By loose definition, financial freedom means having the ability to live the life one wants to live without money interfering in the process. It’s something to which hundreds of millions of people all over the planet aspire. The problem is it’s not an easy thing to attain.
It’s important to note that financial freedom doesn’t necessarily mean someone has a lot of money. There are plenty of people who have money but still feel burdened by financial concerns. Likewise, there are plenty of people who feel financially free simply because they have all the money they need. With that in mind, it’s fair to say that financial freedom is simply a “state of mind.”
Assuming financial freedom is one of your primary goals in life, here’s a list of seven things you need to know about establishing and maintaining it. These are things financial advisor Cairns would likely recommend.
1. Make Decision to Live within Your Means
After spending 16 years and tens of thousands of dollars getting an education, it’s difficult for young adults to resist the temptation to leave college and rent that nice apartment and buy that fancy new car. It’s a trap. If you are serious about having financial freedom at some point in your future, now is the time to start living within your means. That means covering your living costs and being able to save money without taking on unnecessary debt.
2. Set Financial Goals Early in Life
A good financial plan for your life is always a good place to start. Your financial plan should incorporate things like setting retirement goals, deciding on home-ownership and making decisions about family size. The earlier you can establish a vision of what your financial goals are going to be, the more time you will have to chart a course in the right direction.
3. Avoid Credit Card Debt
Time and again, one bite of the credit card animal has set in motion a lifetime of debt for people who don’t understand the real costs of using credits cards. There’s no place in your life for credit card debt. If you can’t afford to pay cash for the things you want/need, you are probably living beyond your means. See #1.
4. Diversify Income Streams
In the earlier parts of your working life, you will likely have more energy than you’ll have as you near retirement. Instead of relying solely on your wages to build your financial empire, it might be a good idea to figure out other ways to make a little extra money while you have the energy to do so.
5. Save, Save, Save
There’s a quote that’s relevant here: “Life is what happens to you when you are making other plans.” No matter what you do in life, emergency situations will arise. People with sufficient savings seldom feel the impact of a financial emergency. Those who fail to save are destined to suffer the repercussions of unexpected occurrences for many years to come.
6. Be a Net Investor
Take this piece of advice. You will never have financial freedom is your attempt to live off your wages alone until retirement. The people who get the opportunity to live the kind of financial freedom discussed above are the people who earned and took a portion of those earnings to make investments. By learning how to put your money to work while you are working on your career, you’ll be able to eventually accumulate the financial resources you’ll need to get the freedom you want.
7. Establish Relationship With a Mentor
No one was born an astute investor or a successful money manager. These are traits everyone has to acquire from somewhere. While the pursuit of financial freedom is your personal endeavor, you don’t have to walk that path alone. There are people, likely people around you, who are financially free. If you invest a little time seeking the counsel of people who have what you want, it can save you from having to endure the process of trial by error. When it comes to planning and investing, a good mentor could be the difference between financial failure and success.
Eric Reyes is a passionate thought leader having been featured in 50 distinguished online and offline platforms. His passion and knowledge in Finance and Business made him a sought after contributor providing valuable insights to his readers. You can find him reading a book and discussing current events in his spare time.