What Is Financial Freedom

 

What Is Financial Freedom?

 

The key to financial freedom is very simple: convert your regular earned income into passive income or portfolio income. With this in mind, it is very easy to achieve the goals you desire without giving up on things that you hold close to your heart. This is from Robert Kiyosaki.

How does it feel to have financial freedom?

True financial freedom is the feeling of not having to worry about money. You have the right to live a stress-free life because you have financial freedom. You know exactly how much you can spend and are free to do whatever you want (within your budget) whenever you want without fear of financial repercussions.

Financial Freedom: What It Is And How To Get It

Financial freedom!!.

It sounds appealing.

But what exactly is it?

Is it liberation to buy new shoes on the spur of the moment?

Why not treat yourself to some new strawberries?

Do you want to buy Super Bowl tickets? Is it possible to never function again? 

Freedom from ever having to worry about money?

True financial freedom is the feeling of not having to worry about money.

You have the right to live a stress-free life because you have financial freedom. If a problem arises, you don't even blink because you know you'll be able to pay for the repair. Nothing has an impact on your finances. You know exactly how much money you have, and you are free to do whatever you want (within your budget), whenever you want, and with whomever you want without blinking an eyelid about the cost

Levels of Financial Freedom

We just want to be debt-free when we retire. We want to spend our retirement years relaxing and enjoying the fruits of our labor. This dream can seem unattainable to others.

But, exactly, what does financial freedom entail?

It can be broken down into three levels:

Level 1: No financial Freedom:

You're totally reliant on your paycheck to cover expenses and pay off debts at this stage.

 Saving money is difficult at this point because you need every penny you earn. You will stay in this stage until you earn more money. To get out, you'll need to put in a lot of effort and time.

Level 2: Temporary financial freedom:

This stage necessitates a savings account. To stay in this stage, you must make more money than you spend.

This isn't just about pay raises and bonuses.

You may be able to find another job.

You may also start your own company or work as a side hustle.

Adding another source of income increases your savings.

More money saved equals more freedom. You can change jobs, further your education, or even fly with this freedom. These liberties, however, are only temporary.

This is due to the fact that you are purchasing these with your savings.

This temporary freedom only lasts as long as your salary lasts.

Level 3: Permanent financial freedom:

At this stage, you have a solid written financial plan in place, with your non-employment income well outnumbering your expenses.

This non-employment income could come from a hobby or a side business.

You're probably interested in starting a side business or starting a blog. You're happy with what you're doing. This sense of satisfaction reduces the desire to overspend on non-essential items.

Financial freedom and personal satisfaction go hand in hand.

Related post:     What Is Financial Independence?

14 Ways To Achieve Financial Freedom

For those who can afford it, financial freedom sounds like a brilliant idea.

However, being able to afford it has little to do with your income and more to do with how well you prepare ahead.

Financial freedom in retirement can be achieved in a variety of ways.

Perhaps you'll go back to your old job. There are a lot of them.

Alternatively, you could downsize and save money.

Another common method is to use a calculator.

Perhaps you'll combine tactics to come up with a strategy that's completely new to you.

Regardless of how you go about it, the main thing is to think about it now rather than later when you are confronted with the realities.

Here are 14 strategies for retiring with confidence.:

1. Make a compromise and concentrate on what matters to you.

Financial freedom sounds so appealing. You could picture a well-heeled couple sipping champagne on a yacht, but freedom is a relative concept.

Since she is debt-free and owns her home outright, a retired woman in West Virginia will be able to live comfortably on Social Security as her primary source of income.

A retired couple in South Florida could enjoy financial freedom after selling their McMansion and purchasing a beach house with friends.

For some people, a million-dollar portfolio is out of reach. However, if your funds are sufficient to cover your needs, it might not be necessary.

Todd Tresidder, the founder of Financial Mentor, states in an interview with NewRetirement.com that your ideals will be expressed in your spending.

Finding out what those ideals are will help you get on the path to financial freedom.

2.      Get Rid of Debt More Quickly

For many people, the term "debt" is unsettling. There are, however, better and quicker ways to get rid of it than just spending a little more than the standard.

Consider the many forms of debt you have. There's high-priced debt and low-priced debt. The interest rate is the difference.

Although some financial experts recommend starting with the smallest balance and working your way up to the largest. If you're disciplined and concentrated, you'll want to start with the debt with the highest interest rate and the highest cost.

