We all want financial freedom, no matter where we are in life. Whether you’re a college student struggling with debt or in your 60s and entering retirement, financial freedom is something worth striving for. It’s a journey that transcends age and circumstances.
But financial freedom is not a one-time achievement. It’s an ongoing process that evolves as you move through life. Personal circumstances and professional scenarios change, so maintaining financial freedom requires regular attention and consistent effort. But the rewards are always worth the work.
When you’re financially free, you can live on your terms. You can adapt and grow in every stage of life, all with peace of mind that your finances are under control. As you embark on your journey toward financial freedom, start by asking yourself a question: “Do I own my money, or does my money own me?”
Financial Freedom Defined
Financial freedom means you have enough financial resources to live the kind of life you want for yourself. It means you’re in control of your money, not the other way around. Typically, financial freedom involves having a dependable income and enough money set aside to cover emergencies and accomplish your goals.
It’s worth noting that financial freedom can mean something different to different people. You may want the freedom to choose how you spend your money and what career you pursue. Maybe you want the financial security and the peace of mind that comes from knowing you can overcome any challenge or emergency. You could seek the freedom of adventure, the freedom of comfort, or even the freedom of time. Whatever version you pursue, the most important thing is knowing what financial freedom means to you.
Why Financial Freedom Matters
Being financially free doesn’t mean you’re financially perfect — but it does mean you’ve done something right. It’s not easy to achieve financial freedom, but doing so can vastly improve your life.
For starters, financial freedom gives you increased choices. You can choose the job you want. You can buy the things you want. It also gives you the freedom to make choices based on long-term outlooks. Financial freedom gives you a fresh perspective on life, so you can make decisions based on your values, lifestyle, and life goals rather than purely on money. While money is still a factor in your decisions, it’s no longer the driving force. You can align your values with your spending, meaning you can buy the things you need and value without spending in excess or feeling like you’re missing out.
Achieving financial freedom is also a major confidence boost. When you reach your financial goals, the sense of accomplishment is incredible. And since success breeds success, it can give you the confidence to meet other milestones. You’ll grow financially and personally, and that combination adds up to a better overall life experience.
How to Achieve Financial Freedom
Because financial freedom looks different for everyone, every journey is unique. Here are a few steps we recommend taking to get your finances on track.
1. Know your starting point.
To determine where you are going, you must first figure out where you currently are. Take a careful look at your income, debt, savings, investments, and recurring monthly payments. Once you take all these factors into account, you’ll get an accurate picture of your current financial situation and what it will take to gain financial freedom.
2. Set specific goals.
The more specific your goals, the easier it will be to work toward them. There’s also something to be said for physically writing down your financial goals. Having goals tied to a specific number you want to hit in a specific timeframe will help you know exactly what you want to achieve and what it will take to achieve it.
3. Follow a budget.
Before each month, determine where your money will go. Set aside funds for bills, paying off debt, savings, and day-to-day expenses. Then, keep track of your spending throughout the month to ensure you’re sticking to your budget. By simply creating and following a budget, you’ll keep yourself from spending above your means and will be one step closer to reaching financial freedom.
4. Save, save, save.
Before you start paying off your debt, make sure you have money set aside for emergencies. Paying off your debt without having an emergency fund in place only sets you up to accrue more debt when an emergency strikes. Once you’re out of debt, you can focus on building an emergency fund that can cover 3 to 6 months’ worth of expenses.
Saving also helps you plan for big purchases. Anticipate when those purchases will occur, such as around the holidays or special occasions, and set aside money each month. With careful planning and intentional saving, you can make those purchases when the time comes without spending above your means.
5. Pay off debt.
When you create your budget, try to set aside some funds to pay off debt. The sooner you pay off your debt, the sooner you can start keeping the money you bring in each month. You’ll save thousands of dollars in interest by eliminating debt, further improving your financial situation.
6. Invest in your future.
Financial freedom extends to all stages of your life, so think about your future as you work toward becoming financially free. When it comes to saving for retirement, the sooner you start investing, the more time your money has to grow. If possible, invest 15% of your monthly income toward retirement. You should also take advantage of any tax-favored retirement accounts offered by your employer.
As you go through life, make daily financial decisions with the future in mind. Paying off your mortgage early will save you thousands of dollars in interest, and saving early for your kids to go to college will alleviate that financial burden down the road. No matter where you are or where you want to go, being smart with your money now will pay off later.
Ready to start working toward financial freedom? Our team is here to help! Talk to a Spero member advisor or visit one of our branch locations to learn how to start your journey to financial freedom.