Who doesn’t dream of one day having the resources to be financially independent? However, very few people manage to do so! The reason is not necessarily a lack of means at the base but often a lack of determination, endurance, and discipline. If this is your case, here are some guidelines and the behavior to adopt to progress on the road to financial freedom.
Financial freedom can be defined in many ways. In this context, we define it as having sufficient savings and resources to live the lifestyle you want. And renew and grow your savings and resources independently of any income from your occupation. In other words, it is to succeed in making your money work for you rather than against you, to be entirely free in how you spend your time and make your life choices. Interest, dividends from your investments, rental income, and royalties; there are many ways to make your money work for you.
How do you generate these financial flows? Are this freedom and personal fulfillment reserved for the wealthy? The answer is no, even though it is evident that these people start with a definite advantage! Regardless of your income level, you can start on your way and gradually approach the goal. It’s all about spending and investing wisely and being aware that this journey requires real effort, discipline, and years, even decades, of patience. There is no miracle recipe to give you, but a few good habits will help you stay the course over time.
- A vision with short and long-term goals
What does financial freedom mean to you? A vague desire to have enough money is not enough. You need to be able to set specific goals, whether they are financial or directly related to your lifestyle. For example, you must be able to answer the following questions: how much money do you have available to lead what lifestyle, for how long, and based on what recurring income sources? Establishing a roadmap without knowing where you want to go is impossible! Once the destination is set, it becomes possible to determine the short-term and long-term intermediate steps.
- Manage your budget like a good father
Financial freedom starts with budgeting. Make a household budget to better understand your current situation and to rationally define your expenses. The first goal is to have your income exceed your expenses. Here, we cannot stress enough the need to manage your spending and debt levels. You must keep your debts under control and limit them as much as possible if you ever want to achieve financial freedom.
Determine the total cost of fixed expenses (rent, water, electricity) and basic needs (food, hygiene,…), which are considered untouchable. By deducting these from your budget, you will obtain the amount available to save, pay off your debts, or treat yourself. Respecting this budget will protect you from temptation and ensure that your bills are paid on time. Financial discipline is the only way to stay on track to achieve your goals.
- Stay in control of your expenses.
Sometimes it doesn’t take much to live well without running out of anything. While staying within your budget is the first step to financial freedom, living below it can help you improve your resources. Especially when your resources are limited. Taking control of your finances by cutting back on spending is an effective way to achieve financial freedom, regardless of your salary. It’s not about living a minimalist lifestyle or doing without. But instead, make minor adjustments by separating the essentials (what you need) from the superfluous (what you want) or buying second-hand, for example. There are countless small ways to save money.
- Adopt a savings culture
There is a golden rule to achieving financial freedom: pay yourself first! Based on the available budget, you first take out a portion intended to build this financial autonomy (via savings, an investment portfolio, etc.). This point does not contradict the previous one; it establishes priorities for the available funds aside from basic needs.
The most important thing is to consistently dedicate a portion of your resources to achieving your vision. Ideally, at least 15-20% of your budget should be devoted to this, if not more. If that’s too much, start with what’s possible for you today. After paying yourself, pay off your debts at the beginning of the month. Also, plan to withdraw a certain amount of money for an emergency fund that will allow you to meet unexpected expenses. As you can see, the road to financial independence leaves little room for incidental expenses.
- Take care of yourself and your belongings.
In many cases, maintenance and upkeep are less expensive than replacement. Taking care of your assets daily ensures that they will last longer. You will therefore avoid unexpected and sometimes expensive investments. This approach also applies to your body. Regular visits to your doctor or dentist and a few changes in your lifestyle (healthier diet or more frequent exercise) will save you from long-term health problems.
- Grow your wealth
If you’ve taken the first steps described above, you’ve got a growing sum of money that you’ll now need to grow. Since savings have been particularly unprofitable for several years, investing in the markets, real estate, or elsewhere is a solution. To find an approach that corresponds to your profile and objectives, it is essential to be accompanied by finance, law, taxation, or real estate professionals.
There are ways to increase your income while waiting for your money to bring in enough. You can rent out some of your assets on different sharing platforms or launch an entrepreneurial venture in addition to your job. Do you have a passion (hobbies, art, etc.)? Turn it into a profitable project and generate income from royalties. Once again, taking advantage of the advice of a professional can help you in your approach and guide you toward the appropriate tools.
- Put your money to work.
An investment that gains value is not enough! Why? To achieve financial freedom, you need to make your investment work for you: rental income, dividends, and interest. So that you can invest this extra income and thus start growing exponentially. Achieving significant growth will take a long time, but you’re almost there once it starts. This is an essential part of your investment strategy.
- Invest in yourself
Learning and educating yourself, acquiring new skills, and gaining experience is key to success. Knowledge and mastery are powerful allies in making good decisions, choosing the right experts to work with, and dealing with the unexpected.