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As entrepreneurs, you always hear the term financial freedom being thrown around. Its meaning can vary depending on who you talk to as its significance can change with each new stage of your growth and development to becoming a full-time entrepreneur. In this blog, we will be discussing what is financial freedom how do you obtain it and what benefits it is can provide to you and your family.
Financial Freedom also known as Financial Independence according to Wikipedia is the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For individuals who are financially free, their assets generate enough income and/or their cash flow supersedes their expenses leaving them with excess that is at least as great as their expenses.
When doing our research for this blog as well as from our own personal experiences we realize, financial freedom is far more than just having money or having extra cash lying around the house. It’s about the freedom to be who you really are and doing what you really want in life. It’s not just about what you choose to do but having the independence to make the choice. Whether it’s the option of changing career paths, taking time off to recharge and travel or starting your own business. It’s about having the freedom to choose such things.
We have been taught since childhood to get good grades in order to obtain a good paying job. It’s time to stop that cycle of thinking and change your mindset if you seriously want to get on the road to becoming financially free.
If you are serious about gaining your financial independence, it’s time to let go of whatever has held you back in the past and latch onto a different frame of thinking. This process won’t happen overnight but you first need to realize you are going to need to become a different person to achieve this goal. Financial Independence is a process of growing and improving. Gaining the wealth of knowledge needed not only to grow your bank account but also to strengthen your core in the areas of spirituality and emotions to become the most powerful, happy, and successful “you” possible can be. This is what Kim Kiyosaki on richdad.com describes as the true rewards of financial freedom. Whenever we think of change, a bit of fear usually sets in for some, but in order to take control of your situation no matter what it is, you have to take matters into your own hands and deal with it head-on. The great part is anyone can be successful in achieving this goal, it’s not rocket science but it will take time, dedication, determination and being consistent on your journey towards financial freedom.
Financial Freedom: What Does it Mean to You?
Taking control instead of being controlled by your finances can be one of the hardest concepts to conceptualize; financial freedom means that you get to make life decisions without being overly stressed about the financial impact because you are prepared, Now let’s be real the path to financial independence isn’t a get-rich-quick strategy. And financial freedom doesn’t mean that you’re “free” of the responsibility of handling your money well. According to David Ramsey, it’s quite the opposite. Having complete control over your finances is the fruit of hard work, sacrifice and time. And all of that effort is worth it!
What does financial independence look like for you? Maybe it’s:
- Freedom to go back to school to study what you love
- Freedom to take two family trips a year one domestic, one international.
- Freedom to pay cash for an item instead of using a credit card.
- Freedom to buy clothes without checking the price or seeing if it’s on sale.
- Freedom to give to charity without worrying if you can pay your bills.
- Freedom to retire early without being penalized.
When you are financially free the option is yours, you don’t have to ponder if your lights will be cut off if the car breaks down or if your bank account can handle being laid off for six months. It’s about having autonomy and independence in your daily routine, allowing you to design a better life while spending your time, money, and energy in a more meaningful way. This may sound too to be true but it is possible!
Where to do you start?
Building wealth is nearly impossible if you’re living paycheck to paycheck as every dollar is accounted for, it’s easier to ignore than to deal with finances. To be prosperous you are going to have to stop and take a real hard look at your finances; where are you consistently overspending or under spending and make adjustments in each area. Create a budget and stay on track, getting to financial independence won’t be by accident or by share luck.
Give every dollar a name before the month begins, and track your spending throughout the month. If you consistently overspend or underspend in certain areas, you can always adjust the amount in each category.
Budgeting is important to get your finances on the right track, but it doesn’t end there. Even once you achieve financial freedom, you’ll still complete a unique budget every month. No matter how much money you have, you need a plan.
You won’t get to financial independence on accident. Budgeting is the first step to building wealth on purpose. There are great websites and apps that can help you manage your money, some examples include Mint or Personal Capital as great apps to use for money management.
We’ve all made financial mistakes in our lives, from having numerous credit cards when we were in college to racking up student and car loan debt. You can’t beat yourself up for it and play the should of could have game, it time to own those mistakes and get down and dirty to start cleaning up your finances and kick debt to the curb. If you want to reach your goal, you need your full income at your disposal, not bits and pieces that are left over after paying credit card bills and student loan payments.
According to David Ramsey https://www.daveramsey.com/blog/what-is-financial-freedom
Paying off your debt helps to lay a foundation to build wealth is everlasting. To begin you will need at least $1,000 saved before you can really start tackling your debt. You don’t want an unexpected expense to derail your progress! Now that you are on a budget you should have some additional income freed up to start throwing that extra amount to your smallest debt until it’s gone, this will create a snowball effect for every month you work on hitting your debt hard paying your smallest bill off first until you reach your biggest bill. Paying off debt is hard work, but there’s nothing more exhilarating than the feeling of actually keeping the money you bring in every month into your bank account. The earlier you start the better; here are a few things to keep in mind:
- Where do you want to be in 10 years? Start with the end in mind. Does this path make sense with your overall goals?
- Can you grow? Are there opportunities for you to move up and grow personally and professionally?
- Do the benefits support your goals of financial freedom? Your options for retirement savings and health insurance can dramatically affect your ability to build wealth.
The way you answer these questions can have a big impact on your long-term financial plan, so take it seriously!
Short-term and Long-term goals
If your goal is financial freedom, you need a buffer for the unexpected life events that happen to all of us, like car repairs, broken appliances and in this day in age medical copayments and deductibles. With that being said, do you have an emergency fund set up? Having the cash on hand to cover an unexpected life event gives you peace of mind and is a critical part of your overall financial plan. As we mentioned previously it’s all about budgeting, set some money aside to help with the unexpected, can make a world of a difference. It can be as little as twenty-five dollars a month, capital one 360 is a great resource to help, with a full emergency fund and a plan to cover big purchases in place, you’ll have the financial foundation to start investing. Making the right investment moves you toward your long-term goals and ultimately into financial freedom. Making the decision to invest and using a financial advisor, is the first step, but staying in tune with your fund performance is crucial to getting the most out of your investments. Setting your investments on autopilot is not an investment strategy. The great news is the sooner you start investing, the more time your money has to grow. That’s the power of compound interest at work. We are not saying this process will be quick and easy but it’s essential if you want to get ahead.
“If you live like no one else, later you can live and give like no one else”~David RamseyClick To Tweet
For Rodney and I, financial independence is a pressing desire, we want to achieve not only for ourselves but also for our family. It is our primary financial long-term goal. We appreciate the flexibility and freedom that accompanies a large pool of savings, and we would rather forego being a consumer that is solely dependent on a bi-weekly paycheck. Although we haven’t yet achieved permanent financial freedom, we are in a great position to do so, we are working on our debt and are in the beginning stages to accumulate assets to invest and make purchases for prolonged periods of freedom it may not be permanent just yet but at this point we have the knowledge and determination to bring what we need into fruition. It’s not going to happen overnight, or next month or even next year but we are focused on making it happen and completely becoming debt-free. Financial freedom is about more than just being able to cover unexpected emergencies but goes deeper in which you can not only help yourself but others around you. The fun begins when you cannot only meet your needs but the needs of others; a shift is made and it moves from not just being about you anymore but helping those in need. This then leaving a lasting impression or our ultimate goal of a legacy, in the words of David Ramsey “If you live like no one else, later you can live and give like no one else” in the end all the hard work will get you there you just have to be willing to be consistent in the process.
We hope you found this blog insightful, until next time Happy Reading!
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Build your legacy today!
Melissa & Rodney
Co-Founders, Diamond Legacy Group
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