6 Steps To Financial Freedom – Part 2
Dr. Manish Sinha
Business Consultant | Lifestyle Transition Coach | Digital Creator & Marketing Strategist | NLP Practitioner & Introvert Mindset Coach | Speaker & Mentor | Self-Development | Educator | Success | Growth | Leadership
Introduction
Achieving financial freedom is a goal many of us aspire to, but it’s a journey that requires emotional stability and clarity. In this second part of our series, we’ll delve into the first crucial step towards financial independence. Remember, these insights are based on my personal experiences and are meant to clarify financial freedom and how one can achieve it. Everyone’s path may differ, so feel free to adapt these steps to suit your journey. Here I am delving into only Step 1. Rest of the 5 steps will be published in my next article on the coming Friday i.e. Financial Freedom Part 3. However, you can read this article on my website www.manishadda.com. Click on the link Financial Freedom Part 3 to read the article.
Recap of Part One
In Part One, we covered the basics of financial freedom, laying the groundwork for our journey. We talked about the importance of understanding your financial situation and starting with a solid foundation. Now, it’s time to build on that foundation.
Table of Contents
Exercise: Identifying Needs and Desires
Before we dive into the first step, let’s start with an exercise. Take a moment to list down everything you believe is required to achieve financial freedom. Now, from that list, separate the necessities from the desires. This will vary from person to person. What makes you happy? Understanding your happiness is key to financial freedom.
Reverse Engineering Financial Freedom Goals
Let’s look at a practical example. Say you want to buy a car for your family. First, you determine the price of the car and set a budget. Next, you calculate how much you need to save each month to reach that goal by a specific date. This reverse engineering approach helps you understand what you need to do financially to achieve your goals.
To attain financial freedom, you must first reach a stage where your expenses are less than your earnings, allowing you to save. Once you achieve this balance, you can move towards financial freedom without worrying about meeting your basic expenses, as discussed in Part One of financial freedom.
Establishing an Emergency Fund
It’s crucial to have an emergency fund, even if your income exceeds your expenses. In today’s world, where the cost of living rises yearly despite moderate GDP growth and inflation, an emergency fund provides a safety net. While experts suggest having six months’ worth of expenses saved, my experience suggests aiming for a full year. Your financial freedom journey truly begins once you have this safety net in place.
Defining Purpose and Drive
You’ve listed your requirements for financial freedom and identified what makes you happy. This means you have a sense of your purpose. Now, let’s take a closer look at your current engagements. Ask yourself a few questions:
It’s crucial to spend enough time addressing the requirement of finding your true purpose. Your purpose will define your path to financial freedom, and it varies from person to person based on the impact they want to have professionally or financially.
For Example, Scientists are the least paid, but their impact is very high
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Evaluating Current Engagements
Check your current activities and see if they align with your goals for financial freedom. Do they help you get closer to your financial goals, or are they holding you back? This evaluation is essential to ensure you’re on the right track.
Finding Your Purpose
Your purpose is the driving force behind your journey to financial freedom. Some people can define their purpose easily, while for others, it develops over time and for some, it gets attached automatically. For instance, a business person’s purpose might be to earn money. Here I am not talking about traditional businessmen, whereas a student’s purpose could be to secure a job post-graduation.
Connecting Actions with Happiness
Attach every action to your happiness. When your heart is happy, your mind and body align with that happiness, making the journey smoother. We all work to earn and provide for ourselves and our families, but true financial freedom comes from aligning your actions with what makes you genuinely happy.
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Stages of Purpose
Purpose evolves over time. For instance, a student’s immediate purpose might be to graduate and find a job, while a married person’s purpose might be to provide happiness to their family. Recognize that the purpose can have different stages, and it’s important to adapt as your life changes. You can read my article Lifecyle on my website www.manishadda.com by the name
Defining Happiness Quotient
One way to clarify your purpose is through the concept of IKIGAI, (you can watch my video on IKIGAI) which helps you find what makes you happy and what you’re good at. Write down what brings you joy and align it with your financial goals.
Examples of Purpose-Driven Careers
Here are a few examples of how different purposes can drive career choices:
Your purpose should bring you happiness and align with your financial goals.
Confirming Your Purpose
Once you’ve defined your purpose, imagine yourself achieving it. Close your eyes and visualize living that life. Ask yourself if this is what you truly want. If the answer is yes, start your journey. If not, reassess and find a new path. It’s better to spend time finding the right purpose than to waste years pursuing the wrong one.
Importance of Calibration
It’s crucial to regularly reassess your purpose. You might discover that what you thought you wanted isn’t what you want. Avoid the shiny object syndrome, where you keep changing your goals based on fleeting interests. Spend time living the life you imagine to ensure it truly aligns with your purpose.
Overcoming Societal Pressure
Take breaks when needed and don’t let societal pressure dictate your path. Personal happiness attracts opportunities. People are drawn to those who radiate positive vibes, so focus on what makes you happy and opportunities will follow.
Conclusion
Financial freedom is a journey that requires careful planning, emotional stability, and a clear purpose. By defining your purpose, aligning your actions with your happiness, and regularly reassessing your goals, you can achieve financial independence. Remember, it’s a personal journey, and there’s no one-size-fits-all approach.
FAQs
What is financial freedom?
Financial freedom means having enough savings, investments, and cash on hand to afford the lifestyle you want for yourself and your family. It also means growing your savings and investments to achieve your financial goals.
How can I start saving for financial freedom?
Start by tracking your expenses and creating a budget. Reduce unnecessary spending and increase your savings rate. Consider setting up automatic transfers to your savings account to ensure consistency.
Why is an emergency fund important?
An emergency fund provides a safety net for unexpected expenses, such as medical emergencies, car repairs, or job loss. It helps you avoid going into debt and ensures you can cover your essential expenses during tough times.
How do I find my purpose?
Finding your purpose involves introspection and understanding what makes you happy. Consider your passions, strengths, and values. Writing down your thoughts and goals can help clarify your purpose.
How can I stay motivated on my financial freedom journey?
Set clear, achievable goals and track your progress. Celebrate small milestones along the way. Surround yourself with supportive people and remind yourself of the benefits of financial freedom.