Many people aspire to achieve financial freedom. This typically refers to being able to live the life you desire for yourself and your family while also having a growing nest egg that allows you to retire or follow the job of your preference without being constrained by the need to earn a specific amount each year.
The problem is that far too many individuals fall short of their goals. They are hampered from achieving their goals by massive debts, unanticipated expenses, and other problems. A storm or an earthquake, or even a pandemic, may completely overturn plans and disclose safety net vulnerabilities that weren’t previously apparent.
Almost everyone has run into difficulties, but these eight guidelines can hopefully redirect one on the right path to financial freedom.
1) Make a list of life goals
What is financial freedom to you? Defining the term may help you get a better sense of what it means to you. A general desire for it may be too vague as a goal, so get specific. Make a list of how much money you need, what kind of lifestyle you want, and when you want to reach those goals. The clearer your objectives are, the more likely it is that you will achieve them.
Decide how many years you have left till retirement and set regular financial milestones to help you stay on track. The next step is to go backward in time to your current age and set recurring financial milestones. Put the target sheet at the front of your financial binder and write everything down carefully.
2) Establish a financial plan
To achieve financial freedom, financial plans may be quite beneficial. They can help you clarify your goals and objectives, provide motivation, and create a detailed and precise path to follow. Individuals can take the initial step toward something that is unfamiliar or daunting to them if they have goals in place before they begin investing.
A monthly home budget, followed strictly, is the most effective strategy to ensure that all expenses are paid and savings remain on track. It’s also a consistent habit that helps you stay focused on your goals and resist the temptation to overindulge.
3) Engage in bargaining
Many people are afraid to bargain for products and services because they are concerned that doing so would make them appear inferior. If you can overcome this cultural barrier, you may save hundreds of dollars each year.
When you’re in a situation where you have to bargain for financial freedom, there are some basic principles that will help you get the best deal.
a. Know your worth: You need to know what your skills and experience are worth in the marketplace and what’s an appropriate amount of money for your skillset and experience.
b. Know the competition: You need to know who else is bidding for this opportunity so that you can counter-bargain by offering something they don’t.
c. Know your time: You need to know how much time you’re willing to spend on this project or opportunity so that you can get a sense of how much it will cost in terms of hours invested.
d. Know your limits: You need to know what kind of deal would be acceptable
4) Proper upkeep and maintenance
Taking excellent care of one’s belongings extends the life of anything from automobiles and lawnmowers to shoes and clothing. Because the cost of maintenance is only a fraction of the cost of replacement, it is a wise investment that should not be overlooked.
For example, shoe mending, sometimes known as “shoe cobbling,” is an excellent option to save money that is all too frequently disregarded. It’s possible to save money on shoes so that you may spend it on bigger purchases, like a house or a car. If you have a pair of shoes that fit like a glove or that make you feel like a million dollars, consider fixing them rather than hoping and praying that the replacement would look and feel the same. A good rule of thumb is this: If a repair costs less than half the price of new shoes, fix the old ones.
5) Attempt to live below your means
It is not difficult to live a modest lifestyle if one adopts an attitude of “living life to the fullest with less.” Indeed, many successful persons acquired the practice of living below their means before attaining their current levels of financial success.
No, this isn’t a challenge to live a minimalist lifestyle, nor is it a call to throw away the items you’ve accumulated over the years. Maintaining a healthy financial mindset by discriminating between the items you require and those you desire is a financially beneficial habit to develop.
Authors Thomas Stanley and William Danko wrote in their best-selling book “The Millionaire Next Door: The Surprising Secrets of America’s Wealthy” in 1996 that one of the most important secrets of the country’s wealthiest people is that they live below their means and reject extravagant lifestyles.
6) Consult a financial advisor
Get a financial advisor if you’ve accumulated a significant amount of money, whether it’s in the form of liquid investments or tangible assets that aren’t as easily converted to cash. A financial advisor can educate you and assist you in making financial decisions as your wealth grows.
Good financial advisors take the time to get to know you and your requirements before assisting you in putting a strategy in place that represents your objectives and risk tolerance. They assist you in investing with discipline and in understanding how emotions might cause you to make poor decisions during the investment process. A financial advisors duty is to assist you in taking a logical approach to your money and can thus open the pathway to your long term financial success.
7) Preserve your health at all costs
Invest in your health by seeing your doctor and dentist on a regular basis and follow their medical advice if you have any concerns. Changing one’s way of life, such as getting more exercise and eating a better diet, can help alleviate or even avoid potential ailments.
Due to the fact that some firms only allow for a limited number of sick days, when those days are used up, there is a significant loss of revenue. As a result of obesity and diseases, insurance costs soar, and bad health may cause a retiree to leave the workforce sooner and earn less each month.
The wages of workers who are obese are generally lower than those who are within a healthy weight range for the same employment. According to a study done by Stanford University, this is more likely to be the case if a firm provides employer-sponsored health care coverage. As a result of the increased insurance expenses that obese individuals pay (an average of around $732 per person per year), economists have discovered that companies would reduce their compensation in order to offset these costs.
8) On-going education
Every year, check for any changes in your local tax rules to ensure that all adjustments and deductions are maximized. Keep abreast of financial news, and don’t be afraid to make adjustments to your investment portfolio as needed. Furthermore, knowledge is the most effective deterrent against those who prey on naive investors in order to make a quick profit.
What’s the bottom line?
There is no guarantee that following these eight steps will alleviate all of your financial burdens, but they will inshaAllah assist you in developing healthy habits that will put you on the path to financial freedom.