If you have a mortgage, it is a relatively low-cost loan. Even if the interest rate is higher than normal, it is almost certainly lower than the interest on your credit cards.

Credit cards are unsecured debts with higher interest rates, which are typically in the mid-teens and higher. Despite the fact that the loan amounts are less than your mortgage, the interest rates make them costly.

The debt blaster tool is known by a variety of names. The technique is known as the "Snowball" method by Dave Ramsey, but the process is the same.

You pay the bare minimum on all of your high-interest debts except the one with the smallest balance. You put in a lot of effort to pay it off.

As soon as it’s paid off, add the amount you were paying on it to the minimum payment of the next debt in line, continuing this cycle until all of the expensive debt is gone.

Whether you target your most expensive debt or the smallest balance, as you start paying off debt you’ll feel a sense of freedom. And that freedom will build with each debt that you blast.

Paying off debt and moving toward your debt-freedom target date will become a driving goal. And you’ll be amazed at how much extra money you’ll find to throw at your debts.

3.      Put off your retirement date as long as possible.

Even with the best preparation, certain debts may persist, and retirement savings and expected income may fall short of expectations. It's a good thing that your retirement date isn't set in stone.

The majority of people have the option of choosing when they want to retire.

That means you can put off taking Social Security for a while, pay off debt, and earn more in the long run.

Social Security allows you to retire at a variety of ages, but the benefits you will get vary.

Early retirement, according to the National Academy of Social Insurance, starts at age 62, but comes with a hefty, lifelong penalty.

If you retire at the age of 62, your benefits will be reduced to 70% of what you would have earned if you had waited until full retirement age. You'll get 86.7 percent if you retire at 65.

In 2018, the maximum retirement age was raised to 66 years and four months, an increase of one year. It is the age at which you will begin receiving maximum benefits and continue to receive them for the rest of your life, with inflation increases.

However, if you wait any longer, you will be eligible for full benefits as well as a lifetime bonus. If you wait until you're 70, the sum increases by a whopping 32 percent.

Your permanent benefits sum increases by 8% for each year you wait to receive benefits after reaching full retirement age.

This rise continues until you turn 70 years old. There's no need to wait until after you're 70 to start earning benefits because that's when the incentive ends.

4.      Keep track of your finances.

Budgeting is an integral aspect of financial planning. Tracking your expenses is an important part of budgeting. It's eye-opening to see what you spend the most money on.

You may discover that you're overspending in some places.

You have the choice of allocating your funds in a more practical manner. The extra money could be put into retirement savings.

Writing a cash balance report is an easy way to keep track of your expenses. You may also make use of budgeting software. The majority of applications are open. A monthly spending report may be available via your banking app.

The following are some budgeting apps:

Mint – Turbotax was created by Intuit, the same company that created Turbotax. You can monitor your spending by linking your credit card and debit card reports.

Simple – As the name implies, it's simple to use. The app connects your bank account to your budget, allowing you to have full control of your expenses.

Mvelopes – In technology, it uses the conventional envelope budgeting method. To use their system, you must connect your bank account.

GoodBudget – is another online budgeting tool that does not require you to connect your bank account. You can enter expenses manually or import a.csv file from your bank.

America’s Cheapest Family Budget – This is for those who want to keep track of their money on paper. Budgeted funds are stored in a bank account on a monthly basis, while expenditures are recorded on individual budget category sheets.

Whatever budgeting system you use, the most important thing is to stick to it. You'll see amazing results if you set up one of these programs and use it to track your expenses for six months.

5.      Increase the number of sources of income.

It's difficult to find additional financial capital. Starting a side hustle is one way to increase your income. Consider it a second career.

This position may be part-time, freelance, contract, or even a full-time position.

Choose something you're already passionate about. There's a good chance you can make money off it.

Do you know how to make jewelry? Etsy is a great place to sell your handmade products.

Do you want to write? Make a living as a freelance writer for businesses and websites.

Designing and creating websites will earn you money if you're tech-savvy.

Is there a spare room or two in your house? Consider signing up to be an AirBnB host.

Do you like to drive? Become an Uber driver.

Do you love shopping for groceries? Become an Instacart shopper.

Do you enjoy instructing kids? Become a tutor for VIPKids or VarsityTutors.

