This is How to Achieve Financial Freedom
Financial freedom usually means having enough money via savings, investments or cash to live the lifestyle you desire. Whatever your vision is, it’s achievable, however you have to take some steps to make those dreams happen.
The importance of financial freedom
Financial freedom is sometimes used interchangeably with financial independence. Financial independence usually has a dollar value assigned to it. For example, “you need two million dollars before you can retire” or “you need to earn a certain amount of income per year to achieve your goals”. Financial freedom actually takes you beyond those numbers and forces you to think about and define the lifestyle that you want to be covered by your path of income. Essentially, financial freedom affords you the ability to live life on your terms.
What does financial freedom mean to you?
Everyone’s definition of financial freedom is a little bit different. Some people may want to work part-time or work a different job, some people don’t want to work at all so that they can raise children, care for loved ones, start a business, or travel the world – you name it!
So, what does financial freedom mean to you? Why do you want financial freedom? What do you wish you could achieve? What would you do with your life if finances didn’t matter? The path to financial freedom can be long and difficult, and knowing your “why” can give you the strength to push through those obstacles.
Create and write down your financial goals
Many of your goals will and should support your desire to be financially free. Make sure your goals are SMART. SMART stands for Specific, Measurable, Attainable, Relevant, and Time-Specific. Click here to learn how to create SMART goals.
Now you should write down all of your financial goals that will help get you to your “why”. If you end up having financial goals that don’t help you on your journey to financial freedom, maybe your “why” is different than you thought!
Know your financial baseline
Know what your net worth is. Know your income, expenses and have a good idea of what you can or are willing to save. Write all of these numbers down on a piece of paper or in an excel sheet so that you can easily update and look at it. Sound like a daunting task? We can help! Schedule your free introductory meeting today to learn more!
Live below your means
This means spending less than you earn. Although this is one of the simpler steps, it can be the most difficult. If you don’t know what you earn and you don’t know what you spend, then you don’t know what you can save.
Take a look at your spending on debit and/or credit cards so that you can see how much you are spending in different areas. Then update your excel sheet (that you created in the previous step) with the amounts you spend in each area (groceries, gas, bills, entertainment, subscription services, etc.) so that you can adjust your spending and savings amounts. Now you have a budget!
Increase your savings rate over time
Whether you increase your income or decrease your spending or do a little bit of both, you want to grow the difference between the amount that’s coming in and the amount that is going out.
You can invest in your career, pick up side hustles, do what is necessary to increase your income, scrutinize your budget and see what you can cut out to reduce your spending.
Establish an emergency fund
If you don’t have funds available for emergencies, you run the risk of dipping into non-emergency funds and de-railing your plan to achieve financial freedom. Hint: A rule of thumb is to have 3-6 months of expenses in an emergency fund. For help determining this amount, refer back to your excel sheet – or the one we’ll help you create!
Open accounts and invest in a way that aligns with your goals
Having all of your money invested in cash is not a good idea. Likewise, if you put all of your money in the stock market, you also run the risk of de-railing your plan if that’s what you’re depending on to fund emergencies or short-term goals.
It is important to have a mixture of both. A financial advisor can help you figure out the exact percentage to save into both cash and the stock market based off your goals, your income, your risk tolerance, and your plan.
This is how ARK manages your wealth.
Pay off high-interest debt
This can include credit cards and many forms of loans such as student loans, auto loans, etc. The higher the interest rate, the more money you are paying your lender. The faster that you pay off your debt, the more money that you can save.
Monitor your credit score over time
Monitoring your credit score provides for a better understanding of your credit position. Your credit score is what lenders look at to see if you are a favorable borrower or not. By regularly checking your credit score, you will start to understand the things you should do to get a better credit score.
Consider creating an estate or legacy plan
Do this to ensure that your legacy lives on in a way that you intend it to.
An attorney can help you set up the necessary documents for an estate or legacy plan. Click here to find an attorney that fits your needs and budget.
Be flexible and don’t get discouraged
Adapt to life as it happens. Sometimes you have to pull back on your saving, and sometimes you have to increase your spending to make ends meet and that’s okay.
Good luck on your quest for financial freedom
As financial planners, we encourage you to invest in the future, but we also remind you to enjoy life as it is today. For help creating a financial plan, reviewing your investments, or determining where to start to attain financial freedom, reach out to us! You can find us at www.ARKFinancialWellness.com or call (314) 353-9924. We wish you the best on your quest for financial freedom.
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Conclusion
Maximizing your money requires discipline and a commitment to your financial goals. Remember, the key to maximizing your money is to be intentional with your spending and to make your money work for you. Keep in mind that achieving your financial goals takes time and effort, but with the right mindset and habits, you can achieve the life you want.
Disclaimer:
This work is powered by Advisor I/O under the Terms of Service and may be a derivative of the original.
The information contained herein is intended to be used for educational purposes only and is not exhaustive. Diversification and/or any strategy that may be discussed does not guarantee against investment losses but are intended to help manage risk and return. If applicable, historical discussions and/or opinions are not predictive of future events. The content is presented in good faith and has been drawn from sources believed to be reliable. The content is not intended to be legal, tax or financial advice. Please consult a legal, tax or financial professional for information specific to your individual situation.
This content not reviewed by FINRA
ARK Financial Wellness, LLC is an independent firm with advisory services offered through Blackridge Asset Management, LLC, a Registered Investment Adviser. Blackridge Asset Management is an SEC Registered Investment Advisory Firm.
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