Welcome back to our series. This week is unfortunately our last article for the series; however, on the flip side, we saved the best for last. Finances are a big part of our lives, whether we want to admit it or not. Therefore, being financially free is one of the greatest gifts you can give yourself.
What does it mean to be financially free?
A person who is financially free has a feeling of liberty about their finances. This means obtaining a steady income and feeling in control over your money. People who are financially free have sufficient funds set aside to cover unexpected expenses. They also have sufficient funds to afford the lifestyle they want without feeling guilty. In essence, financial freedom is the freedom of choice and better security over one’s finances.
How to achieve financial freedom?
Financial freedom is actually the end goal, and before we get there, we need to gain financial independence first. Financial independence means being able to afford one’s current lifestyle with adequate passive income. So let’s have a look at what to do to actually achieve this.
- Set your goals
Getting out of debt and saving for an apartment are good examples of goals. Goals should be SMART: specific, measurable, attainable, realistic, and within a time limit.
Every dollar needs to be tracked and planned for the previous month so that nothing goes unaccounted for. This helps to plan for the next month or even the whole year. Prioritise the most important things each month; this allows you to move stress-free throughout the month.
- Live within your means
Do not go broke trying to look rich. Live within what your income or salary can allow. This is a basic rule everyone should learn: you don’t need to go out every weekend to a five-star restaurant, wear a new outfit, and buy the most expensive champagne. Don’t do it unless you have made provision for it beforehand.
- Pay off all debts
All debts, including student loans, must be paid off immediately. When they are paid early on, it saves money from being thrown away in interest.
- Save, save, save!
Simple rule: Do not save what is left after spending, but spend what is left after saving. Immediately after paying your water, housing, and electricity bills, transfer money into your savings account.
- Create more sources of income
Having multiple sources of income helps you achieve financial security. Side hustles are a good place to start using your extra time off work to earn more money.
In our first article of the series, we spoke about self-discipline, and this is where it becomes most important. One needs discipline when it comes to all things financial, especially when saving and budgeting. Remember, when your mindset changes, your money changes. So let’s change the way we see money and start living financially free. I hope you enjoyed growing with us in this series. For more steps to grow, read our first articles here.