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Queconomics – Financial freedom. It sounds like a nice theory. But the truth is, financial freedom is something we can all achieve. I mean everyone – even someone who, like me, once owed a pile of debt. No matter what financial difficulties you face today, there is always a way to get back into the green. In this article, we’ll explore the importance of financial freedom and outline some avenues for financial freedom—including some that have worked well for me.
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What does financial freedom mean?
Financial freedom is about taking responsibility for your money. It’s about finding a reliable source of income (or better yet, several) that enables us to live according to our ideas. When you’re financially independent or financially free, you don’t have to worry about how to pay your bills or unexpected expenses. Plus, you won’t have to deal with an overwhelming mountain of debt.
It’s also about realizing that you need a side job to pay off your debts and ultimately increase your income. We’ll take a closer look at this aspect in a moment. And last but not least, it is also about planning your long-term financial situation by actively saving for bad times or retirement. With a few tips, the path to financial freedom will be at your fingertips – so let’s jump right in.
10 important tips for your financial freedom
1. Be aware of your current situation
How do I achieve financial freedom? Many of us have probably already asked ourselves this question. You cannot achieve financial freedom without knowing where you started. If you think about how much debt you have, how much savings you don’t have, and how much money you need, it can be very frustrating at first. However, this is a precious step in the right direction to become financially independent.
So first, make a list of all your debts: mortgage, student loan, car loan, credit cards, and any other debts you may have accumulated. Also, don’t forget about the money you may have borrowed from friends or family members over the years.
Now take a deep breath. And again. Then you add up all the numbers.
So how much is your debt?
If it is a large number, do not immediately panic. In the article, I will give you some practical solutions that will bring you back to the black mode. If it’s a small number, or maybe you have no debt at all, congratulations. You are welcome to share your financial freedom tips in the comments with our readers.
Next, take a look at the money you’ve saved so far.
Make a list of your savings: savings accounts, stocks, employer savings, personal retirement plans, etc. Next, we’ll add the recurring monthly payments you receive. It includes, for example, your salary, income from the second job, dividends, etc.
As we look at the following few tips for your financial freedom, you should keep these numbers in mind.
2. See money as a positive thing
Debt can be a daunting thing for sure, and there’s no doubt about that.
Remember that money is a good thing, even if it is a massive burden on you right now.
Work on your thinking and realize that financial freedom is something you deserve.
According to America’s Bestseller Jen Sincero’s “You Badass Money,” people who don’t make a lot of money often feel shy when it comes to making money. Thus, the biggest obstacle many people face when making money, feeling like they have money, is terrible. Many people feel guilty. After all, they have the money and even more sin because they want to. Sincero says of money: “We use it every day to improve our lives. However, we always seem to focus on the downside about it.”
Money is just a necessity like food or water. It helps you buy the things you need and live the life you want.
To experience financial freedom, you must look at money as a tool – a tool.
It helps you achieve your dreams, recharge your batteries and enjoy a stress-free life.
If you view money negatively, you will subconsciously sabotage your chances of earning more and keeping it long-term.
3. Write down your goals
How much money or capital do you need to gain financial freedom, and what do you need?
Do you want to get rid of your debts forever? Are you trying to escape from the hamster wheel? Is there a place you’ve always wanted to travel to? Need to save for a wedding, kids, or retirement?
When I gained financial independence, it was because I connected it with an emotional purpose. My goal was to pay off my student loan and save for my first home. It was an almost exhilarating experience to watch how the debt gradually disappeared, and my savings grew.
When I saw the numbers change, I worked even more challenging to make more money. I tasted blood and wanted to make a more significant change in my finances. Would I have achieved my goal of financial freedom if I had not associated that goal with something emotional? Mostly not. I wanted to get out of debt and get out of my parents’ house. This goal kept me excited throughout my journey.
Then another important thing happened. In February 2016, I wrote down some of my goals on a piece of paper:
- Earn $100,000 selling products online
- Save $20,000 on a down payment on a loan
- Pay off your $24,000 student loan
Somehow I misplaced this piece and completely forgot about it. And then one day, a little over a year later, when I was already living in my new home, I found it in my notebook. You have already achieved all three things. The funny thing is, I didn’t consciously think about these goals.
