Sometimes it can feel like our finances control our lives. For many of us, most of our days are spent working to earn money to pay our bills. In a way, we can be trapped by our finances.
However, more and more people are setting their sights on achieving financial freedom. Financial freedom is a way to have control over your finances, living without having to constantly find money to pay for bills and living expenses. Here’s some of the ways you can reach financial freedom.
Get Comfortable with your Money
To be financially free, you first must understand your money and be comfortable working with it. Financial freedom doesn’t come simply from how much you earn but from what you do with the money you earn.
Start by tracking your monthly income and expenses. Once you know monthly income and how much and where you’re spending it, you can begin to create a financial plan.
To become financially independent, it’s important that you’re constantly making smart choices with your money, the first and most important of which is to save as much as you can. Once you know where you’re spending your money, you can find where you can cut down on your expenses. Maybe you have formed a habit of eating out, or you’re paying for a gym membership which you don’t use. Find where you can make savings and start building up a savings account.
Increase your income
Once you have your income and expenses in order, it’s time to increase your income to boost your savings. There’s a huge amount of ways to earn more money in todays economy.
The best way to increase your income is passively. This way you’re earning money with little to no effort. You can consider getting a side hustle through the sharing economy, where you rent out your assets like storage or your vehicle in return for cash. Another common way to earn more is through negotiating a pay rise.
Put Your Money to Work
With your spending under control and your savings building, the next thing you can do is find ways to make your money grow. Most commonly, your money will grow with the interest you receive in your bank account. There are, however, more profitable ways to make your money grow.
Purchasing an investment property is one of the best ways to increase your wealth. To do so, you’ll need to have some initial savings for a deposit. St. George Bank has a handy guide on house deposits and how much you will need. Initially, your rental returns will go towards paying off the mortgage, but after that the money your property generates from rent or a sale will be yours to keep.
As your wealth builds, so too should your investments. It works as a kind of feedback loop, where the more money you invest, the more you earn and so the more you can invest.
Being flexible with your finances is key to financial freedom. Life can be unpredictable and there will be times where you’re required to spend more money than you have budgeted for. In the case where your investments take a hit, you have less income, or a re required to spend more, it’s important that you can adapt and pick up the savings elsewhere.
Commit to the process
The key to reaching financial freedom is to commit to the process. There will likely be times where you want to splurge or stop tracking your finances, but this is a slippery slope.
While you might experience some immediate benefit from impulse purchases, you’re much more likely to benefit from living frugally and continuing to save and invest your money. This is what’s known as delayed gratification. Rather than “treating yourself” when you get some extra income, you should treat your future self and invest.
Financial freedom is something many of us are aiming for but few of us actually achieve it. Surprisingly, financial independence can be easier to achieve than you first might think. With some planning and budgeting, smart investing and some self-control, financial freedom is within your reach.