How to do 5 Easy Steps to Financial Freedom
What is the definition of financial freedom(independence)? Financial independence is defined as when your passive income (from your own business or assets) exceeds your costs, allowing you to live your ideal life without having to work as an employee!
As you finish your degree and, maybe for the first time, enter the professional workforce, you’ll quickly realize that a degree, reading the Barefoot Investor, and a solid salary won’t be enough to attain financial independence. Sure, it’s simple to buy a fancy automobile these days, but that decision may not put you on the right track to financial independence.
Imagine being able to purchase your dream home, live in your ideal suburb, and cross items off your vacation bucket list without having to get out of bed every morning to join the daily grind and make small chat with coworkers about your weekend at the water cooler.
The financial freedom mountain may be conquered in 5 easy steps!
#1 The Foundations
Clarify your objectives and reasons, and maintain a positive attitude that you can attain financial independence. Have a budget to define your discretionary, non-discretionary, and savings plans, as well as an automatic cash flow and bank account system. Keep yourself motivated to keep to the plan and avoid hasty emotional spending by being pleased at work and in your personal life.
Financial counsel may assist you with your financial flow, money values, and objectives. A psychologist or a certified life coach can assist you in managing your money barriers and changing your mentality.
#2 Plan B is pretty important
Create a safety net to safeguard you and your loved ones in the case of permanent or temporary sickness, incapacity, or early death, as your path to financial independence is unlikely to be without bumps. Set aside a part of your cash reserves for an emergency fund of around three months’ worth of spending (depending on your situation such as whether you have a mortgage).
Income protection, life, complete and permanent disability, and trauma insurance are examples of personal insurances that take into account prior health concerns as well as cash flow affordability. Your risk management approach and whether products are suitable for you can be helped by a financial advisor.
#3 Integrate debt and financial advisory
Pay off consumer debt, such as high-interest credit cards that aren’t tax deductible and vehicle loans. There are a number of techniques that may be used to help you pay off your debt faster. A financial consultant or financial counsellor can help you decide which repayment option is appropriate for you.
A financial planner or a financial counsellor can help you figure out the best repayment option for you.
#4 Invest for long-term income
Investing can take place either within or outside of superannuation.
Cash, fixed interest, stocks, and real estate are examples of investment asset types with varied growth and income possibilities. Investment risk, liquidity, investment term, diversification, preservation rules, and tax are all factors to consider while developing your investment plan.
Tip: Seeking investing advice from an expert, such as a financial planner, is essential to avoid making costly mistakes.
#5 Organize your assets
Keep your riches in check by not overspending or being overly generous with it. When necessary, review, monitor, and supplement your investment portfolio. As your life and goals change, make sure your financial plan is up to date.
A long-term connection with a financial advisor might be beneficial.
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