You may not achieve everything in a month. But a year is a long time to make progress on your goals. Make sure that your plan is linked to a specific number that you want to achieve. Believe it or not, you will automatically start working toward these goals without even realizing it.
Knowing precisely what you want to achieve and when you want to achieve it (maybe financially free at age 30?) makes it a lot easier to find your way to financial freedom and know when financial freedom is a realistic option.
4. Keep track of your expenses
How do I become financially independent? An essential step in this journey is keeping track of your expenses.
For this, you can z. For example, use a tool like Wallet that lets you see how much money you spend, which categories you pay excessively in, how much money is in all of your accounts, and how much debt you have.
Another great thing about Wallet is that you can set personal goals in the dashboard. You can monitor your goals and know the month you should reach your goal based on your deposits. This way, the app holds you accountable and regularly reminds you to keep saving money to achieve your goals.
5. Pay yourself first
You may have heard the phrase “pay yourself first” before. If not, this approach is about putting a certain amount of money into your account before you pay anything else (like bills). Paying Yourself First has helped countless people successfully advance on their path to financial freedom.
If you pay €500 per salary first, the remaining funds must be used to pay your bills. And if you don’t have enough money to pay those bills, you’ll have to build up additional income to cover these costs.
With this strategy, you make sure that you always put money aside to invest in yourself. If you do the opposite, you’ll only get what’s left. It is usually not enough to help you pave the way to financial freedom.
You can also pay yourself in other ways. For example, if your employer has a retirement plan, you can request a percentage of your total income.
Salary flows into this program. This way, you invest in yourself and your future first. The money will be deducted directly from your salary. So you can use the rest of your bills, expenses, and medium-term savings projects.
6. Financial freedom by spending less
In 1958, Warren Buffett bought a five-bedroom home for $31,500 and hadn’t moved since. his capital? $90.3 billion. So he can easily buy a bigger and more expensive house. But his economy may be one of the reasons why he is one of the wealthiest people in the world.
The difference between the two successful men? Buffet never spends more than he needs to, and Kanye West spends money he doesn’t have.
The truth is that many wealthy people do not look like the rich. Zuckerberg wears the same boring shirt and jeans every day.
Buying a little can help you get richer and, most importantly, become financially independent.
By spending less money, two things work in your favour: First, you’ll have more money to set aside on your way to financial freedom. Second, you will learn that you need fewer material things to survive, which will also help you set aside more money.
It leads us to the next point.
7. Buying experiences instead of things
Life is short. It’s not about piling up all your money until you’re 65. You can enjoy life during your time on this earth.
In the end, the things that contribute to a fulfilling life will be your experiences – not the stuff you own.
Do the things you buy make you happier in the long run? Does the debt you accumulated from buying material things make your life easier?
Now let’s look at the other side.
What are your happiest memories of what did you do? Who was with you?
Let’s create more memories like that.
Perhaps you have a friend with who you enjoy exercising. Invite them to do a home workout together to a YouTube playlist.
Perhaps you are planning a date now and want to make it unforgettable. Find a great Groupon activity you’ve never done before – for a fraction of the price.
Have you always wanted to discover Hawaii? You saved money for a year to make your dream vacation a reality. Take this vacation and enjoy it without feeling guilty. You didn’t go into debt, so you deserve it. Or you can become a digital nomad and travel the world while working abroad.
Life is made of moments. They best trace their origins to the time they spend with friends and family. While some material things can help bring you and your family closer (like a weekly family video game night), most don’t add much value.
Don’t spend money. You don’t have to pretend you have money!
8. Pay off your debts
Some people will tell you that it is wiser to invest your money in stocks rather than paying down your debts. If you are an experienced stock trader, this may be true. But if you never invest in stocks this way, you could end up with more debt.
Many people feel the same thing after they make their last loan payment: forgiveness.
Even if you have 10,000 euros in your account, you will not be able to call yourself financially free with a debt of 20,000 euros. You are still in the red with 10,000 euros.
Even if paying someone else doesn’t seem as charming as having cash in your account or a stock wallet, it will bring you closer to your financial freedom.
There are two main ways to pay off your debt: snowball and avalanche. With the snowball method, you’ll pay off your small debts first. The avalanche method is to pay off your debts for the first time at the highest interest rate.
You decide what is best for you. As I worked for my debt-free life, I followed the snowball effect. It helped me stay more motivated. In just a month, I could pay off my first debt in total – a credit card.
