There’s no denying that all of us are after financial freedom. Who doesn’t want to reach the point where you can do whatever you want without having to worry about money?
The journey to financial freedom may be a difficult one, but its path is open to everyone, whether you’re drowning in student debt or dealing with a bad credit score. As long as you know how to plan and control your expenses, this is attainable!
Today, we’ll cover everything you have to know about financial freedom and the steps you can take to earn it.
1. Define what financial freedom means to you
The first step towards financial freedom is being able to define it on your own terms.
For most people, it means being able to settle monthly dues with enough money left for savings and leisure. Others define it as having the option to retire early and pursue other passions you didn’t have time for in the past.
At the end of the day, the meaning of financial freedom is different for everyone. It doesn’t matter how you chose to define it, but it’s important to have a clear picture of what it looks like.
The path to financial freedom will slowly reveal itself when you know what it means to you instead of just following another person’s definition of it.
2. Put numbers to your dream
After defining what financial freedom is, it’s time to estimate how much it’d cost to live the lifestyle you envision.
First, you might want to take a look at your recent expenses to know if you’ve been spending your money the right way.
From this, you’ll get an understanding of whether your current salary and spending habits align with your idea of financial freedom. Is what you’re earning now enough to support yourself adequately at the moment? How about the lifestyle you’re dreaming of?
Chances are, it’s not, because you have to consider healthcare costs too, along with other expenses along the way. So what are you going to do to make that lifestyle possible?
By having a specific goal in mind, you become more motivated to work on your dreams, no matter how far off they seem right now.
3. Understand where you’re at
As with any goal setting, before you can start working towards financial freedom, you have to know your current financial situation.
Compile a list of your current debts and include things such as your student loans, mortgage, credit cards, and any other bills you may have accumulated over the years.
Now take note of how much savings you currently have. This can include the amount you have in your savings account, stocks and investments you’ve made, retirement plans you’ve purchased amongst others.
Do you have enough savings once your debts are factored in? It’s normal for your savings to be overpowered by debt, especially as a young adult, so don’t freak out. Trust us, there are people in worse situations who have managed to pull themselves out of their financial woes.
If you want a more in-depth guide on how to settle your debt, try to check out our separate article on how to reduce your debt!
4. Track your spending
Tracking your spending is a financial tip that always works. It allows you to know where your money goes and whether you’re spending it the right way.
You can keep yourself accountable when you make it a habit to track your expenses, especially if you tend to be an impulse buyer. It also helps in changing habits that don’t help towards achieving your financial goals.
Using budgeting apps such as Wally, Seedly or Zenmoney may also help you get a better overview of your spending habits.
5. Pay yourself first
How you’re splitting your monthly salary can also affect how fast you’ll reach financial freedom.
Our suggestion is to pay yourself first - but what does this mean?
Most people settle their monthly bills first before setting aside a portion of their income for savings, but we believe it’s smarter to do things the other way around. You may end up with almost nothing if putting aside money for your savings comes last on the list when it should be your priority to make them grow every month.
By paying yourself first, you’ll be more aware of how much you’re spending and whether you’re spending the smart way.
6. Reduce your expenses
The path to financial freedom comes with sacrifices, including reducing your expenses and changing your perspective on spending.
It’s hard to get rid of unhealthy spending habits when you’re already old, so there’s no better time to change your mindset than now.
It’s tempting to get your hands on the newest iPhone model, but always remember that every unnecessary purchase sets you back from achieving your desired financial freedom.
By spending less on unimportant things, you’re not only saving more money, but you’re also creating a healthy spending habit, bringing you closer to reaching your dreams.
It also benefits you in two ways: you’ll have more money to invest into your financial goals and you’ll learn that you actually don’t need a lot to live a normal life.
7. Spend on experiences, not material things
In sum, the best budgeting tips for fresh graduates we could give is to know your priorities and stick to them as early as now.
You'll find that every financial decision you make today will have a long-lasting impact on your future lifestyle.
While we’ve outlined great tips for you, it always helps to get a professional voice. If you want to learn more about financial planning as a young adult, don’t be afraid to reach out to us! We’ll connect you to experienced financial advisors who can guide you in your financial journey as well.
8. Look for other sources of income
Having more than one source of income means you’ll be able to settle your debt easier and set aside more for savings every month.
Luckily, in this day and age, landing a second job has become relatively easier due to the demand for digital workers like virtual assistants and freelance writers and editors.
When you have more than one stream of income, you’ll reach financial freedom faster!
9. Consult a financial advisor
No better person who can help you reach your financial goals than a financial advisor. They are professionals in the field for a reason.
The main job of a financial advisor is to give you the best advice on how to achieve your financial goals, whether through the help of insurance products or investments.
Their advice is also likely not driven by being emotionally invested in your life but rather from a neutral and objective point of view.
A final word on financial freedom
There’s no shortcut to financial freedom, but being determined and disciplined can make your journey a lot easier! Every bit of help counts too, so don’t hesitate to talk to friends and professionals.
If you want to talk to an expert in financial planning, or simply want advice on how to properly save money, don’t be afraid to reach out to us. We can connect you with experienced financial advisors who can help you reach your goals!