Financial Freedom is the ability to use your money without stressing out about it. It doesn’t require a million dollars, or a six-figure income. And your freedom shows up in everyday life.
It does not mean that you can spend money as much as you like. Even if you have a ton of money, if you do not know how to spend it wisely and carefully, it will be got away in a short term.
When you gonna have a mindset of financial freedom, these are the practices you can experience:
You may not care about when your bills are due, because the money is already there!
You may not be nervous to check your bank account balance every day and when you need to pay it!
You can buy a cup of latte without thinking about it much!
You wake up every morning without thinking about a huge debt!
You knowing your Net Worth is going up every payday
You don’t need to spend hours a day to check the stock market because your investments are automatic making profit!
Your family is always happy as you do not have any arguments or fighting with your spouse as less of money!
You don’t need to quit your job to stay home with the kids and take care of them all the time!
So, what should you do to obtain the financial freedom?
Change and practice your mindset.
People usually overlook this initial step when starting a new path of financial freedom. They usually thought that financial freedom only happens to families with high incomes or having stable and strong supports from their parents. It’s totally wrong. Even your family has a good financial background; you will throw it away easily without wise mindset.
People need to analyze their definitions about money and examine their relationship with it. How is their point of view with money? Money is a tool to help them live and exist or people lives and works hard because of money. Set your mindset is a critical first step to proceed to any steps later on.
Be aware of your current financial situation
Whether you are a student with a part-time job, you just graduate or you have your own family that you need to take care of your wife and children, you need to be carefully aware of your current financial situation. Let’s start completing an honest assessment of your personal or family financial situation is a critical first step on the journey to establishing financial well-being.
If you have no ideas on how to do an assessment, which sources you need to get or who you can obtain the advice with. Exploring various financial blog posts, magazines, get advice from your friends who work in financial market or whoever you think they have a good foundation of managing personal or family financial plan. They are great to provide their advice as they are neutral and non-emotional about your plans/ budgets or issues.
Control the usage of your credit card
Credit card is a two-headed knife which may make you worse than better. By using your credit card, you need to control it wisely as it allows you to spend a limited ton of money prior to paying. Although you know you have to get the payment afterwards, however, most people knew about it but it’s hard to know the stop limit. Additionally, credit will definitely cause you debt if you do not pay it on time.
Credit card is not the fault, the fault is you don’t know how to spend and use it appropriately. Be aware of your salary, personal and family financial situation, your demand of spending things in life are critical keys to monitor your credit card well.
Track your spending monthly
Take a month to track where your money goes in and goes out, then it is a strong base for you to get the saving. What parts do you usually spend within a month? Are those daily spending, parent presenting, medical health check-up, life insurance, credit card payment, entertainment spending,..,etc to know how much you can leave for saving?
Plan for an emergency fund
Without planning for an emergency fund, your risk is going into high-interest credit card debt which should an unexpected expense occur. Besides savings which are prioritized for big assets, marriage, retirement package, study approach for your kids,…a debt plan should be considered.
After calculating to minus your monthly spending, next one is emergency fund. Save an appropriate amount of money to your emergency fund to use in unexpected situations. Then you can start calculate for other savings such as retirement and college savings.