Table of Content
- 1 What Financial Freedom Actually Means
- 2 Creating a budget
- 3 Living by that Budget
- 4 Increasing Savings
- 5 Suze Orman 9 Steps to Financial Freedom
- 6 The 9 Steps to Financial Freedom: Practical and Spiritual Steps So You Can Stop Worrying
- 7 3 Simple Financial Freedom Rules
- 8 Rule Number 1: Do Not Live Above Your Means.
- 9 Rule Number 2: Save Up and Invest Whatever Remains.
- 10 Rule Number 3: Improve on Rules 1 and 2.
- 11 When Do You Really Become Financially Free
- 12 Money in Your Life—How Much Is Enough
- 13 Steps to Financial Freedom
- 14 Step number one involves setting your own financial goals.
- 15 Step number two is somehow basic; learn the art of making money.
- 16 Step number three is simply avoiding negativity.
What is Financial Freedom to start with? Ever since the colonial period, many individuals have always been after attaining complete freedom main a lot of sectors.
However, if there is one sector whereby many have failed to achieve complete freedom it is in the financial sector. Once again, what is financial freedom? This question has brought about a lot of fuss with different people having different definitions. According to wikipedia, “financial freedom is a well-planned lifestyle whereby one is not required to work in order to earn all enough income to cater for the expenses”. This is one of the major definitions used by most of the elites in the sector.
Another very common definition is one that describes financial freedom to be a state whereby one’s passive and residual incomes are more than his or her expenses. This is the most reliable definition.
Passive income is one that one gets from investments while residual income is one that one earns on a monthly basis from doing a particular job. All in all, both incomes attribute to the total amount of money one gets at the end of the month.
No matter the amount of money you end up earning at the end of it all, all that matters is the manner in which you budget for it. The secret behind financial freedom is that you earn as much profit as possible such that you can sustain yourself in the time of need. This is where budgeting comes in. It should be done in such a way that the expenses are way below what you earn in the long run. On the other hand, do not budget for all the money to an extent that your pockets remain completely empty once you buy whatever it is you had planned for. Cut down the cost such that you will still remain with some reasonable amount that if saved properly can be invested.
However, this can only be done under two conditions.
Number one; get rid of all the bad debts. These are debts that just add up your cost. Deal with them first before anything else.
Condition number two: get as many sources of income as possible. The best alternative source is by investing more and at the same time building a job on the side. A very good example is home-based network marketing that has no time limits and in addition to this, you are your own boss.
What Financial Freedom Actually Means
With the cost of living constantly rising and people’s personal debt on the increase, the question of financial freedom is in most people’s minds. How to achieve it and live a life that is debt-free, or at the least, where the ability to pay every day expense’s and provide for the family without needing to go into debt is the goal for most people.
Achieving financial freedom need not be difficult. People with a poor credit rating can turn their lives around and achieve a better rating simply by making financial goals for their life. Financial planning is not just for the rich and famous. Anyone who wants to achieve financial freedom must and should engage in financial planning.
Financial planning is about taking control of your financial situation instead of allowing it to control you. It is about creating goals and then committing to them. The reward for this action is the financial freedom you are craving. It will enable you to be debt-free and saving money regularly, while also having money to spend on the things you enjoy most in life.
Achieving financial freedom involves three major steps that you should plan on.
Creating a budget
Creating a budget means ensuring income does not exceed expenditure and the goal of the budget is to create a lifestyle plan that covers all expenses and provides extra for saving and personal spending. It involves not only listing the current income sources, but potential other sources to increase income if required. The interest paid on debts is a constant drain on finances. While it may seem logical to payout small debts and then focus on the large ones, in fact paying off the larger debts first will save money in the long term.
Living by that Budget
A budget is only as successful if there is a commitment to live within the budget and resist impulse buying and anything that may cause voluntary over expenditure. The exception to this rule is the true emergency, which although not budgeted is covered by the savings plan you have put in place. If you have plans to buy household furniture or other expensive items, delay doing this you are debt-free
Allocate a weekly fixed amount of money as savings. Do not compromise on this amount for any reason. It is your key to future financial freedom.
