9 Simple Hacks That Will Help You Reach Financial Independence
H.J. Chammas, 4X Best-Selling Author I Publisher
Helping Entrepreneurs and Coaches Publish Their Bestselling Books and Become the Authority in their Field So That They Monetize Their Services
Don’t you just wonder what it would be like to have enough:
Well, you are not alone in this. One thing we all have in common is our desire to be financially independent, but the most important is your reasons why you need to have enough money.
Very few people realize that money is only an enabler for you to have the non-money-related things you want in life – your “Big Why” list.
Related article:?What is Your "Big Why"?
Having enough money in your account does not mean you have attained financial freedom. You could have a million-dollar in your bank account, and yet not be financially independent. What you need to focus on is having multiple streams of income, not from your job, that is in excess of your expenses, while maintaining your current lifestyle, to become financially independent.
Financial freedom sounds like a far-fetched theory, but anyone can achieve it, with the right habits and mindset. Regardless of the financial trouble, you may have today, with the right financial habits you can live a stress-free life and improve your personal finances.
What Does Financial Freedom Really Mean?
Financial freedom is simply the degree to which your finances enable you to live your life the way you want it. Financial freedom goes beyond just having money. It is the independence to take ownership of your finances and afford the lifestyle you want, without the need to work for money. This is the state where your money works for you and earns you Unearned Income for every month for the rest of your life. This kind of wealth can also be passed on to your children.
Financial freedom is not a destination but a journey. It is often difficult to spend less when there are all forms of temptations and distractions around you. However, when you actively plan for your long-term financial situation by making smart money decisions daily, you’ll get closer to financial freedom. Although several issues may try to thwart your effort, including having financial emergencies, paying off bad debts, and retirement plan, among several others. However, that is not the end of the journey, but a progression.
There is no “one size fits all” to financial freedom. If that is what you are looking for, then I’m afraid you’ll keep searching for the impossible. What Mr. A needs may be totally different from what Mrs. B needs. There simply isn’t a single approach to financial freedom. What you need to know is that you have a choice, and that choice can make or mar your financial freedom.
How to Achieve Financial Freedom: The 9-Step Formula
Adopting the following 9 habits will help you accumulate more wealth, live a stress-free life, and ultimately achieve the financial freedom you need.
1- Having a Positive Money Mindset Helps
Debt, specifically bad debt, can be disheartening.?Research has shown that people feel ashamed when they don’t make enough money, while at the same time are drowned in piles of debt and bills.
Sometimes when you can’t make head or tail about such a financial situation, but having a positive money mindset about money may just be what you need to get you started. Your healthy mindset would motivate you to take proactive steps in fixing your financial challenges.
You can’t make the right decisions about your finances and money if your emotions are all over the place. Having a positive money mindset is like one of those strong main pillars to accumulating wealth. Remember that money is good if it's put to work for the things that matter in your life - your "Big Why" list.
Change that notion that money is evil. Money is just an enabler to get the things you want and need. That's it! We make it good or evil, depending on what we do with that money.
Cultivate the habit of believing and getting thrilled about being wealthy. Improve your financial education and learn more about how to better invest your time and money for a wealthy return on investment. That way, you will start to identify those opportunities, which have always been there but not visible to you.
2- Set Goals
Money becomes meaningless when you don’t understand your motivation for wanting it.
Ask yourself these questions, “Why do I want to make money?” “Do I want to get rid of debts? “Are you saving for a major event like a wedding, a house, or a retirement? Do you simply want to be your own boss and escape the nine-to-five routine? Do you want to go on a vacation alone or with your family?
Having a general desire to make money is not enough. You need to set financial goals. Write down your goals and review them often to monitor your progress. The more specific your financial goals are, the easier it is to achieve them. You may not achieve all you want but you’ll get to cross off a lot from your list.
3- Have an Extra Source of Income
If you really want to have the freedom to spend money the way you want, then your nine-to-five job may not be enough. You need to find additional sources of income. You can either turn that hobby into a profitable business or start investing your money to make it work for you.
