Being financially free is a product of intentional habits that are productive and goal-oriented.
There are several myths and misnomers when it comes to financial freedom, and individuals can take in a lot of advice from renowned financial experts, self-acclaimed experts, and junkies. Review our top 15 habits that can lead to a more financially independent life.
Table of contents
- What Does It Mean For Someone To Be Financially Free?
- How Much Money Is Considered Financially Free?
- At What Point Are You Financially Free?
- What Does It Feel Like To Be Financially Free?
- How To Achieve Financial Freedom
- What are the Habits That Will Help You Stay Financially Free in 2021?
- Frequently Asked Questions (FAQs)
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What Does It Mean For Someone To Be Financially Free?
The pursuit of many people is to achieve financial freedom. Financial freedom generally means having enough savings, investments, and cash on hand to provide the lifestyle you want for yourself and your family. Financial freedom allows an individual to retire or pursue the career he/she wants without being driven by earning a certain amount yearly.
Unfortunately, quite a huge number of individuals fail to achieve it. They are heavily burdened with increasing debt, financial emergencies, profligate spending, and other issues that thwart them from actualizing their goals. Then there are unexpected events, which include a hurricane or earthquake—or pandemic—that overturn plans and reveal holes in their safety nets that weren’t visible at first.
Everyone at one point or the other faces financial trouble but with these 15 Habits that will make your stay financially free in 2021 brought to you by The Wealth Circle (TWC), you are sure of being financially free all throughout 2021 and beyond.
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How Much Money Is Considered Financially Free?
To be financially free or independent, the amount of money you need varies depending on your current income and lifestyle.
For instance, an average American needs about 1.5 Million dollars to be financially free, but an individual can determine exactly how much he/she needs to save using the 4 percent rule.
On a general note, to be financially free, your investments and net worth should be equivalent to 25 times your yearly expenses. That’s a generally accepted definition. It is in line with what’s been known as the four percent rule.
At What Point Are You Financially Free?
The point at which someone is said to be financially free is dependent on two rules of thumb as follows:
1. The 25 times rule
The 25 times rule is among the rules which determine financial freedom and states that once you save up 25 times of your yearly living expenses, you have enough money to retire.
2. The 4% rule
The 4% rule is used to determine how much of your retirement reserve of money you could live off annually.
What Does It Feel Like To Be Financially Free?
It is everyone’s goal to be financially free. Is your desire more than that? Maybe your quest is to build a palace-sized structure someplace beautiful. Or you want to tour around all the countries of the world. All of these dreams and desires have one thing in common: They’re about being financially free.
The ability to let go of a job you are not pleased with, go on a vacation because you just wish to, or storm out of work after a really tasking day, is a form of freedom. On a specific note, it’s personal financial freedom. This means being in possession of a huge amount of money that you don’t need to work to cater to your basic necessities.
The feeling of being financially free is such that seems incredible but very realizable depending on your financial goals. It’s one that comes along with this joyful feeling, feeling of being on top of the world, feeling of fulfillment, establishment, and achievement.
The feeling is such that lets one know that he/she is independent financially hence is in control of his/her time, finance, resources, etc. The feeling is so great that you wouldn’t want to keep being told about it but have yourself walk into financial freedom.
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How To Achieve Financial Freedom
The how-to financial freedom involves the practices one should take up to become financially free and they include:
What are the Habits That Will Help You Stay Financially Free in 2021?
A habit is an action performed on a regular basis. To stay financially free in 2021 and beyond, there are financial actions you are to put up on a regular basis to be financially independent. They include:
Set Life Goals
In life, you have to set goals that are SMART and work towards them conscientiously. The financial life goals you are to set have to be specific, measurable, achievable, realistic, and time-bound.
Carry out practices like writing down how much you should have in your bank account, the financial lifestyle you are to take up so as to achieve your financial goals and at what age this should be achieved.
Setting SMART financial goals is very necessary because more specificity of goals makes for a higher likelihood of achieving financial milestones.
2. Make a Budget
Making a budget and sticking to it against all odds is a sure way to be financially free and a habit that will make you financially dependent.
3. Pay Off Credit Cards in Full
Paying off credit cards in full is among the ways to become financially free and is and will be a good way to build a good credit rating.
4. Create Automatic Savings
In creating automatic savings, one of the things that are very needful for you to do is to pay yourself first. It’s also wise to have an automatic withdrawal emergency fund that will serve as a remedy in cases of emergency.
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5. Start Investing Now
Investment is one of the habits that will help you stay financially free and is historically known to be a better way to grow your money. Invested money grows by the magic of compound interest which makes for exponential increment over time. But it is to be noted that a lot of time is needed to achieve meaningful growth. See how to invest in agriculture
6. Watch Your Credit
The accumulation of credit is one of the things to watch as it hampers financial freedom. Watching your credit will help you to checkmate reckless financial habits. To do this you are to get a credit report at regular intervals to ensure that you are having a healthy financial health record.
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With negotiation, you are sure to buy things in bulk or open new businesses which can open the door to good discounts. Negotiation is a sure way to being financially free. With negotiation you are sure to save thousands yearly.
8. Continuous Education
Continuous education is among the ways to be financially free. It involves reviewing all applicable changes in the tax laws yearly to make sure that all adjustments and deductions are put to effective use.
It also entails keeping up with financial news and developments.
9. Proper Maintenance
Proper maintenance makes for properties to last longer and cuts off the cost that would have been incurred in repairing any property. This is the case because the cost required to maintain a property is a fraction of the cost of replacement.
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10. Live Below Your Means
Living below one’s means is one of the habits that research has proven that individuals who are known for their affluence have exhibited before rising to affluence. This being the case, it means that for one to have affluence (be financially free) the person has to learn to live below his/her means. To do this, you are to distinguish between the things you need and the things you want.
11. Get a Financial Advisor
Getting a financial advisor is one of the ways to stay financially free as the financial advisor will educate you and help you make financial decisions.
12. Take Care of Your Health
Can you remember the popular axiom that goes, health is wealth? This is indeed very necessary to be remembered if you want to stay financially free.
Taking care of your health through investing in good health and regular visits to doctors and dentists and following health advice about any health problem encountered will save you nine and more.
To stay financially free, you are to do due diligence to take care of your health as it is one that is healthy that can make wealth.
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Frequently Asked Questions (FAQs)
The 10 steps to financial freedom are; #1 Set goals #2 Make a budget #3 Pay off credit cards in full #4 Create Automatic Savings #5 Start Investing Now #6 Watch Your Credit #7 Live Below Your Means #8 Get a Financial Advisor #9 Take Care of Your Health #10 Negotiate for goods and services
Financial independence is the status of having enough income to make payment for one’s living expenses for the rest of one’s life without having to be employed or dependent on other individuals.
Financial freedom is important because it will enable you to clearly assess the progress made by your investments towards each of your financial goals.
Financial intelligence is the ability to analyze the numbers in greater depth, calculate profitability, leverage, liquidity and efficiency ratios. It also deals with understanding the meaning of the results.
Just as you’ve known from this article construct, you can become financially free but beyond that and the extent to which you would be financially free is dependent on your ability to take up and conscientiously practice these habits that we have exposed you to that will help you stay financially free.
Here’s best wishes from us to you. We can’t wait to hear about your financial exploits courtesy of this write up. Cheers.
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