Suze Orman 9 Steps to Financial Freedom
Financial freedom has become a trending topic in our streets today with many individuals trying their level best to attain this stage that is admired by many. Despite all the fuss, only a handful have achieved this condition.
It has become a sort of like an impossible mission for many as they quit along the way. This is basically due to the simple fact that they are not doing it right.
As a result, various renowned business elites have come up with tips that have helped many achieve financial freedom. Among them is the profound writer, Suze Orman. She has written a book entitled “9 Steps to financial freedom” that simply deals with financial freedom and how none can achieve it.
In the book, Suze Orman has come up with a list of 9 simple steps through which one can attain financial freedom the soonest possible. The first step discusses just how much the past means to your financial future. As a matter of fact, she states that the past holds the key to financial freedom in the future. How is this? You all know that experience is the best teacher. The same applies in this case. It is the past financial mistakes one made that will help him or she is more careful when doing their finances.
In the second chapter, she simply states that there is no way none can achieve financial freedom with a negative mentality. It is up to you to generate a positive mentality since it is all in your brain.
The third step is to simply be true to you. There is no living being in the world that knows you as much as you know yourself financially. It is only you that can point out your weakness and strengths. Therefore, it is very important for you to be true to yourself.
In chapter four, Suze talks about taking care of those that you love. She says that in order to be fully financially stable, it is necessary to leave something behind for your family just in case something happens to you.
According to Suze Orman, how you treat yourself matters a lot in financial stability.
In the fifth chapter, she says that one is supposed to respect themselves as well as their money in order to be financial freedom.
In chapter six, she states that in addition to respect, trust should also be available and especially.
Step seven, Suze encourages people to give to charity claiming that it is important to be open in order to receive what you are meant to receive. Finally, she explains the money cycle.
3 Simple Financial Freedom Rules
Many tend to think of financial freedom as something that cannot be achieved. Others think of it as a myth. This mentality has deeply sunk into their brains to an extent of the whole concept become just but an elusion to them. They have totally given up on the idea and the word ‘financial freedom’ is no longer part of their vocabulary. This should not be the case. On the contrary, achieving financial freedom is as easy as ABC. All that you should do is to follow some three simple rules and you will be on your way to a life full of financial stability.
Rule Number 1: Do Not Live Above Your Means.
This is one of the main reasons why many can never achieve financial stability. Living above your means simply means that you tend to strain the little that you earn. In the long run, you end up dead broke. Your next hope of getting some cash in your next salary of which you still plan to use it all up in luxuries. Try and live below your means. There are a lot of luxuries that one can get rid of and still live comfortably. For example, boarding a taxi on a daily basis when going to work; why not save up by walking for the next two months and buy your own car in the third month. This is just but one of the few ways that you can simply save up.
Rule Number 2: Save Up and Invest Whatever Remains.
I am sure that we have all heard of various saving options offered by banks or most of the money co-operatives we deal with. Some are using them while others just ignore them. Saving is one of the wisest things one can do. It is important to think of the future and not just today. See beyond your nose and plan for it. Look for a saving scheme that you can use and start saving. As for the amount that might remain, find a way of investing it. This way, your money will grow.
Rule Number 3: Improve on Rules 1 and 2.
It is easy for one to plan to save or minimize his or her expenses. The problem comes in after a couple of months or so when most of them quit along the way. Make sure that you do not fall into this category; improve on your saving skills day after day. Read periodicals and books dealing with these topics and talk to professionals.
When Do You Really Become Financially Free
Because the term ‘financial freedom’ has become a very popular term in the world today, and especially in the financial sector. Many use it when referring to financial success.
However, they really do not know what the true meaning of financial freedom is. There are those who think of financial freedom as a state where one is completely free from debt. On the other hand, others think that financial freedom simply means having a huge bank account from which you can comfortably live off.
Personally, I do not concur with these definitions. Think of it this way; human beings are never satisfied with money. No amount of money is enough!
Several business elites have tried to come up with various definitions for financial freedom. All in all, one of the best definitions is that given by Robert Kiyosaki, the writer of “Rich Dad, Poor Dad”. In the book, he simply speaks about the general financial situation of an average dad. The definition given for financial freedom in the book is that it is a situation whereby an individual’s expenses are less than his or her passive income.
