What Is The Key To Financial Freedom?
Having financial freedom means different minds to different people. But, commonly, it is understood as being able to live the lifestyle of your selecting, while responsibly managing your finances. Financial freedom has to be personal. Dream big and get specific about your target.
Financial freedom in layman’s terms is when all are your costs ,are covered and this includes your monthly needs to all the way to paying your debts and then you have some cash left for investing, and a small part if saved as an emergency fund for any unforeseen costs.
Shortly, financial freedom is having enough residual income to cover your living costs. This can be achieved only when you are prepared for it. All you need is a little financial planning.
Earn a decent revenue.
If you don’t make any cash, you will never get ahead financially. Forget about winning the lottery, getting an inheritance, or expecting the government to subsidize your lifestyle. The only way to build wealth is to work.
Jobs with a decent revenue include computer programming, accounting, nursing, engineering, dental hygiene, physician assistant, and radiology technician. Notice that you don’t need a university degree for all of these professions.
However, you need to be intentional about targeting a profession that is in demand, and pays a decent salary. Don’t get a degree in history and expect to make a livable fee without a significant uphill battle.
I would suggest targeting a household income of 6 figures or higher. This will be easier if you have a two-earner household. For example, you can get to 6 figures with 2 teacher wages. The reason for this goal is that you need to earn enough to be able to save half of your revenue, and still have enough left over for primary needs, and a reasonably comfortable lifestyle.
Save a large portion of your income.
You won’t get wealth by saving a measly 5 or 10% of your revenue. You will need to save a massive portion of your income, such as 30–50% to create wealth and reach financial independence in a reasonable period of time. Lower your costs. Study how to budget. Keep away lifestyle inflation. Fully stock your emergency cash with 3–6 months of costs. Fill up your 401k, Roth IRA, HSA, and if you have anything left over, stick it in a good ‘ol taxable account.
Get out of debt.
If you are in debt, you are paying interest on that debt, and losing cash every second. You need to be gaining cash every second, not losing money every second. If you still have debt, you need to attack it and eliminate it. This is not the time to be passive.
This is the time to get intense, learn how to suffer and make things occurs. There’s no abrakadabra here. Take a half of your income, and throw it at your debt until it is gone. Don’t buy things you can’t afford. Once the debt is gone, then take that 50% and save it.