The world we live in is a complicated one, and the world of finance is no different. With so many things going on at once, it’s easy to get confused and overwhlemed when it comes to our finances. Fortunately, the road to financial freedom is simpler than one might think. Here is how anyone cane achieve financial freedom in 5 easy steps…
The first step to financial freedom is having some sort of income. Noone can achieve financial freedom unless they have an income, unless you were born into riches and are completely spoiled (if so, jump to step #2). Making money is the first step, and the more money you can make the better (obviously). Many of you already have an income coming in so guess what, you’re already that much closer to financial freedom. If you don’t have an income yet, I suggest you get one.
The next step to financial freedom is creating a budget. Comparing how much you make to how much you spend will help you do two things; 1) keep you out of debt by making sure you don’t spend more than you make, and 2) help you spend less than you make so that you can build your wealth. Staying out of debt is the main goal of this step, and once you are able to stay debt-free you can then move on to step #3.
Once you make enough money to pay your bills and you’re not spending more than you make, then you must work on saving as much as possible. You don’t have to save everything, and feel free treat yourself from time to time with a night out or some new clothes but, the more you save the closer you will be to financial freedom. What would you rather have; the short-term pleasure from clothes you don’t necessarily need, or the long-term pleasure of financial freedom? Also, not all your savings need to be too long term. Half of it can be short-term for things like a vactaion, or bigger items you would like to purchase like the new Macbook Pro or a new couch. As long as you can be disciplined enough to build up some long-term savings, you are ready for step #4, and are so so close to financial freedom.
Great job on beginning to build your long-term savings. No matter how big or small your long-term savings are right now, you are ready for this next step, investing. Investing is the art of making your money work for you, and therefore earning more money. From mutual funds to ETFs, to stocks and even real estate, the opportunites are endless. Just make sure you speak to a professional in your area so that you can work together in finding the best investments for you. Once you have some investments set-up, you can move on to the last step.
The last step can either be the easiest or the hardest, because its just repeating steps 1 through 4. Keep working and earning an income, and work hard so that you can earn more with time. Review your budget often so that you can make sure you are staying out of debt, and stick to it so that you can keep saving. Remember, you don’t have to save it all, and not all of your savings need to be long-term savings. but the more you save for the long-term, the faster you’ll achieve financial freedom because the more money you will having working for you. Eventually, your investments will be making enough money that you no longer need to work, a.k.a. financial freedom.
The Bottom Line
Although there is a lot of uncertainty in our world, and things can get pretty confusing pretty quickly, simplifying things down to these 5 easy steps can help anyone achieve the financial freedom they seek. It may not be easy, and it may take some time but, it will be worth it. Plus, there’s always room for some fun along the way.
For tips on how to earn more, budget, save, and invest, check out Investopedia.com. This site is a great resource for anyone seeking to achieve financial freedom.