Simple steps to achieve financial freedom in 2024

When we talk about financial freedom, you often think that it’s a lifelong process.

But what if we told you that you could achieve freedom in the next year and with simple steps?

However, it’s essential that you first know what it is:

A person who has this kind of freedom can do what they want with their money, when, how and with whom they want.

Therefore, you can act according to your own wishes, without being tied down by debt.

So, you control the money, not the money controls you.

Another interesting example is that you are not obliged to accept a certain job just to pay the bills at the end of the month.

In other words, you actually act on your decisions, since you have achieved a satisfactory level of stability with regard to your finances.

How much money do I need to have financial freedom?

When we talk about this topic, it’s common for the following thought to pop into your head:

I’ll only achieve freedom when I become a millionaire and no longer need to work.

However, this is not a correct thought.

According to author Robert Kiyosaki:

“Most people don’t realize that what matters in life is not how much money you make, but how much money you keep”.

Therefore, a fundamental factor that guarantees your financial freedom would be the ability to manage your money wisely.

Grant Sabatier, in his book “Financial Freedom – a proven path to all the money you will ever need”, says that:

The value of achieving financial freedom is subjective.

As a result, it changes according to each individual, according to their goals and what they understand as being financially free.

“Only when you know the destination can you discover the best route to get there”, so you must know your number.

How much do YOU need to achieve financial freedom?

To help answer the question, you might think that freedom comes when you’re able to pay off your debts and stop living off your paycheck.

On the other hand, you may think that freedom is having two years’ worth of expenses saved up.

Consequently, you can travel for a while or have enough money to work part-time and spend more time with your children.

In this way, think about and identify what freedom is in for you.

As a result, you’re finally be able to calculate the value and which path to follow to achieve your freedom.

How to achieve financial freedom in 2024

Although the concept of freedom is different for each person, there are some factors that prove it.

For example, a person who has good finances has no debts.

To clarify this fact, let’s think about the following scenario:

Can a high-income person not have financial freedom?

Yes, although it may seem contradictory, it is essential that you understand that wealth does not guarantee financial freedom.

An individual can have a lot of assets, property and money, but if they are trapped in significant financial obligations, substantial debts or engage in risky investments, their freedom is limited.

As a result, poor decision-making, excessive financial commitments, extravagant lifestyles and reckless financial management can jeopardize financial freedom.

That’s why your only goal is not simply to accumulate wealth, but to adopt sensible financial practices in order to achieve and maintain financial freedom.

According to the Federal Reserve, American household debt has reached a record high of 16.9 billions of dollars at the end of 2022.

Other problems of default 

As you can see above, not paying your debts affects your financial freedom.

And remember that every time a contract is signed, rights and obligations arise for both sides.

This establishes a bond of trust that the agreement will be fulfilled.

However, when the client fails to fulfill their obligations, there is a breach of trust, so that they will find it difficult to obtain credit from that bank or others in the future.

Default is also a problem because the bank that made a loss on the contract will try to compensate for the loss by increasing the fees on future contracts, something that affects other customers who need credit.

On the other hand, when consumers pay their debts on time, their relationship with the bank is strengthened.

This gives them access to other credit options, including more advantageous conditions.

Watch your spending to achieve financial freedom

We first decided to talk about debts so that we could now talk about how to avoid them.

It’s simple: if your spending gets out of control, you won’t be able to meet your financial commitments, and you’ll get into even more debt.

Therefore, the first step in taking care of your spending is to identify what is superfluous.

There are expenses that have already become part of our lives and can even be mistaken for necessary.

For example, you don’t need to subscribe to three streaming services and a pay-TV service.

When we talk about financial freedom, it’s essential to keep this in mind:

In isolation, these services may not represent such significant expenses. 

However, together, they can even amount to a large percentage of your monthly income.

You can choose between keeping your pay-TV or streaming service.

Another essential tip is to have a spending ceiling.

Depending on your monthly income and essential fixed expenses, set an amount that will be earmarked for extra spending.

Of course, you can use simple strategies to control your credit card use if you have difficulties.

For example, withdraw cash and use it in kind to avoid unnecessary spending.

Another interesting tip would be to keep track of what you spend with a spreadsheet.

In this way, you keep track of everything that comes in and goes out, so that you understand how your money is being spent.

And in addition to the spreadsheet, have your plan for financial freedom.

We’d like to make it clear that:

In order to achieve financial freedom, you don’t have to stop enjoying all the things you like.

By keeping a close eye on your accounts, you can set priorities and know when the time is right to fulfill your desires.

Emergency reserve 

It seems to be a rule to talk about emergency reserves when we talk about financial tips.

However, it’s interesting to note the following: the repetition is done for the purpose of you applying the tips.

How many times have you heard about the reserve, but you haven’t started structuring your own?

So note that the reserve serves as a financial fund to deal with unexpected expenses and maintain your financial freedom.

For example, there are two types of people:

Those who value the reserve and those who think it’s an irrelevant tip.

In the first scenario, if the individual loses their job, they have the resources to support themselves for at least six months.

On the other hand, the person who doesn’t care about the emergency reserve doesn’t have the money to support themselves even in the first month of unemployment.

Of course, the lack of a job isn’t the only problem.

The emergency reserve is used to deal with unforeseen medical expenses.

Also, car repairs and other events that happen in our lives.

In other words, it’s a way of anticipating possible problems in the future and avoiding debt.

Diversifying sources of income for financial freedom

You may think: it’s not possible to achieve freedom on the salary I currently receive.

If this is the case, think about options for extra income.

If you are a professional specializing in a certain area, you can create courses, tutorials and books to sell online.

The great benefit is that it takes initial effort to prepare the content, but then the income is generated on an ongoing basis.

As a result, as interested parties come forward, you receive more money.

Investment

Investments not only help you achieve financial freedom, but also independence.

As soon as you learn more about how to handle money better, you’ll see that good investments speeds up the achievement of your goals.

As a first step, we recommend that you know your profile.

Then, define a percentage of your income to invest and do so on a regular basis.

Daniel 18 de March de 2024