What is Financial Freedom? How to Achieve That?

By Samyati Mohanty

Everyone has their own personal definition of women financial freedom. For the majority of people, this is having enough money (in the form of savings, investments, and cash) to support a particular standard of living in addition to a retirement fund or the freedom to choose any line of work without regard to compensation. So here are few tip to keep in mind.

1. Determine your number 

What does monetary independence  mean to you and your family? Thinking about your number, or the amount of money needed to help you become financially free, is one of the most crucial steps to financial independence. There is no universal magic number. You may earn a particular sum of money that would allow you to live comfortably and follow your passions. How much does that cost?

Consider your regular living expenses, a safety net for unforeseen costs, and an adequate excess to prevent financial stress. In spite of the fact that it could appear big, jot down a number that makes sense to you. Do some analysis now. How much money do you now make? What modifications do you need to make?

2. Addressing limiting beliefs about money is step two.

Even people with a lot of money in the bank can experience financial worry. You must deal with money fear and the restrictive thoughts that underlie it if you want to live the life of your dreams. Do you think that because no one in your family has ever enjoyed financial freedom plan, you will never be wealthy? Do you believe you lack the skills or intelligence necessary to earn the money necessary to achieve financial freedom? Explore the  tips for financial freedom. Once you've discovered these ideas, you may swap them out for empowering ones like "I am a maker of abundance" or "I deserve to live in financial independence."

3. Gain control over your finances

Your previous financial issues  won't go away just because you believe you are deserving of earning the money you deserve. Take a good, honest look at your money in this phase to identify any mistakes that need to be fixed. Are you heavily indebted but unsecured? Credit card balances with hefty interest rates? Are any of your accounts now being collected?

If you owe someone money, especially if it has a high interest rate, a significant portion of your monthly income will be going to that person. If you receive a bonus or a pay increase, pay down your debt right away. Pay off your smallest debt using the snowball approach, then use the funds you would have used to settle it to begin paying down the next. You'll have more money each month and more peace of mind once you've eliminated your debt and created a budget.

4. Formulate a short-term plan for heaving sales

Financial freedom won't come to you overnight, so as you implement your strategy, you should have a reserve set aside to cover any pricey shocks that may arise. You'll have more money to budget each month and put toward savings once you've paid off your debt. When you have a six-month emergency fund in place that can cover any eventuality, such as a sudden loss of income or significant medical expenses, you can use the additional funds to feed your money-making machine.

It is practical and essential for your mental health to have this emergency money. When you have financial security, you can take more chances at work and say yes to things that will truly make you happy without having to worry or feel guilty about it.

5. Creating a plan for financial independence

Now is the moment to figure out how to achieve financial freedom. Start by building a machine that makes money. This can be accomplished by utilising the strength of compound interest. Create three fictitious containers for your money: security, risk/growth, and dreams. All of the money for your bills goes into your security fund; you require this cash to maintain your standard of living. Then, your risk/growth category would include equities and bonds with a high yield.

Your ultimate goal bucket is money that you can use for enjoyment. This is where bonuses and winnings are deposited. Working with a fiduciary who can advise them of investment possibilities and assist them in creating the best plan for their particular circumstances is helpful to many people who are trying to reach financial independence.

6. Assess, evaluate and change

As you progress through the preceding steps to financial freedom, pay attention and make adjustments as necessary. Keep an eye out for warning signs in your portfolio that could be impacting your returns. When you or your partner gets a promotion or accepts a new job with a pay increase, add extra money to your buckets. Keep an eye on the market and diversify your holdings as necessary.

If you're dealing with a fiduciary, assess how things are going and ensure that they are prioritising your interests and that you are at ease with them. You are not required to continue working with your broker if they are a bully or if you don't believe their recommendations. Your eyes may be opened to new possibilities by a new financial counsellor, or you may discover that you are now financially literate enough to manage investing on your own.

Keep in mind that the answer to the question "What is financial freedom?" will vary depending on your personal goals, values, and level of living. You can achieve your financial goals by understanding what financial independence means to you. You can eventually become financially independent by aggressively managing your money and taking advantage of interest. Financial freedom is about having the flexibility to make the most of your life without depending on a job or paycheck. It has nothing to do with wealth, women's earning power, or prestige.

You can achieve financial freedom, but you must start making plans for it right away.