An invoice for a total of 1,100 euros. The sense of accomplishment helped motivate me to deal with my much larger student loan finally.
And since credit cards are no longer an issue, I was able to pay off almost three times more on average than the meagre minimum payment of 200 euros. In the end, it took about three years to pay off my student loan instead of the nine I initially advised.
Paying off more significant debts will take a heavy burden on your shoulders. After paying off your debts, your savings will increase significantly. It feels great to see your account balance go up (even if it has to go down first).
9. Develop additional sources of income
At this point, you may be thinking to yourself, “My debt is much higher than my salary. How can I pay it off right away if I don’t earn enough?”
If you are serious on your way to financial freedom, you have to sacrifice some blood, sweat, and tears.
Your regular job may not be enough to bring you closer to your goal. If this is the case, you will need to change pace and look for sources of income outside of your current job.
Some experts recommend having seven different sources of income. If you have a 9 to 5 job, then congratulations – you have a job, and another six are missing.
You can look at your sources of income in two ways: active income (i.e. exchanging time for money) or passive income (money that keeps flowing, even while you sleep). You must already say that passive income streams often contribute more effectively to financial freedom than active income streams.
If you only exchange your time for money, you are limited to the number of hours in the day. Here are some part-time jobs that you can do to earn an additional active income:
- Become a freelance copywriter and find jobs on Textbroker
- Support Entrepreneurs as a Virtual Assistant with Job Postings on Upwork
- Earn side money with apps like b. Streetspotter
- Look for side jobs on sites like Kimeta or Seitenjob Zentrale
- Fill out questionnaires and get paid for them, for example, B. in CINT
- And much more!
If you don’t have much time, you can focus on increasing your income by using passive sources:
- Start an Online Dropshipping Store on Oberlo
- Start your custom fashion Shopify business.
- Sell ?? profitable content (blog, ebooks, courses, webinars, audiobooks, podcasts, apps)
- Become an affiliate marketer
- Buying and renting real estate
- Invest in stocks
Fortunately, your seven streams can come from the same source if you are z. NS. If you are an e-commerce expert, your seven income streams can come from building seven different online stores. Remember: you do not have to start with seven sources of income. You can build them up gradually.
10. Invest in your future
The last tip for your financial independence is essential. Let’s say you follow the tips and recommendations in this article, get past your debts, and build your savings. You are probably already satisfied with it at this point. But what if something unexpected happens? Will you be prepared for this and that’s also what the issue of financial freedom is all about.
It’s essential to set aside money for the bad times, your retirement, and (sorry if I mention it here) your death as well so your family can’t bear the costs involved. But now we want to return to the positive aspects.
So if you regularly work as an employee, you should talk to your employer about your current retirement savings options. You may already be making corresponding contributions without knowing it. The corresponding amount is usually deducted before it is transferred to your salary. This way, you do not feel that you are losing money. Plus, it’s great to check your balance now and then and see how your savings are growing.
After that, you should save some money for the emergency store. Some experts here recommend €10,000, while others prefer a six-month salary. Sure, those numbers can seem pretty high if you’re not making a lot of money. Instead, start with a goal you can afford – e.g., with €100 in the first month.
Then, once you start earning more active or passive income, you can start increasing your goal to $500 per month or $500 every two weeks. And if you ever have to settle for an enormous bill, you shouldn’t use your emergency budget for it. Instead, focus on finding more active income opportunities for yourself.
The emergency buffer is only for unplanned emergencies – e.g. b. If the car is damaged due to a storm or medical treatment, you have to pay out of your pocket.
By setting aside money for the bad times and your retirement, you will achieve financial freedom faster.
Financial freedom: the bottom line
Financial freedom can help you take responsibility for your money and, most importantly, your life. It’s about living within your means, being a little frugal, and making sure you spend the money on the things you need — like food, shelter, and even vacations (relaxation is essential, too).
By following the tips in this article, you can make your dream of financial freedom a reality. How much money do you need to be financially free? There is no general answer to this, as it largely depends on your situation and requirements. So take a closer look at your finances, build additional income streams, pay off your debts – and before you know it, you’ll be financially free and independent.
How far have you reached financial freedom? Do you have any other tips that can help you become financially independent faster? Let us know in the comments below.