10-Step Guide to Financial Freedom

7 mins read Finance
10-Step Guide to Financial Freedom

Financial Freedom!! What is Financial Freedom? Have you heard this word before? Have you read any Financial Freedom book? Is your whole life focused only on earning money? Do you think that at some point, you will be able to reach a level where you will not worry about money?

You have to get the answer to all these things today. So here we will read about 10 such steps, by following which, you can achieve financial freedom, meaning you can earn a lot of money. This 10-Step Guide to Financial Freedom. This process is taken from the book Financial Freedom, written by Grant Sabatier.

Step 1. Understand Where You’re At

If you don’t know where you are today, you cannot achieve financial freedom. Seeing how much debt you have, how much savings you don’t have, and how much money you need to get out of can be pretty depressing. But to grow in the right direction, these are precious steps.

First, make a list of all your debts: mortgages, student loans, car loans, credit cards, and any other debt that you owe. And also do not forget the money you have taken from your friends and family members.

Now take a deep breath, take another deep breath. Now add up all those numbers. How much total debt do you have? If the number is big enough, don’t panic. We will share with you some such ways by which you will be able to pay all that loan. If it’s a small number, congratulations to you!

Now take a look at all the money you have saved. Make a List of Saree Savings: Compile a list of all your savings: savings accounts, stocks, company stock-matching programs, company retirement-matching programs, and retirement plans.

After this, we will add Recurring Monthly Payments, which you get from salary, side hustle money, and other things. Keep this number in mind, as we will do them easily using Financial Freedom Tips.

Step 2. Look at Money Positively

Debt can be a little bit discouraging. But remember that money is a good thing, even if it seems to carry a lot of burdens right now. You deserve to achieve financial freedom.

According to You Are a Badass at Making Money by Jen Sincero, people who don’t make a lot of money often feel shame when it comes to making money. And so the most significant obstacle many people experience when making money is that they feel like having money is evil. Many feel guilty for having it and guiltier for wanting it.

Money is simply a necessity like food or water. It helps you buy the things you need and live the life you want. So to experience financial freedom, you will need to look at money as a tool to help you achieve your dreams, fuel your energy, and live a stress-free life you can enjoy. Because if you view money negatively, you’ll subconsciously sabotage your chances of making it and keeping it. 

Step 3. Write Down Your Goals

Why do you need money? Do you want to get rid of debt for good? Are you desperate to escape the 9-to-5 grind? Is there a place you’ve always wanted to travel to? Do you need to save for a wedding, kids, or retirement? When the author achieved financial freedom, it was easy because an emotional goal bound him. He aimed to get out of student loan debt and save for his first home. And honestly, it was a euphoric experience watching the debt dwindle and my savings rise. 

He got so excited by seeing the numbers change that he worked harder to make more money to see a more significant change in his finances. Would they have achieved his goal of financial freedom if he hadn’t tied the goal to something emotional? Probably not. He was desperate to escape debt and move out of his parent’s house. That desperation kept him motivated throughout his journey. That’s why it is essential to know what our ultimate goal is.

And when we write that goal with clarity, this planning becomes even more apparent. Then we can move towards our big goal by talking about that goal in small circles and working on them individually. With this, we will always reach our destination on time or before time.

Step 4. Track Your Spending

An essential step toward financial freedom is tracking your spending. You can also use many online tools to follow this. Or one can also use a diary with only one date. We should know what our daily expenses are, what weekly expenses are, and what monthly expenses are. How much do we spend on the basics of the house, and how much do we spend related to work?

Whatever the category is, the expenses of all those have to be noted. You’re monthly EMIs, loans, all loans, where the money goes out of your hands, and elsewhere, all have to be tracked.

Step 5. Pay Yourself First

You’ve probably heard the expression “pay yourself first” before. But if you haven’t, this means putting a specific amount of money in your savings account before paying anything else, such as bills. And the act of paying yourself first has helped countless people inch closer to achieving financial freedom.

Why? Because if you want to pay yourself $1,000 per pay period first, then whatever’s left over needs to go towards bills. And if you don’t have enough to cover those bills, you’re forced to pick up a side income to cover the costs. Why? By paying yourself first, you guarantee that you’re always putting money aside to invest in yourself. By doing the opposite, you only get whatever is left over, which usually isn’t substantial enough to help you experience financial freedom. 

