There are various stages in most people’s lives when they consider the benefits of financial freedom and how to attain it. For many, it is having plenty of money in the bank and the ability to do what you wish with your time. For others, it is simply being off the grid to minimize funds needed and reliance on the main grid.
But, regardless of your personal perspective of financial freedom, many people never achieve it because they don’t know how to. The good news is that it’s possible in 5 simple steps.
- Financial Planning
The first step to achieving financial freedom is to decide what it is you want and need. This means do you need $10 a week or $10,000? Deciding this sets the target regarding the funds you need to raise.
You will find it beneficial to talk to financial planning experts to help decide the funds you need and evaluate what you have.
In many ways, this is the process of setting a goal. The figure you decide on is your ultimate goal.
- Clear Debts
There are many people that will tell you to start investing and saving. However, this must take second place. It’s time to create a new budget and set a savings schedule. However, the funds you have spare, which could be saved, must be destined for your debts. Clearing these and avoiding new ones is essential if you want to be truly financially free.
Create a list of all your debts and start paying them off, smallest first. Choose the smallest as this will speed up the process of paying them off and make you feel like you’re getting somewhere.
Once you’ve cleared the old debts you can direct the monthly payments to an investment account. This will help you to maximize the amount you can save or invest every month. You’ll need to decide the risk factor you’re prepared to accept in order to build the funds in your account.
Investing takes advantage of the stock markets and is generally the fastest way to increase your net wealth.
While your plan is to be financially independent, you should take a moment to consider what happens if everything goes wrong. Now is a great time to take out life insurance and health insurance.
While the monthly costs will reduce your investment budget slightly, you will benefit if you become ill, or your dependents will be taken care of if the worse was to happen. It’s important to be prepared for all eventualities.
- Boost Your Knowledge
Investing your money can generally be done by placing it into a fund that handles investments for many people. But, you can now choose to boost your own knowledge of the markets and other financial issues. This will help you to make your own financial decisions and even handle your own investments. With a cautious approach, you can actually take over investing in the stock market and create a significant return on your investment.