How to achieve financial freedom
Financial freedom is when you can afford all your mandatory, essential and discretionary expenditures, so you can live a comfortable life and are able to pursue your passions and so on without your income limiting you. Financial freedom can most easily be achieved through having multiple sources of income for example, income from your job and income from a side hustle eg. having a cake business. However, having financial freedom doesn’t necessarily mean that you have to leave your job.
Steps to take in order to achieve financial freedom
Determine what financial freedom means to you
Financial freedom will mean the same to all however, it will be a different number to each individual, so find out what this number is to you. Once you have a number you should compare it to your income and see how much you are missing, and than look for ways to increase your income so you could achieve your set target. But financial freedom isn’t about overworking and so on, so make sure you still have that work life balance because your mental health matters.
Create a financial plan
In some cases you might not even need to increase your income to have a comfortable life, but decrease your expenditures. You could create a budget to do this, which will not only help you decrease your expenditures but also increase your savings. Having a financial plan is always a great thing to have especially if you monitor the plan, because it helps you achieve your financial goals faster.
Invest
Investing is generally risky but it can help you increase your wealth greatly especially over the long term. This is due to compound interest where your interest earns interest. For example, if you invest £100 and add £100 each month to the initial £100 over 25 years, earning 10% interest annually, you’ll end up with over £100 000 at the end of the 25 year period. However, you can reap greater results if you invest more money and invest in better companies, however for greater results you might want to invest in yourself first and buy a book or take a course to improve your skills and build knowledge.
To learn more about achieving financial freedom, read my other blogs such as, budgeting, personal finance basics or passive income ideas.
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