The Sunday Mail
Financial freedom is having enough money and investments available to live the type of life you want, no matter how expensive it may be.
Instead of stressing about how you will pay your bills, you may make decisions based on your principles and life goals. Be it good or bad, the way we live, move, and navigate through life is largely influenced by our financial situation.
When you consider how much money can affect our lives, you begin to understand that money is inherently personal. Since we all lead different lifestyles, financial freedom might have different meanings for different people.
You must be smart about money so that you do not constantly live in financial distress. Below, we shall discuss a few ways to ensure that one has financial freedom.
Set your objectives
Clearly define your objectives and your vision for a financially free life once you are confident that you are standing on a solid financial foundation. Once you have set them, actively incorporate them into your budget.
Prioritise expenses
You need to know how to differentiate between needs and wants. Your monthly bills like food, utilities, car payments, rent, mortgage or transportation are the most important and, therefore, should be prioritised.
Settle debt
Financial freedom is difficult to achieve when you are still making debt payments, which is why it is so crucial to pay off debt (especially if it is consumer debt with a high interest rate, like credit cards).
To prevent further credit card debt, pay off any outstanding balances.
If you have small loans, like school loans, you may want to make additional payments to eliminate them as soon as possible. It is not necessarily impossible to pay off your loans earlier just because you agreed to a 10-, 20-, or 30-year payment schedule. In the long run, paying off your debt sooner will save you money because you will accrue less interest.
Once you have taken care of necessities, you can then allocate 10 percent to 20 percent of the money that is left over to savings.
That includes your emergency fund, retirement account and other savings accounts.
When you have finished, you can live off the money that is left over.
Determine how much you should spend each month on regular expenses like eating out or shopping for clothing to make sure you do not go overboard.
Long-term investing
You may invest in property that will yield a monthly rental income.
Using that cash, your rental property tenants can pay your mortgage once you make the initial deposit.
Even better, seek out opportunities where you can immediately make money. Additionally, you may also invest in unit trusts, where you can earn interest income and dividend income. — Moneyweb
Insurance
You may consider insuring what is most important to you. For assets like your car, furniture, and other priced possessions, you can get short-term insurance.
Finding yourself in situations where you must pay large sums of money due to accidents, loss of income, or unexpected disability is not ideal.
This is why health insurance, disability coverage, dread disease coverage, and income protection should be an essential part of your planning.
Purchasing life insurance is also a great way to ensure that all your expenses are covered when your estate is liquidated.
Education savings
You may help your kids avoid student loan debt and put them on the road to financial independence by paying for their tertiary education. This can be done by opening a trust fund for your children; as a result, you won’t need to be concerned about your creditors seizing your property to recoup their money. Furthermore, there are tax benefits, as the growth of assets transferred to a trust is not subject to estate duty.
Create an emergency fund
There is no financial freedom without a fallback option, which is where your emergency fund comes into play.
Saving at least three months, if not six to twelve months, of expenses into a high-yield savings account — before starting to invest or making any unnecessary large purchases — is recommended.
Some may find it difficult to navigate financial freedom on their own, and that is where financial advisors come in.
They can help you set goals to achieve and maintain financial stability throughout your life.
If you are in a position to do what you want, whenever you want, with your money and investments, then you have reached financial freedom. Although life can be unpredictable, and sometimes we go above board with our expenditure, we should not feel bad about a goal not being reached.
The most important aspect of failure is the ability to pick up where you left off and continue striving to reach your financial goals. — Moneyweb
