Enjoying financial independence may be the biggest dream of most people, but do you know what it takes to conquer this autonomy? In today's post, we are going to introduce you to 7 fundamental practices to achieve this goal.
Many imagine that having financial independence means having a stable, well-paid job or simply being able to cope with daily expenses.
Of course, performing a function that allows you to receive sufficient monthly remuneration to avoid possible difficulties and to meet your expenses is very important.
However, it must be recognized that this does not correspond to the desired financial independence so desired.
Is financial independence possible?
The main thing indeed is to preserve a certain level and an acceptable quality of life with the money, without the need to abandon certain dreams and projects, due to not being able to support them financially.
Enjoying financial freedom is much more than charging thousands of dollars (besides, the more we earn, the more our lifestyle changes and, therefore, expenses will probably also increase).
It should be understood that regardless of how much you earn now, to achieve independence, there are a whole series of practices that you need to master and our today's post will address exactly that.
What are the 7 Steps to Financial Freedom?
Do you want to find out what are the 7 practices to enjoy financial independence?
- Control your expenses
- Use spreadsheets
- Pay attention to credit cards
- Looking to grow professionally
- Think about additional profitable activities
- Set acceptable goals
- Learn how to place your money
Read this post to the end and you will learn what is fundamental to achieving this much-desired status.
1. Control your expenses
As we said at the beginning of this post, enjoying financial independence comprises maintaining a good quality of life with your income. For this reason, already, the first practice to adopt is to harmonize your expenses and your income.
How do you get financial independence?
When we think about a check, there is a tendency to imagine that we will have to stop spending on what seems to be superfluous or that only serves our pleasure. But that's not what we mean.
We all deserve to spend part of what we earn on what we enjoy, whether it's eating in a different restaurant, buying new shoes, practicing a hobby, or traveling. However, for spending, remember your income.
The calculation is always the same, regardless of your income. You can never spend more than your income. It makes sense, doesn't it? But this can be more difficult than one might imagine.
Most of the time, we do: let's say you earn $2,000.00 per month. When we think about using this money for personal affairs, we consider having the overall amount and, as a result, we end up spending more than the correct amount.
In reality, before deciding how much you have to invest in something unnecessary, you need to analyze your overriding expenses.
First, think about the taxes that will reduce the amount of USD 2,000.00, such as income tax, dues, union contribution, etc.
After these levies, set aside the amount you need every month for rent or mortgage, electricity bills, water, food, and many expenses related to the maintenance of the home.
It is precisely the remaining amount, after paying all the essential expenses, that you should control most strictly.
Before going shopping, set aside a little to have savings or to make investments (we will talk more about this) and set a percentage to please yourself.
Perhaps you cannot travel in 3 months, as you planned, but, if you control your savings well, the trip can take place in 8 months or a little more.
2. Use spreadsheets
Spreadsheets are great for actually seeing what we've spent. And to enjoy financial independence, it is very important to know how much you receive and how much you spend.
As for the first practice, it was about learning how to control your expenses.
Tip number 2 is a complement to the first. When you fill out spreadsheets to organize your accounts, daily, weekly, or monthly, it allows you to have more control over your financial evolution.
Create a table with all the amounts that you spend throughout the month, even if it is just a simple candy. When you can document all the money spent, it's easier to create strategies that can help you save more.
If you are not sure how much you spend every month, it is likely that you are financial freedom out of control and cannot lose your expenses. For this reason, make a good note of your entire cash flow, even if it's just personal expenses.
3. Pay attention to credit cards
A big recurring mistake is to think that the credit card limit is equivalent to the amount that can be spent every month. But this is not true. When you buy on credit, it means that you do not have this money and that you would have to pay it the next month.
A small example:
Imagine that your net monthly gain (after all, direct debits) is 2,500.00 USD.
You already know what it will be necessary to spend this money on and cope with all the essential expenses every month. However, you will not have much left for your expenses and, what is left, you place or save.
You have a credit card with a limit of 1,000.00 USD. Since you no longer have anything to spend from your monthly income, you then decide to use the credit card and imagine that it is possible to use its entire limit.
The big problem lies exactly there. Some control expenses by always having in mind what they get per month, but for credit cards, they end up losing control and spending funds they don't have.
And the more you use the credit card, the more debts accumulate. And not to mention the bank interest, very high, which will increase your debt even more.
So don't purchase with a credit card on impulse. If you need it, accurately assess whether you will have money to pay next month's credit card bill, without having to dip into your savings.
4. Looking to grow professionally
After each successful professional step, we receive a reward and when it is salary; it is even better. So always try to grow professionally to increase your income.
Prioritize your training: take courses that will help you in the exercise of your function (a good opportunity for those who do not have time to attend face-to-face courses is online training), and take part in events in your sector, and seminars in your niche.
Don't be afraid of promotions or changing positions. It's always good to take on challenges and it can be an extra step on the way to your financial freedom.
But be careful, changing jobs only by salary is undesirable, because you may end up having to do unpleasant things, which are not stimulating at all. (If it discouraged you, we have a text that shows the 9 ways to motivate yourself in case of discouragement).
5. Think about additional profitable activities
Do you have a talent for playing an instrument, making crafts, decorating spaces, or any other activity different from what you do daily? What if you were thinking of an additional profitable activity?
Of course, this cannot be an extra weight in your routine. For this reason, you need to find something that you have already mastered and that will not represent an embarrassment.
But if you reconcile an additional activity on weekends with your daily tasks, you will have another source of income at the end of the month.
Since you already do everything you need with your monthly fixed income, use this extra money to invest or save to enjoy your financial independence in the future (because, if you haven't won the lottery, this independence is unlikely overnight).
6. Set acceptable goals
It's great to set specific targets to achieve our goals. For financial independence, this is also important.
Think about what you want to achieve economically speaking, in the short, medium, and long term, but remember to set goals that can be achieved.
So you can save by focusing and, at the right time, invest your money in what you have planned. There will be no big surprises. You are already ready to spend what you need.
But, a very important factor: never lose sight of your goals. Just because you have finally been able to travel does not mean that you are allowed to stop saving. As soon as you have achieved one goal, create others.
This way, you will always have the motivation to keep yourself financially stabilized and controlled, which will help you have financial independence.
7. Learn how to place your money
The last practice you need to put in place to have your financial independence is to learn how to invest your savings.
It is not very easy to make financial freedom, but you need to define how the money you save will pay for itself. Maybe you prefer to leave your money in a savings bank.
But there are problems when we use the money saved too often.
We don't want to say here how you should invest your savings, but if you are interested in this, look for experts who will help you profitably invest your money for you. Always think like an entrepreneur and look for new opportunities that allow you to evolve.
How much money do you need to be financially independent?
It's time to enjoy your financial independence. As you have seen, it is possible to enjoy financial independence and, with the help of these 7 practices presented, you will be ready to realize this dream.
Do not be mistaken in imagining that your independence will come overnight.
We have already said that for this to happen; you need to be very focused on your goals, know how to spend carefully, and learn to control all the amounts that are added and withdrawn from your account.
And remember, because it is fundamental: your income must be always more important than your expenses.
Would you have any kind of practice to achieve financial independence? Share it with us in the comments!