How do you become financially free? For a lot of us, the main goal of working is to ensure that someday soon, you never have to work again. And that is the stage you get to and say you’ve gained financial freedom. The stage most people you hope to attain in the nearest future.
Well, to be honest, financial freedom is not a piece of cake.
There are a lot of challenges, both personal and also economic that affect one financially.
That is why many people end up working for most of their lives and when they get to retirement age, they are not free financially.
In fact, a lot of people are left worse off at retirement than they are at the beginning of their career journey.
Some people are even ridden with debts and many other commitments, that they do not have any notable savings or investments to keep them afloat.
This is the reason why it is very important to start planning on gaining financial freedom as soon as possible.
There is actually no age cap to when you should start planning for your financial freedom, as the sooner the better.
Hence, regardless of how old you are now, or what stage you are in your career journey, now is the best time to take the first step to become financially free.
As we go on in this article, you will learn what being financially free is all about and why you should aim for it.
Also, you will see what things negatively impact financial freedom that you should avoid, and of course how to become financially free.
We will begin with the definition of financial freedom.
What Does it Mean to Be Financially Free?
Being financially free has also been described as being financially independent by a lot of financial advisers and professionals.
Put simply and directly, being financially free means different things to different people.
However, the principle remains the same.
For some, financial freedom means being able to afford whatever it is they need or want without having to worry about the cost.
Also, for others, financial freedom comes when they are able to stop working, or take a less demanding job, so they can pursue other things like dreams and passion.
Every one of us has dreams and aspirations, many of which we need a particular level of financial stability to achieve.
When we have the financial capability to pursue these dreams, without having to worry about where the next meal or other necessity is coming from, it can be said that we have attained financial freedom.
Additionally, being financially free might also include the idea of retiring early without the burden of financial responsibilities, because you have enough income still coming in to pay your living expenses for the rest of your life.
In all, financial freedom means you are being independent financially, being in a state of mind and position where you do not necessarily have to worry about your expenses and financials anymore.
And at this stage or phase in your life, you can do whatever it is that makes you happy, without notable effects on your “purse”.
Benefits/Importance of Being Financially Free
Whether as an individual or as a business owner, being financially free should be a clear target of yours.
As a matter of fact, as soon as you start up your business as an entrepreneur, you should be aiming for financial freedom as the goal, either short-term or long-term.
The reason for this is that being financially free affords you a lot of opportunities that can increase your personal growth and business development.
A lot of people today are being controlled by their finances, to great negative effects and calamity.
It is the opposite of financial control that you should be aiming for when working towards financial freedom; i.e. having control over your finances.
For you to clearly understand the benefits of gaining financial freedom especially in business, let us list out some of them.
It Improves Your Business and Personal Relationships
This impact of being financially free is the same for family relationships as it is for business.
You would agree that in a family where there are financial problems, difficulties, and uncertainties, the relationship cannot be very cordial.
It is not surprising therefore to find a lot of family problems that exist today being rooted in deep financial troubles.
When a husband and wife are not in a good space when it relates to finances, it might be very hard to forge a calm and happy relationship.
It is the same with building personal relationships in business.
When you as an entrepreneur reach financial freedom, it can help you make better decisions and improve your communication with others.
That is a stage whereby you are not burdened by debts or have to worry too much about where the next income is coming from.
Hence, you spend a greater deal of your time and attention on creating friendships, relationships, and partnerships that benefit you and the business.
It Helps You Focus Better on Things You Love to Do
Sadly, many people today spend every day of their lives engaged in activities that they find little or no joy in.
This is because they do these things out of a sense of obligation as what they have to do and not what they want or love to do.
And one of the reasons why this is the case especially for you as a business owner is if you have financial liabilities.
Take, for example, if you are in debt, it would be very hard for you to focus on doing the things you love to do.
The mental pressure and liability that comes from that situation would make you think about what to do to get out first.
Therefore, you might start making decisions and even financial choices that are not your best decisions but are necessary for the current situation.
Also, being financially free can also help you in choosing the right customers and knowing the one to let go of.
And this is very important because the makeup of your customer base goes a long way in determining business success, growth, and satisfaction.
Only when you becoming financially free can you have that peace of mind, mental focus, and determination to do what you love to do and not just what you have to do.
It Helps You Be a Better Risk-Taker
Different people have different opinions about risk-taking and to what extent one should indulge in this.
While some are avid risk-takers, others can be quite conservative when it comes to this.
