Get a hold of this proven and tested financial freedom checklist and follow through. Take your time but don't slow down.
Financial freedom is something that most people would love to achieve. But sometimes, achieving financial freedom is not as easy as it sounds. There are many different factors and considerations that need to be made before you can say that you are financially free and even then there will still be things to work on towards your own personal financial goals. If you want to achieve financial freedom in your life, there are certain steps that you can follow. This financial freedom checklist can get you on the path to financial freedom and independence, and allow you to live a happier and more fulfilling life.
Save Your Money As Soon As You Have It
This is by far one of the most important steps that you can take in achieving financial freedom, but many people find this step difficult because they have never done it before. The key here is making sure that every single penny that comes into your possession goes directly into your savings account .
While there will be times when you need money for urgent necessities such as rent or food, whatever amount is left over should go straight into your savings account. Make sure you set up a direct deposit that will automatically deduct a fixed percentage of your income into your savings account. This way, you won't even miss the money because it comes right out of your paycheck before you ever see it.
Build a Crisis-Proof Emergency Fund
Once you have been saving for at least three months with no disruptions to your source of income, start putting aside enough funds in an emergency fund to help cover 3-6 months worth of expenses. Ideally, this should be somewhere around $5000-$10,000 depending on how much debt you have and what your other needs are.
Make sure this fund is separate from any kind of retirement or savings account so that if something goes wrong (such as a job loss), you can still function as a normal person without having to dip into your retirement or savings accounts.
Start Learning and Investing in Mutual Funds
Once you have built up your emergency fund, you should start investing in mutual funds. This will give you consistent growth in the value of your investments over time, which is key to achieving financial freedom.
Investing in mutual funds is actually quite simple. You can do so through your bank or by using an online investment advisor. Make sure that you diversify your portfolio to minimize the risk of loss. This will help ensure that even if some of your investments fall, it won't affect the overall performance of your investments too much.
Be Financially Disciplined
After saving for a while and investing regularly, make sure that whatever you are spending is the bare minimum.
Don't spend too much on things you do not really need. There is nothing more precious than your money, so act as if it is already the money that you need to live off of.
When you make large purchases such as cars and houses, try to pay for them with cash—not credit cards or loans. Otherwise, you will have trouble paying off the debt and interest within a short enough period of time. This will end up costing you an extra fortune in the long run.
The same goes for things such as vacations; whenever possible, purchase vacation packages through a travel agency so that they include flights and hotel room bookings. You can then use this package deal when booking your travel instead of having to choose from individual flight tickets and hotel accommodations.
Invest Early in Your Retirement Account
Although this doesn't necessarily contribute to achieving financial freedom, it is a good idea to invest in your retirement account regardless of your age. The younger you start saving for retirement, the more time your money has to compound and grow over time.
Set up an IRA or Roth IRA with one of many reputable companies that offer such accounts, such as Vanguard or Fidelity . For those who are not eligible for an IRA, make sure you use every opportunity you have to save towards your future self.
This could come in the form of putting aside some savings whenever you receive a bonus at work or even starting a small business if you have the time and ability.
Put Your Money on Real Estate
Real estate can be a great asset for people who want to achieve financial freedom as it can provide both income and tax advantages. The more properties you invest in, the greater your overall returns will be.
In addition to this, if a property generates negative cash flow (which means you pay out more than you receive) for several months after purchase, there is still depreciation on real estate that allows investors to take advantage of accelerated depreciation rules.
Start Investing in Collectibles
Another way to achieve financial freedom is through the buying and selling of various collectibles. This strategy works best for rare or unique items that are not readily available, but can be sold at multiple different prices depending on demand.
It is important to do your research beforehand because even with value fluctuations, charging a high price may equal increased sales volume . If you are considering doing this as part of your investment strategy, make sure you diversify your portfolio so that if one area becomes less popular than another, you will still have something to fall back on.
Over time, people who invest their money using these methods typically see a steady increase in the value of their assets over time.
Learn and Invest in Bonds
Bonds are basically IOUs that can be purchased by those with money. They earn interest payments and will pay out a set amount at the end of the term, meaning you may or may not lose money depending on how well the company is doing.
While this is a great way to invest your money for retirement or other important goals, it is usually recommended that one holds bonds until maturity as opposed to selling them before then. If you do decide to sell them early (which can result in losses), make sure you understand all of the risks involved beforehand.
For example, if you buy a 20-year bond from Ford for $1500, they promise that after 20 years they will pay you $1800. However, if the economy is not doing so well and the company does not have enough money to pay back the bond by its maturity date, you may lose your investment. This risk can be minimized or eliminated however with research into companies that are likely to succeed in a recessionary environment .
Invest in Cryptocurrencies
While cryptocurrencies are very volatile and risky investments, for those who want to achieve financial freedom through cryptocurrency investing, it could potentially yield great returns over time if the currency appreciates significantly in value (this means it goes up rather than down).
For example, bitcoin has increased over 300x since its inception . Many people view this as an unsustainable bubble though because how much money can one currency really multiply by that much? For these reasons it is important to understand all of the transaction costs and risks involved in each cryptocurrency before you begin investing.
Cryptocurrency investing is very different from traditional forms of investment because it is not done through one centralized institution like a bank, but instead through various people selling and buying into the currency network . This means there are always new individuals coming in who may be using the latest technology to try and make money off of other investors or simply trying to do good work on their own project without attracting too much outside attention (which would increase the price).
In addition, cryptocurrency networks will typically always require a certain amount of work from those who are willing to support the network through verifying transactions through specialized hardware or simply donating computer power.
Save Money for Emergencies
Once you have reached $1 million in assets, it is important to continue saving money every month at least by putting away 10% of your income if possible. This money should be kept liquid so it can be accessed easily when needed even though this means these funds are no longer available as investment capital.
If you don't need to use the cash for emergencies, consider reinvesting into more long term investments like stocks or real estate after having already achieved financial freedom. It may also be a good idea to keep some amount of cash stashed away in a safe location it can be accessed in case of emergency.
Don't Forget to Enjoy and Live Your Life Your Way
With your financial freedom, you can live the good life, have fun, enjoy and do whatever you want. Using money that you have worked hard for and that isn't tied up in investments is a great feeling and one thing I highly recommend you do.
This does not mean you should go out and spend recklessly though because doing so would only hurt your finances in the long run. Instead, it may be helpful to travel more often or go on vacations with friends and family regularly, donate some money and put up a foundation, or simply spend time relaxing without worrying about how much any dollar may be worth at any given moment.
It's amazing what being financially secure every month feels like when the money you have saved up means that your needs and then some are met.
The only downside to being financially secure is how many people will try and get that security away from you. These same people may also want to keep others down by convincing them they will not be able to achieve financial freedom, but this only makes things more difficult for everyone in the long run. Instead, if we all work together as a society and help each other out, we can create an amazing future where everything we need is provided through well built systems.
Also, remember that it may take time before you to become fully financially independent so do not despair if you cannot reach this goal right away or see slow growth along the way. Always bear in mind that even a small amount of saving can grow into something big over many years and that is what allows people to be able to be financially free in the first place.
Read the Entire Financial Freedom Series
- What is Financial Freedom, Really?
- Achieve Financial Freedom With These 4 Easy Steps
- How to Turn a Treadmill into Financial Freedom
- Guide To Setting Financial Goals In Marriage
- 6 Steps to Make Your Financial Assets Work Harder in 2021
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.