You need to create multiple streams of income to an extent that the accumulated passive income will carry all your expenses while maintaining your current lifestyle.
Note that trading your time for money is not the ideal solution. This cannot be scalable. You need streams of income that pay you passive income and that keep on building your wealth. Investing in rental property is one of the most solid assets that pay you passive income and grow your wealth.
4- Stop That Consumer Mindset
We all have different triggers for spending more than we need. Some people spend more money after a breakup, some spend more when they are sad, while others spend money when they think they have just enough in their accounts. Understanding your emotional triggers and controlling them will help you curb unnecessary spending.
In the early stages of building wealth, you need to limit the unnecessary?expenses, the discretionary spending. In that way, you spend on the essential expenses, and the saved money will be put in a separate account that will be used for investing later on.
Withdrawing cash before you go shopping can also help curb your spending. It is very difficult to walk away from a full store with several products that you think you need when you have your credit cards and other forms of payments. However, when you go shopping with just enough cash, you only buy what is on your list or the vital items.
5- Be Financially Literate
Financial literacy is the knowledge, information, understanding, or training you acquire and use on the most successful and effective?money practices . Financial literacy is crucial not just for organizations but for individuals as well. For you to make wise money decisions you must be able to effectively understand taxes, personal finances, comprehend the notion of debt management and budgeting, and know how to make your money work hard for you.
So keep yourself up-to-date about financial news, tax laws, and developments in the stock market, and make appropriate changes to your investment portfolio where necessary. Financial knowledge is key to attaining financial freedom and avoiding people who exploit ignorant investors.
6- Invest in Income-Producing Assets
You don’t need to accumulate a staggering amount of wealth before you can invest. Regardless of the amount you earn, you can always find a suitable investment. Your money can only work for you when you invest it in assets that pay you passive income.
Learn to also invest in yourself and in your financial education. Listen to financial audiobooks, purchase relevant?investing courses , and read?books? on financial management and investing.
You should also invest in your future by setting aside money for emergencies. You can have emergency funds, have a retirement plan, and other investments. By having these funds set aside, you’ll be less likely to fall back into financial problems.
7- Do Not Misuse Your Credit Cards
If you think adding just about anything to your credit card is not an expensive habit, then you are absolutely wrong. It can be costly when you don’t pay off your debts when they are due. Don’t spend the money you don’t have. Learn to automate your payments, so you don’t end up paying ridiculous amounts of interest on your credit cards. When you automate your payments you avoid debts and avoid spending them on something less important.
The psychological implications of misusing your credit cards are endless. For one, your credit score can determine if you’ll get car insurance, life insurance premiums, or even a job. The perception is that a person who is irresponsible with his/her finances would likely be irresponsible in other areas of his life. You see why you cannot afford to be reckless in your spending. Ensure you get consistent credit card reports to avoid tarnishing your reputation.
8- Have a Budget and Monitor Your Expenses
This point is closely related to the goal-setting formula. Set a budget for your monthly household expenses and stick to it religiously. This way you can ensure that all your bills are paid on time and your savings are on the right track. Having a budget would restrain you from overspending and you’ll achieve your goals easily.
You can?monitor your expenses with automated tools?that would help you keep track of how much you’ve spent, what you’ve spent your money on, how much you have left, and even how much you owe. With these tools, you can monitor your goals and know how close you are to achieving them. It can be dangerous to spend money without having something that serves as a check-and-balance to control your expenses.
9- Seek Financial Advice
The last but most certainly not the least step to take is to get the right?financial advice . You need a capable and credible financial advisor or a coach to help you fix your personal finances, invest in income-producing assets, and grow your wealth.?He/she would be there to enlighten and coach you on how to make certain decisions that may affect your financial freedom.?
Finally
Reaching the point where your finances do not influence your decisions is not an easy process when you have debts to pay, medical bills and other bills, and emergencies, among others. However, financial freedom can be reached through cultivating the right financial attitudes and habits and carefully planning how to achieve your financial dreams.