Being financially free is mostly everyone’s dream. Who doesn’t want to be debt-free and have the freedom to do what they want, when they want? The road to financial freedom can be tough. It isn’t always a cake walk and in most cases, it isn’t. Let’s talk about 12 surefire ways to gain financial freedom so you can enjoy living out the life of your dreams with a rock-solid financial plan.
1. Have a Plan
Having a goal in mind all starts with a plan. What is it that you want from life? Why do you want to be financially free? Starting with the basic answers to these questions can help you uncover what it is you really want to accomplish with your financial freedom.
For me, it was important to be debt-free and pay off all my loans. I wanted to be able to grow my income without worrying about piles of debt. I wanted to mark out a strategic plan to allow me to save my money and also pay off my debt. Make sure that you write down your goals so they become solidified. If you don’t make your goals a priority by writing them down, how can you stick to your plan in becoming financially free?
Learn how my husband and I were able to pay off $60,000 in debt in 11 months here.
2. Rewire Your Mind On Money
When I was growing up, my family always talked about money. There was always a conversation about finances. At a young age, I was conscious about money and I felt guilty for asking for too many toys or clothes because I didn’t want my family to worry about money.
Fast-forward to today and all those premonitions about money have been deleted, null and void from my mind. I rewired my brain, so to speak, to eliminate any negative connotations I had about money. By doing that, I was actually able to see an influx of money. I was able to double my income and I was able to start paying down my debt in chunks.
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3. Start Earning Passive Income
Yes, passive income. What is passive income exactly? Take for instance blogging or affiliate marketing. You can literally earn money while you sleep from each of these endeavors. You can turn a hobby into a profitable business. You can learn more about affiliate income and blogging by taking my free course where I show you how to start a profitable blogging business from scratch.
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- How to Start a Money Making Blog from Scratch
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- 5 Reasons to Start an Online Business
4. Keep Your Personal Finances and Your Business Finances Separate
I can’t stress this enough. As an entrepreneur, it’s super important to keep your finances in order. It is especially important to separate your personal finances from your business finances. I get it. Early on as an entrepreneur, it is difficult to keep everything in order. You are just trying to make it. You want your business to be successful and you want to grow your income. I have been there. One mistake is not separating the two. In order to grow your income, you need to cut back. When I was starting out in my business, I lived in a beautiful apartment that was super expensive. I loved my place and it made me feel good to come home to such a wonderful environment. The thing was, I traveled a lot. I was never there. Roughly about 4 times a month I’d come home. I was spending money for a place to store all my things.
After my lease was up, I moved out and found a place half the cost. I was able to save over $15,000 just by cutting my rent in half. In the long run, I now own a house versus renting and I was able to save enough money to pay off all my debt, leaving me debt-free and a homeowner.
I was able to succeed in this by keeping personal finance and business finance separate. I took out a credit card specifically and only for my business. I used this to build my business and keep me on track of growing at a steady pace.
Related: Personal Funding Loans
5. Pay Off as Much Debt as Possible
When I was starting my business, I had a lot of personal debt. I wanted a way to consolidate my debt so I would be able to pay off everything I owe and have a chance to start with a clean slate. I took out a personal loan to help get my finances in order. I suggest you check out Viva Loan if you’re looking for a way to pay off debt or take care of your finances. They offer many different options regardless of credit and help you get on the right path to financial freedom.
6. Set Attainable Financial Goals
If your goal is to save $10,000 in a year, you need to set small milestones in order to achieve that goal and make it a realistic goal to accomplish. Let’s say for example, you buy a Starbucks Tall Chai Latte everyday. Instead of spending roughly $4 per day on a tea, you could be saving around $1300 per year if you eliminate Starbucks and make your own tea at home. Maybe you also buy lunch everyday at work. Lunch may roughly cost $10 a day. Instead of spending $50/week or $2500 per year in eating out for lunch, you could make meals at home and take leftovers for lunch.
With these small changes, you could potentially save $3, 750 per year. What else can you cut back on? What else can you save to reach your goal of saving $10,000 per year? Whatever the goal is, set small, attainable goals to achieve small wins. These small wins will give you the willpower to keep going to achieve your long-term, bigger goal.
7. Spend Less Than You Earn
This should be an obvious reason but for meany it’s difficult to follow through. By standard, you should be saving at a minimum, 10% of what you earn. Whether that’s going towards stocks, smart investments or a retirement plan, 10% needs to be untouchable money. If you earn $50,000 a year, $5,000 should be kept separate for savings.