You can pay yourself first in other ways too. For example, if your company has a retirement savings program, you can ask to have money withdrawn for your retirement. That way, you’re investing in yourself and your future first. Then, the money gets deducted from your pay, so everything left over is money you can put aside for your bills and expenses. 

Step 6. Spend Less

In 1958, Warren Buffett purchased a five-bedroom home for $31,500 and hadn’t moved out of it. His net worth is around an astounding $100 billion. Of course, he can afford a more extensive and expensive home. But his frugality might very well be why he’s one of the world’s wealthiest people. On the other hand, Kanye West isn’t afraid to flaunt his money. He lives in a $20 million mansion. And at one point, with $53 million of debt, he decided to ask Mark Zuckerberg for $1 billion on Twitter. 

The difference between the two super successful gentlemen? Buffet didn’t spend more than he needed to, and West spent money he didn’t have. The truth is that plenty of rich people don’t look like rich people. Zuckerberg wears the same boring t-shirt and jeans every day.

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By spending less, two things work in your favor. You’ll have more money to put aside for your financial freedom. Two, you’ll learn that you need much less stuff to survive, which also helps you put aside more money. 

Step 7. Buy Experiences, Not Things

Life’s short. It’s not about hoarding all your cash until you’re 60-65. You’re allowed to enjoy life while you’re alive. Ultimately, the things that’ll help you live a more fulfilled life will be your experiences, not the products you own. And are the things you buy making you happier over the long term? Does your debt from buying a bunch of stuff make your life easier? 

Now let’s flip the switch. What’s your happiest memory? What were you doing? Who were you with? Let’s create more memories just like that. 

Step 8. Pay Off Debt

Some people will tell you it’s wiser to invest your money in stocks instead of paying off your debt. If you’re an expert stock picker, maybe that’s true. But if you’ve never invested in stocks, you could have more debt. Many people feel the same after finishing their last debt payment: relieved. But, of course, you can’t call yourself financially free if you have $50,000 of debt, even if you have $30,000 cash in the bank. You’re still $20,000 in the hole.

While paying someone else isn’t as glamorous as having money in the bank, it does bring you closer to financial freedom. There are two main methods of paying off debt: snowball and avalanche. Snowball is when you pay off the smallest debt first. Avalanche is when you pay off the debt with the highest interest rate.

Of course, you need to decide what works best for you. But when the author worked towards becoming debt-free, he did the snowball effect. It helped him keep more motivated. Since he was able to get rid of his first debt, a $1,200 credit card bill, in only a month, the feeling of accomplishment helped motivate him to tackle a much bigger, lingering student loan. 

Step 9. Create Additional Sources of Income

Okay, so at this point, you’re probably thinking, “My debt is a lot more than my salary; how can I pay it off if I don’t make enough?” If you’re serious about financial freedom, you’ve got to sacrifice blood, sweat, and tears. Your 9 to 5 might not cut it. If that’s the case, you need to step it up and look for money outside your current job. Some experts recommend having seven streams of income. If you have a 9 to 5 job, congratulations, you have one, only six more to go!

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So we should keep both the options open, active and passive. For active income, you can find a part-time job and a new job where you get more money. For passive income, you can start blogging, become an influencer, sell your courses online, or you can also create audiobooks and podcasts.

Step 10. Invest in Your Future

The last financial freedom tip is an important one. Say you follow the advice and recommendations in this article, get out of debt, and grow your savings. That might be enough to help you out right now. But what if the unexpected happens? Will you be prepared for it? Keeping money for bad days is very important, for retirement or if something happens to you, so your family doesn’t get in trouble.

If you’ve got that 9 to 5 job, talk to your company about adding a retirement plan or check to see if you’re already having deductions made towards it. The deduction gets taken out before it hits your account, so you never feel like losing money. And it’s pretty cool to check it out periodically and see your savings grow. 

So, friends, these are the 10 steps by which you can improve your financial journey. Take all these steps slowly, and make the life of yourself and the people around you better. Apart from these, if some such points have helped you, then definitely share them in the comment box.

Thank you.

Buy original book now: Financial Freedom

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