Well, regardless of what your own opinion is about this, you can’t help but agree that risk-taking is an essential part of all successful businesses.
As a matter of fact, many people have been able to change their lives and businesses because they have the needed determination to take risks.
However, before you can have that extra push to take on calculated risks, being financially free is important.
If you still have to struggle with the thought of how to cater to your expenses or clear a debt e.t.c., taking risks would be the last thing on your mind.
However, when there is financial freedom, you are in a better state of mind to see opportunities, calculate the risks and take necessary ones.
And this in turn has proven to be very beneficial in the long run, as you can even make your financial situation a whole lot better with that.
It Helps You Improve your Health
There are several ways in which being financially free can help you healthwise.
For one thing, the thought of making money in order to cater to daily living expenses can cause anxiety and stress.
Not to mention having to go to work on a daily basis, because if you don’t, you have no hope of where your next income is coming from.
However, when you achieve financial freedom, you experience less stress, worries, and anxieties.
Additionally, because you have more time to yourself, you are able to use this in engaging in activities that improve your health.
At the stage of being financially free, you might have more time to exercise and have a workout routine.
In all these ways, you are doing more to improve your health and put yourself in a better situation healthwise.
It Helps You Make Better Long-Term Decisions
The best decisions that any business owner can make in order to grow his business are long-term decisions.
However, sometimes, you might be forced to make short-term decisions that are not very profitable in the long run.
This might be because you need that at the moment to survive or give yourself a sense of security.
That is one of the negative impacts of having financial troubles and anxieties.
On the other hand, when you become financially free, you are more calculative and calm in your decision-making.
You do not rush into making important decisions, but rather you take your time to weigh the pros and cons.
And then, it is easier to make choices that offer long-term benefits and not just short-term.
Factors That Makes Being Financially Free Difficult
Gaining financial freedom is not impossible for anyone, and that is regardless of who you are, what you do, or what you earn.
However, being financially free might be a bit complicated for some, and that too for some obvious reasons.
One reason why it might be hard for you to achieve financial freedom is if you lack the knowledge of what this is and how to go about it.
Not everyone understands how money works, and the best approach to take in gathering money and keeping it.
Hence, if you lack this knowledge, you might find that it is difficult for you to achieve or attain financial freedom.
Therefore, the responsibility is on you to learn about your personal finance, and how to best manage money to stand a chance.
Another problem might be not setting the goal from the start to be financially free.
As achievable as something is, if you do not pre-configure your mind to achieve it, you would most likely not.
Hence, when you do not have it as a goal to achieve financial freedom and have a time frame for it, you limit your chances.
Self-limiting beliefs are also very key in limiting one’s chances of being financially free.
It might sound cliche, but the truth remains that you are what you think and what you believe.
If your belief system constantly tells you that it is impossible for you to become financially free, you most likely would not.
Finally, when it comes to gaining financial freedom, your level of commitment to your goals also matter.
A lot of people have fallen short on this goal because they set the goal but lack the commitment to see it through.
Hence, it becomes difficult for them to achieve such a goal.
How to Become Financially Free – Practical Steps You Can Take
Financial freedom does not happen overnight, in a day, maybe not in weeks, but the first step starts now.
Before we take you through the process of what you can do to become financially free, you need to first have the confidence that it is achievable.
That is the step of letting go of whatever self-limiting beliefs you have that might be affecting your mental disposition.
Having convinced yourself that financial freedom is a possibility, the next step is the process of achieving this.
Here are some practical steps you can take to become financially free:
Understand Your Current Financial Position/Situation
The first step you can take starting right away towards becoming financially free is knowing where you are at the moment.
It’s obvious that if you do not understand your current financial position or situation, it is hard to aim for financial freedom.
Understanding where you are financially at the moment would mean knowing how much you earn, your debt profile, savings, investments, e.t.c.
It is very important to write down all these things, so you can have a clear picture of your strength and weakness financially.
Well, the truth is that putting your expenses and debts especially in clear perspective can be rather frustrating, especially if they are on the high side.
But it is a vital step because only when you know these things can you come up with the right process of building wealth towards financial freedom.
The possibility of achieving all valuable endeavors in life is largely dependent on settings goals for them.
And being financially free is also included.
You cannot successfully achieve financial freedom if your aim for it just lives in your head or subconscious and you do not make it a goal.
Therefore, you should set different goals that you can achieve as a progressive path towards financial freedom.
Also, do not forget to write them down, as goals that are not written down are just wishes or dreams.