Your imagination is the only limit to earning extra money.

Take a look at some other passive income ideas...

6.      Assemble a group of people to support you.

Here's a thought:

Have you ever considered joining a commune?

It's not as insane as it sounds, particularly when you remember how The Golden Girls lived on television.

Communal living can be very cost effective, and it can also make retirement years safer and less lonely for certain people.

Based in the United Kingdom According to Moneywise, collective living can be what it's hyped up to be.

You and a few friends or family members might sell your respective homes as retirement approaches, or even later in retirement years, and pool your money to buy one larger home free and simple for all of you.

The advantages are numerous.

There will be no mortgage, or just a tiny one.

You'd never be isolated, because someone might call for you if you needed assistance.

You'd even have your own retreat with master suites for every property owner. Privacy does not have to be compromised.

The deed on such a property is a little complicated, but your lawyer will handle it using Tenancy in Common.

Unlike Joint Tenancy, where shares must be equal, each individual or couple may own a different share in the land, according to NOLO.

This is critical because some people in the pool will have a lot more to offer, and others may have a lot less.

Tenancy in Common also provides for separate arrangements to be made in the event that any of the property's owners has a life change.

Related Post:   How Does One Become Financially Independent?

7.      Work as a Property Manager

Consider being a caretaker for a larger estate if you're handy and want to live in a different city or exotic place.

Opportunities can be found all over the world. You live rent-free in most cases when doing or arranging maintenance and repair duties. Other jobs pay in addition to providing room and board.

More than 10,000 people act as land caretakers for camps, parks, nature preserves, and private individuals.

Caretaker.org is a website that lists volunteer opportunities in the United States and around the world.

8.      Save rather than consume

Consumption is a way of life that can drain your bank account. There's nothing wrong with wishing to live a luxurious life. Todd Tresidder, on the other hand, points out that splurging on luxury items would not help you achieve financial freedom.

Take some time to think about what you've bought. Will this commodity be of use to you in the future, or will it be easily depleted? Will the product make a difference in your life? Will the transaction, more specifically, contribute to your financial freedom?

You can avoid overspending by asking yourself these questions.

You should put the money you don't spend into investments. Rather than wasting money on non-essential products, invest it in something profitable. For example, for retirement, you might “purchase” a Roth IRA.

Roth IRAs are retirement plans that are funded by after-tax dollars. There are no tax breaks available right away. Roth IRAs, on the other hand, are tax-free. You own every penny you put into an IRA. You are free to withdraw funds at any time.

9.      Consider Long-Term Medical Care

Health care may not be the first thing that comes to mind when thinking about a financially secure retirement, but that would change in a moment if you needed care that you couldn't afford.

A third of Americans are unaware that if you need long-term or skilled nursing services in retirement, Medicare will not cover it until you are practically homeless, according to Yale University's Institution for Social and Policy Studies.

Since people are living longer, you or your partner will need long-term care at some point.

Nursing homes and similar facilities will cost upwards of $90,000 a year, so your retirement savings will easily deplete. If your partner continued to live in your house, Medicare will not be able to use the property to help pay for your treatment.

However, if your spouse died, the house would be given to the state. Not only that, when your financial resources dwindled to the point where Medicare kicks in, your spouse's quality of life will be far from what you had expected.

The solutions aren't ideal, but being mindful of the issue allows you to plan ahead. If your salary allows, you may be able to save enough money to cover the expense of skilled nursing in the future.

If it doesn't, you might want to consider purchasing long-term care policies. According to Yale, these items are costly, but they are much better than not buying one and not having the personal capital to cover treatment.

Look for unique ways to cover a long-term care need.

10.      Seek out mentors.

When you have someone to help you, achieving financial freedom becomes a lot easier. If you do not want someone to hold your hand at all times, having a mentor will assist you in making sense of everything. A mentor may be a family member, an acquaintance, or a coworker.

They should be someone who can keep you to your strategy and plans. They do not hope to be compensated for their efforts. After all, you could pay for professional advice from a financial advisor. Find a strong mentor if you simply want someone to lead you.

It's also not necessary for your mentor to be physically present. You may appreciate the work of a particular financial advisor. Keep an eye on their blogs and social media pages. Keep up to date with their tips and tools. Find influencers and blogs that are similar to yours. Pay attention to who they are following.

