you with respect and they want to connect with you more than often.
– Enhanced confidence: You hit that wall of confidence when you have money. Everything about you changes; your body posture, handshake, or your style of walking.
– More choices: financial freedom opens up various other avenues for you; you get more options for your career change as you have that financial margin. You stop being a slave to the corporate industry.
– Decision-making power: With more money comes the power to make your own decisions.
– Improved mental well-being: Your mental health takes the next leap with reduced stress and much more comfort and peace.
– Better relationships: Most of the relationships in the world break because of financial issues. With proper financial stability, people have a good chance of managing marriages.
5 steps to achieving financial freedom
Now that you understand “what is financial freedom and what are its benefits”, let’s explore the steps that you can take and climb the ladder that leads to gaining financial strength.
- Step 1: Create a money management plan
First, ask yourself questions. What are your monetary desires? What should be your level of income in order to have the lifestyle of your choice? How much money do you need and for what?
Answer all such questions and then set your financial goals. Plant the seed of wealth by creating a plan. Never assume that being wealthy is out of your reach. Always think about the crashing effects of forming limiting beliefs whenever you feel you can’t have something.
- Step 2: Generate passive income
Most of us are following the linear income model. We meet our financial needs either by toiling in a job or by running a business. We put in a great deal of time and effort just to get that paycheck by the end of the month.
What if I say that you can earn money even while sleeping, bathing, eating, or doing whatever you want to do?
No, I haven’t gone crazy! — I’m talking about passive income!
The idea of “passive income” has gained a lot of momentum nowadays. It’s a new buzzword.
What exactly is a passive income?
It’s the income earned by a person by not being actively involved during the process of money creation. Simple! Sounds great, right?
Yes, you can achieve your financial goals by creating a passive source of income. Find some ways through which you can generate multiple sources of income for yourself — invest in the stock market, start a YouTube channel, publish a book, etc.
- Step 3: Live the frugal life
Did you notice that when your salary hikes, your expenses increase and your savings remain the same? Why does it happen?
Do your necessities change? Do you buy groceries for 10 people instead of 4 as soon as your salary increases?
No! It’s just that our desires grow exponentially. We need to learn to control our expenses. And we must understand the difference between desire and necessary expense.
Earning is easy, and saving is hard. Try to spend less and find more means that can help you cut your spending and save more money.
Now, being frugal does not mean that you become a miser. In fact, you don’t need to compromise on your lifestyle if you learn how to do smart spending.
- Step 4: Decide to become an investor
Make it a habit to invest your money wisely in high-return ventures. Perform thorough research before you put your money invested in financial instruments.
Investment is one of the most promising steps to achieving financial freedom in India. Once you start investing, you will understand how much money you can make through the magnificent power of compound interest.
The nature of money is not about being stagnant; it’s about the flow. So, keep investing, reinvesting, and using your money for accumulating wealth.
Tips:
- Diversify your investments
- Start as early as possible
- Do not equate your money in a savings account as an investment, the return is even lower than the inflation rate.
- Create your own financial freedom account in a bank other than your regular bank. And use that money only for investments.
- Step 5: Make use of your inheritances
Some of us are fortunate enough to have inheritances. However, do we know what is the best thing that we could do with the inherited property? Do we consider using our inheritances for generating wealth?
Many people who inherit real estate don’t know how to use that property. They simply sell it off and splurge their wealth. When, in fact, you could have used that money judiciously for better investments or for starting a new business.
Always try to make use of your inheritances. If you’ve got high-interest debt, consider paying it off as soon as possible by selling your property.
Also, it’s not a great idea to keep your property vacant. Use it in such a way that it creates a flow of income — maybe you can use the property for rental income, set up a showroom, or open a supermarket or a grocery store depending on the location and type of property that you own.
How do I get financial freedom before turning 30?
The youth nowadays want to have a comfortable financial status before they turn 30. And it’s highly agreeable that one learns to get hold of his or her finances as early as possible. If you’re in your twenties and want to get financially stable before you reach 30 years of age, you’ve to take a few extra steps along with these 5 steps mentioned above.
You need to make significant decisions when you’re in your twenties. These might include choosing your career path, getting a job, having an emergency fund, learning to invest in profitable financial markets, having your own startup, and cultivating new skills, among others.
Planning for financial freedom requires patience. With all these 5 simple yet powerful steps, you can get started with your journey of achieving financial success.
Good luck!
Also Read: Career Planning & Goal Road Mapping