When you do this, you make the goals more binding on yourself, and you can always check on your progress.
Set a Budget and Stick to It
Many people today struggle to gain financial stability and be eventually financially free because they can’t control their spending.
Some tend to spend on unnecessary items or even buy things on impulse.
For you to be less impulsive and control your spending, you will need to have a budget.
On your budget, you can indicate your monthly expected expenditures, taking your income into consideration.
This budget will help you to set your priorities straight, and only spend when necessary and on what you really need.
It would also help you to control your spending and make you more likely to meet your financial goals.
However, setting a budget is just a first step, as you also need to discipline yourself to stick to it.
Cultivate a Good Savings Culture
You’ve probably heard some people say that you cannot save your way to financial stability or financial freedom.
However, giving too much credence to that statement might make you neglect the importance of savings.
Savings is a very good place to start with building wealth, controlling expenditure, and eventually being financially free.
Hence, whenever you earn your income, the first thing you need to do is set money aside to add to your savings portfolio.
As a matter of fact, this should come first before you settle your bills or handle other expenditures.
Regardless of how small the amount is, cultivating a good and consistent habit of saving can help you in attaining financial freedom.
Make a Plan to Pay Off Your Debts
Debts are one of the things that reduce productivity and also make it extremely difficult to build wealth.
If you have to constantly use your income, either in whole or part to pay off outstanding loans as debts, you cannot achieve financial freedom.
Therefore, you should make a deliberate effort and have a plan to constantly pay off your debts when due.
Do not make it a habit to skip payments or default on payments often, as this can affect your credit score and make it worse.
No matter how little it is, make a consistent effort to continually make your loan repayments, and in no time, you can be debt-free.
Live Within Your Means and Negotiate If Need Be
Don’t act like you are already financially free even before you attain financial freedom.
That is a recipe for disaster and can make it difficult for you to eventually get that financial freedom you seek.
Therefore, it is important that you control your spending and avoid a luxurious lifestyle that you can barely afford.
Also, when making purchases, do not allow yourself to be deceived into believing that you must always agree with the prices you are given.
Learn the art of negotiation, and know that doing so doesn’t in any way make you cheap or less valuable.
At the end of it all, you alone know what goal(s) you are working on, and how that helps you in getting closer to achieving your goals.
Be Conscious of Risks and Get-Rich-Quick Schemes
It might sound counterintuitive to say that you need to avoid get-rich-quick schemes if you are looking to become financially free.
After all, you might see get-rich-quick schemes as an easy and quick way of gathering money and gaining wealth, as the name implies.
However, the truth is that a lot of those schemes if not all eventually fails and get you into trouble.
There is no better and safer way of building wealth than taking it slowly but consistently.
Also, when it comes to risk-taking, be sure to consider all the pros and cons of the risk before you jump into it.
Even when you think you have enough money to risk or you are at an age where you can afford to, always make sure they are calculated risks.
That way, you can always make sure you have your money under control, and financial freedom is easier to achieve.
Be Ready to Do the Hard work
The eventual goal of being financially free is getting to a stage in your life and business where you do not have to work anymore.
However, before you get to that point, you need to do the work now.
It is very important that you learn the daily habits of successful people and try as much as possible to cultivate them.
If you are willing to do the hard work now, you are setting the path for when you would not have to work anymore, being financially free.
Do not Put Your Eggs in One Basket
Not putting all your eggs in one basket in this context simply means not focusing all your efforts or attention on one thing.
The implication of this is that if something happens to the basket, you lose all your eggs.
Therefore, applying it to being financially free, it would mean not depending on one source of income.
It is good to have multiple sources of income.
This would give you stability, security, and also an opportunity to increase your earnings/income.
Even if you are at a full-time job, you can still look for other things to do on the side that earns you more income.
Honestly, when it comes to making money, there can never be “too much”.
Make Good Investments
Some entrepreneurs might be wary of making investments, all thanks to the unfortunate losses experienced sometimes.
However, investments are a very big part of building wealth quickly and becoming financially free.
Therefore, you also need to set aside an investment portfolio, from which you have money set aside to invest.
When you make good investments, you are increasing your earning power and hence a step in the right direction of being financially free.
How to Become Financially Free – Final Thoughts
Do you want to become financially free? Have you set a particular age when you plan to achieve this? If yes, then you are on the right track.
However, remember that a dream only remains a dream or wish if it is not backed up by a good action plan.
We have given you all you need to get started right away on your path to financial freedom.
See you at the top.