This definition contradicts the popular ones that simply state that financial freedom is a state in which one tends to be rich enough, with a fat bank accountable to sufficiently sustain him and his family. According to Robert’s definition, one does not necessarily have to be rich in order for him or her to be financially free. All that is required is for one to be organized financially and you will be on your way to financial freedom sooner than you expected.
In order to understand Robert’s definition, it is necessary that you first understand the principle behind. There are two kinds of income stated in the definition; residual and passive. What is the difference between them? Passive income is one that one gets from various business sectors that he or she had taken part in without necessarily participating in the actual business.
A good example of such an income is the money one receives as dividends from shares. As for the residual income, this is just but the normal type of income that one gets on a regular basis, normally on a monthly basis. Therefore, the amount of money one gets from the two should be more than his or her monthly expense in order to achieve financial stability. This can only happen if one has a well laid out budget accompanied with discipline.
Money in Your Life—How Much Is Enough
Quite sadly, it is an irrefutable fact that we are living in a materialistic world. There is no escaping the fact. Actually, if you think about it, almost everything that we do—right from the start of our day until the time we retire to bed—we are doing it for money or for some other such similar material gain. The things that we do for other reasons, such as our physical development and maintenance and our spiritual growth are precious little in comparison to the things we do for money.
We are addicted to money. The more we get of it, the more we want. We want money to be at our disposal all the time, and we want money salted away so that we feel that we will be able to spend our future lives in luxury as well.
But, the important question is—how much money is enough? When should we put the tabs on it?
The bitter truth is that our lifestyles today have become such that we are chasing after money all the time. When we earn enough money to acquire one of our satisfactions, we feel the urge to earn more money and look for something bigger than that. Wants are unlimited. We always generate higher wants in our mind and then set ourselves to bring it to fruition as well.
If we put it in very simple terms, then you are doing very well if you have enough money to:-
… and so on.
Maybe we forgot to add something in the above list, but you get the picture. The main point is that you have to have money for everything that is important for your survival and for the pursuits of your mind and for security in the future. Remember that we earn money to live—it should never happen the other way round.
Having said all that, we need to point out that it is not wrong to dream about becoming rich… You can dream, but for that, you will need to keep rotating money. You earn money, you put it into your business, then you earn more money and improve your business still further.
In any case, money is important but you should not have money just for the sake of having money. You should use it for enhancing yourself; not for making yourself more complacent and vain about your achievements.
Steps to Financial Freedom
Attaining financial stability is not as hard as many portray it to be. On the contrary, it is quite easy so long as you follow the necessary steps. There are a total of four steps.
Step number one involves setting your own financial goals.
This not only applies to achieve financial freedom but all business sectors. Professionals claim that the main difference between those who succeed in life and those who do not is the simple fact that the previous know exactly what they want in life.
Therefore, they strive to achieve it unlike those that try being jacks of all trades but end up masters of none. The same applies when achieving financial stability. It is important to set goals that you will work towards. This is the only way through which you can access your progress.
Step number two is somehow basic; learn the art of making money.
Many of you might laugh away this point but if critically analyzed, it means a lot. There are specific strategies or methods that are most efficient when it comes to making money. The most common is the usual 9 to 5 salary job, but this is not enough. Method number two simply involves multiplying your income streams. In this economical hardship time, the average salary is never enough. Therefore, it is wise that you find alternative means of earning money such as popular internet money-making opportunities. Finally, make sure you invest this money and save some amount for the sake of the future. This is the only way through which your money can grow.
Step number three is simply avoiding negativity.
When it comes to financial freedom, there is a lot of negative talks that are going around with people claiming just how much of a myth it is. I am sure that if you tell one of your close relations that you are trying to achieve financial freedom, the most obvious is a burst of sarcastic laughter or a mare shrug. It is up to you to avoid such negative thoughts from affecting you. They might end up demoralizing you.
Finally, it is advisable that you first aim at clearing all your major debts. There are two types of debts; good and bad debts. Geoids debts help you grow while bad debts just cost you more. A buy-to-let mortgage is a goods debt since it helps you grow. Car loans or credit cards are bad debt since they end up costing you more without adding any value to your financial situations. Clear them all!