These days it might seem like financial freedom is something that only the super-wealthy can ever achieve, but that isn’t the case at all. In fact, there are millions of average Americans who enjoy financial freedom off the backs of normal 9-5 jobs…and you can too.
What is Financial Freedom?
Before we dive into how you can attain financial freedom I think it’s important to define what financial freedom is because it looks very different for different people. For some people, it means being able to go to the beach every day instead of the office, for others it simply means you never have to worry about having a job to get by. Ultimately, financial freedom is having enough money or income to pay for your living expenses for the rest of your life without having to work for someone else. You don’t have to have millions in the bank to be financially free.
Why do People Want Financial Freedom?
If you love working and love your job then it might not be immediately clear why people want financial freedom, and that is perfectly ok! What it comes down to is that not everyone does love working for someone else and some people don’t want to work at all. For those people financial freedom is ideal.
It allows them to travel full time, be stay-at-home parents, or even travel to all the parks in their city just to feed the ducks every day. For those looking for financial freedom what they’re looking for is the freedom to do what they want with their lives all of the time. While it might seem like a dream for some of us, for them it is something they strive for.
How You Can Achieve Financial Freedom for Yourself
The road to financial freedom is one with many steps and not all of those steps will apply to all people. But if financial freedom is your goal then you should follow these steps.
Do the Math
To start the whole thing off you are going to need a couple of numbers figured out. First, work out how much money you need to live the life you want to lead. Be realistic about your desires. I’m sure we’d all love to live in massive homes in LA and hire someone to cook and clean for us every day, but that is EXPENSIVE. So, decide what you want to do. Do you want to travel the world for a few years? How much will it cost each year? There’s a big difference between 5-star hotels the whole time and airbnbs. Which countries you go to also matters a lot.
There is a reason why a lot of people who enjoy financial freedom head to Asia. The cost of living is insanely cheap compared to say Europe where it is actually more expensive than the United States more often than not. Maybe instead of traveling the world, you want to get an RV and travel North America instead. That’s another popular option. But, RVs need gas and repairs which you have to take into account. So, whatever your lifestyle desires are, work out how much it would cost you to live that life for 1 year.
Once you know how much it would cost you to live for a year-round it up, to give yourself a bit of wiggle room in case of an emergency you aren’t expecting.
Make a Budget, And Stick to It
Many Americans are living paycheck to paycheck, which makes financial freedom seem completely impossible. But a budget can help you get out of that trap. Add up all of your monthly expenses, including your debt payoff, mortgage/rent, food, and everything else. Work out how much money you need to live your life right now. Is it more or less than you make at your job? If after all your expenses are paid for you have money left over, use it to pay off your debt faster! Or put it in a savings account for an emergency fund. If you end up with a balance of 0 at the end of every month or you are actually spending more money than you earn, it is time to re-evaluate your expenses. Where can you cut back?
If you can’t cut back anywhere it is time to start looking for ways to increase your income. Start a youtube channel, drive for UberEats, or even get an evening job.
Once you’ve got a bit of money left at the end of the month and you have a bit of an emergency fund saved up it is time to start investing that extra money. Investing is easier than ever thanks to online brokers. Having investments is the fastest way to increase your income.
Find Passive Income
Passive income is income that you either don’t have to work for at all, or you have very little work to do. This can come in many forms, like writing a successful ebook that continues to bring in money for years or putting your house on Airbnb. The way I like to think about passive income is if I can earn money while I’m laying on a beach, it’s passive income.
Live Below Your Means
In the end, it all boils down to spending less money than you are bringing in, without your job. This happens when you spend less than your investments, passive income, and savings brings in. If you can keep that balance in check then you can achieve financial freedom and live the life you’ve always wanted.