11. Make sure you're up to date with what's going on in the world.

Every day, new financial and retirement patterns emerge. 

According to Todd Tresidder, retirement has improved in recent years due to changes in average life expectancy.

Years ago, retiring at 65 meant putting money aside for at least ten years. 

With the increase in life expectancy, we must now intend to save money for years and years after retirement.

Keeping up with new laws, developments, and tools will help you achieve financial freedom. 

Keep up with well-known financial sites. If you have a financial planner, keep in contact with him or her.

Every year, there are a slew of new finance books published. Keep up to date with these and read them thoroughly.

The following are several well-known blogs that will assist you in achieving financial freedom:

Mr. Money Moustache

Good Financial Cents

Financial Choices Matter

 

Podcasts should be listened to. When you don't have time to read, podcasts are a perfect way to learn new things. They're a fantastic multi-tasking device.

12. Make a retirement plan Early and frequent retirement planning

Financial freedom for retirement would not occur on its own.

You'll need to devise a retirement strategy and tweak it as the circumstances change.

How much money do you need in retirement?

When would you be able to retire?

How much money do you have to spend each year?

How much money would you make?

Are you going to run out of money?

All of these questions need answers.

However, when the economy, your investments, and even your health change from year to year, the responses will change slightly.

Planning for retirement isn't something you do once and then forget about.

One way to sort it all out is to work with a financial planner. Financial consultants, however, can be costly, as Todd Tresidder points out.

A retirement calculator is an alternative to this.

One of the most detailed and efficient retirement planning resources available is the NewRetirement retirement planner.

The device was called a best retirement calculator by the American Association of Individual Investors (AAII) and CanIRetireYet, and Forbes Magazine calls it "a modern approach to retirement planning."

Begin by entering your current plans, then experiment with various scenarios to improve your future finances. Best of all, the web stores your data so you can make changes and keep track of your strategy over time.

13. Do you like the concept of financial independence? Switch it to “FiRE” mode.

FiRE (“Financial Independence / Retiring Early”) is a recent financial freedom movement. Many who follow this path are more concerned with seeking meaning and satisfaction of their lives.

They don't just concentrate on money; they also emphasize mindfulness.

It's all about starting to prepare for your future as soon as possible.

It's an unusual way of life that necessitates extreme frugality and a great deal of saving.

Those who stick to it are already well on their way to a comfortable retirement.

They are steadfast in their convictions, which we should all benefit from. 

The FiRE lifestyle encourages money efficiency in a variety of ways, not just spending.

This way of life has proven to be effective for many people.

It is, however, a lifestyle that might not be suitable for everyone.

FiRE is most effective for people in straightforward circumstances. This involves young people who don't have a lot of debt or spending to begin with. Those who choose to live in "Tiny Houses" or smaller spaces. Not only do they spend less, but they also have a lower carbon footprint.

People who have a lot of debt may find this lifestyle difficult to maintain.

14.      Take Control of Your Financial Situation

The beauty of Financial freedom is that your plan can be as individual as you are. It doesn't have to look the same as anyone else's.

What matters is that you plan ahead. You can't prepare for any eventuality. 

However, you should think about a number of common issues that are likely to arise, choose the lifestyle you want to have in the future, and devise a solution that works.

Some retirement planning measures, such as debt repayment, are self-evident. Others, such as how much money you'll need, can be more harmless.

However, if you're unsure how much money you'll need in retirement, NewRetirement will assist you.

You'll get a good picture of where you are now, discover how much money you'll need later, and find investment strategies that work with this award-winning retirement planning calculator.

Financial freedom is not a final destination, but it is a great aim to strive for and an incredible path to take.

To You, What Does Financial freedom Mean?

Each of us has different objectives in life. When it comes to financial freedom, we all have different goals.

Whatever it is that you want to do, dream big and go for it. Make your objectives clear and measurable.

Your financial freedom objectives may include the following:

Choosing a job that you enjoy without having to think about money

Traveling for a year or more without having to worry about money

Purchase a new sports car with cash.

Early retirement

Make a big donation to a charity or a hospital.

Live a debt-free life

Owning a timeshare in a tropical area is a dream come true.

Never, ever work again.

Using an online retirement planning calculator to document your financial plans will assist you in setting and achieving these objectives. will assist you in setting and achieving these objectives.

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