If you have credit cards, no matter the limit, you should only spend 30% of your credit card limit. If you plan on spending more, a good rule of thumb is to PAY OFF any amount over the 30% limit before the next bill is due. So think twice before using that credit card. Once I paid off all my credit cards, I hid them. I only used them if I needed them in an extreme emergency. Besides that, they were no longer available for me to use. By doing that, I spent only the money I earned, minus 40% which I used for savings and investments. My credit score shot up and I never had to worry about being in debt again.
8. Build an Emergency Fund
Emergencies can happen at any time. I live over 3,000 miles away from my family and I’m a 6 hour flight away from home. In case I need to drop everything and go home for an emergency situation, my husband and I have a plan. Consider an emergency fund. This can be used for anything that you consider an emergency. No, I’m not talking about saving money aside for a new pair of shoes when you have an unexpected date night. I’m talking about building an emergency plan and setting aside money towards a fund. It can be as small as $25/week. That adds up to $1300/year in savings.
9. Downsize Your Lifestyle
If you’re not where you want to be in your life, that’s OK. Most people aren’t. You build to get to where you want to go. It doesn’t make sense to buy a BMW, live in a tiny apartment with no investments or savings or a plan in place. If you desire to live in a 4 bedroom, 3.5 bath house with a yard and a view, take the time to plan for that lifestyle. That may mean cutting back on expenses.
When I was consulting in San Francisco, I cut back on my lifestyle. Instead of living in a swanky apartment with a view that I didn’t own, I decided to rent a room in a house when I traveled to San Francisco. By doing this I was able to save over $3500/mo. This was a great financial move for the both of us. For my small sacrifice of a luxurious place to stay, my husband and I were able to save $70,000 in one year by cutting costs. We were able to buy a rental property and rent it out on Airbnb. You can use Airbnb to get $40 in travel credit when you sign up with my link. It also allowed us to work and travel to any destination we chose to, giving us financial freedom to live the kind of lifestyle we wanted.
10. Think About Your Career
Believe it or not, your career plays a part in your financial endeavors. Before starting this blog, I worked in the HR space in a role where I had pretty much reached the ceiling. If I didn’t change careers, there was a limit to how much I could earn and grow. After much thought and research, I decided to change paths and I started this blog along with consulting with large corporations. I became self-employed. Financially, I was free and I was also able to do something I absolutely loved.
If you feel your career is capped out or you want to earn more money, consider a career change. It’s never too late. I went from an HR role to technical consulting and running a blog. Think about your goals and consider what it is you want to do. If anything, do something because you have curiousity or a passion for it. Don’t do something for the money. As clichè as that may sound, it’s true. I decided to blog because I love writing. I decided to consult because I love helping people. Doing what I love and servicing others equals into rewards, which in turn is financial freedom.
Follow your dreams. I try and encourage people as often as I can who are brave enough to listen to their hearts to follow your dreams. Make sure you have a plan in place as well.
11. Get Your Mind Right
Yes, literally. Get your mind right. In order to become financially free, you must be in the right frame of mind. Going down this journey isn’t easy; otherwise we wouldn’t have people losing their homes and their jobs and unable to pay bills. You have to have discipline and see the bigger picture. In the long run, what are your goals? What are your aspirations? Why are you doing this?
Be prepared to get comfortable being uncomfortable. For one year, I was uncomfortable. I learned a new technology and I did something I had never done before. I moved across the country to follow my dreams and to create a better life. My husband and I took a financial risk to better our future. It worked. It’s working; but it took discipline and the proper frame of mind. Our financial goals are being obtained through having the mindset in place to achieve what we desire.
If you need help on getting your mind on the right track for building wealth, I suggest you check out my blog articles related to this topic:
12. Continue to Grow and Redefine Your Purpose and Your Business
As time goes on, people grow and people change. The only constant is change. I have changed my business models more times than I can count and I’m OK with that. I am constantly learning and growing and changing. As you grow and your business grows, stop and ask yourself what is your purpose for having your business? Who are you doing this for? Why are you doing it? Take some time out to reconsider if the path you’re going down is truly what you want.
I had an epiphany about 6 months ago when I took time to focus on coaching. I took a year to learn and study and grow a coaching business. It was exciting and I was able to help other people in my coaching business. As time went on, I quickly realized my passion lied in writing. I am a writer at heart and this is what I love to do. After coaching some clients and learning and growing from that endeavor, I redefined my purpose. I came back to realize that writing and blogging is where my heart and true passion lies. It’s OK to change paths and it’s OK to change direction. You live this life one time and it’s best to try something while you can then to think and wonder about “what if”.
So I challenge you today to think and rethink your business plan. Ask yourself who you are doing this for and why. Ask yourself if your business is fulfilling or if it’s just filling a void? Always grow and redefine yourself and your business. It’s a necessary part in growth and success.
