In this post you will see the steps and mindset you will need to achieve in your life to reach the financial freedom.
Beyond the money, what you need is the right mindset. You will never become free if you always think about buying things in installments or if you don’t make it to the end of the month.
Let’s assume you’re in financial trouble, maybe full of debts, maybe working on a job you hate, maybe living paycheck to paycheck. That’s a very common situation, actually the most common one.
I know it’s not easy to change your situation overnight. You are probably paying the car in installments because you need it to go to work with which you pay the car installments.
It is a vicious circle.
I recommend that you sit down and first of all understand how Financial Intelligence works.
Financial Intelligence will help you in knowing the basics before trying to control them. Do you know what’s your Net Worth? Do you know what’s your Cash Flow? Your Incomes? Your detailed Spending? Do you know what are the interest rates of your liabilities? Do you know your actual hourly wage?
This may seem like the easiest step to take, but very few people in financial hardship actually do it.
Financial integrity means taking action. Once you have a good idea of your situation, it’s usually easy to find and make the right decision. Therefore, strategies such as reducing excess spending are self-evident and easy to implement.
When you start taking action, you define your values better. It’s easy to see that you have to spend less than you earn if you want to get your finances back on track. You either earn more or spend less (or better, both). The latter is easier and faster. Cutting spending requires making choices and prioritizing your own priorities. You must define “sufficient” for each category of expenses.
If possible, look for a new job or a new way of life. Change house if that costs too much or find a job where you can go with the public transports. Or reinvent yourself by training for better-paying jobs. The digital world offers various opportunities.
Financial independence means feeling freedom. You no longer have to work to support your lifestyle because your money will work for you. Your passive income (like stock appreciation, dividends, rental income, etc.) covers your living expenses and you are free to do what you want.
You can keep your current job, try a different career, go back to school, take entrepreneurial steps, work less, or not work at all. Maybe you have dreams you want to pursue, people you want to take care of. It’s really up to you. You have freedom.
Freedom here means freedom to sell time for money. You don’t need it anymore. You rely on the robustness of your passive income.
If in financial independence your passive income allows you to live. In financial freedom, the annuities exceed your monthly expenditure. You obviously can’t live like an emir (or at least it’s hard to do in a generation). Financial freedom means that you can take a few whims without always having to check that the money enters you.
If you want to spend a month in the subsequent image and have no worries about the money spent you need Financial Freedom.
- Your Money or your Life: it is a very interesting book full of examples, stories and experiences of many people in their journey to financial independence