Financial freedom: 10 Golden rules to achieve financial freedom.
Sure, you are here to know all about financial freedom, what is it? Why it is so important? And how to achieve that?
Ok, in this article we will discuss briefly the concept of financial freedom and 10 golden rules which lead you towards the realm of financial freedom. So let’s start.
What is financial freedom?
If we say that someone has financial freedom, that we mean that person has enough money to afford what he wants, yes he is not worried about their running bills to pay, entertainment, medical and any other type of expenses. That’s just because of having financial freedom.
So, the term financial freedom means to have enough money, bank balances, investments, and cash in hand to finances all the expenditures.
Financial freedom helps you to leads your life in a way you want, you can plan a trip to go around the world, having parties with friends, you can help others with frugality and much more you can do with financial freedom because you are free from the financial restraints.
Now let’s discuss 10 golden rules to financial freedom.
1 – Learn Financial Skills
To learn financial skills means you have to be an expert and good understanding of concepts of finance, like budgeting, money management, and the time value of money, interest rate, investing, debt management, savings, and expenditures. With these financial skills, you will be able to take prudent financial decisions to make your life financially free.
Financial education is as important as any other education, especially if there is a need to grow financially then it’s imperative to learn the skills of financial education. Without having expertise in these financial skills one will remain in the vicious circle of poverty and one cannot grow the ladder of financial success.
2 – Find Your Current Net Worth.
Everyone has their net worth. You should know yours. But you can ask what net worth is and how it calculated? Ok, I am telling you, your net worth will be the difference value of your total assets and liabilities.
Assets: Assets can be anything that you have and possess financial value, for example, your money in a bank, Car, Apartment.
Liabilities: Liabilities are those things of monetary value which you have to pay someone else, for example, a car loan, and a credit card.
If you have your total assets of $ 350,000/- and your total liabilities of $ 250,000/=
Your total Assets – Your total Liabilities = Your net Worth.
$ 350,000 – $ 250,000 = $ 100,000.
Your net worth may be negative, if so then you are highly vulnerable financially, and you should try to get rid of your debts and liabilities and convert your net worth to a positive figure.
3 – Write Your Goals Clearly
If you want to achieve financial freedom and get success in your life journey then you have to set your goals. Your goals should be smart, which means that your goals should be, simple, measurable, attainable, and realistic, and time-bound. You should have your goals in black and white and stick to those goals.
Setting goals in your life will help you in many ways some are as follows.
Gives you direction; your clearly setting goals gives you direction, where are you going? It acts as a roadmap to your destination.
You will be focused; while setting your goals you will be focused on some points. Your energy and thoughts will not be scattered, which leads you to get succeeded.
Goals will act as motivators; as motivators, your goals will motivate you regularly and keeps you energetic.
Boost confidence; your goals create confidence in you. When you progress over time, you will be more confident.
Measure your progress; when you set your goals and act accordingly, it will act as a measuring tool of your progress.
4 – Prepare Your Budget
Budgeting simply means preparing a forecasting plan to spend your earned money in a wise manner. This plan of spending money is called a budget.
As we know that planning is most important in every field of life. Budgeting is financial planning and its very important financial skill that every one musk knows to be successful in financial matters. Your budgeting plan will help and guide you to take excellent financial decisions. It will control all your earnings and spending. It balanced your income and expenses. It will direct you where you have to spend and where you have not.
A good budget plan never allows you to spend more than your income. It also provides the basis for future planning.
5 – Pay Yourself First
Pay your first is the popular concept in personal finance. I am sure you have heard frequently about the term “Pay Yourself First” What it means and how is it possible with having a limited income?
All right, you can pay yourself first. You can set aside some amount from your paycheck or any monthly earning without paying your bills. You just do it blindly, and then what will happen? Yes, you will run short of money to manage your monthly expenses, and this will compel you to think about other alternative sources of income to manage your expenses. In this way you will struggle hard and definitely you will find some other ways of earning. And you will be closer to financial freedom gradually. So pay yourself first in any way.
6 – Start Investing
An investment is an asset or commodity that is acquired for the purpose of generating income or making a profit. In financial science, investing is a financial asset, like a company’s stock, bought with the intention of increasing its value in the future and making a certain profit by selling that asset at a higher price.
In another definition, investing is any sacrifice of a present value, the amount and amount of which are known, in the hope of acquiring any value in the future, the size or quality of which is usually unknown. In other words, the investor is currently sacrificing a certain value in order to get the desired value in return in the future.
7 – Find Multiple Streams of Income
“Don’t put all your eggs on one basket”
You should diversify your investment, manage multiple streams of income. It will minimize your financial risk and you will be safe in an economic crisis. One common habit in all wealthy people is that they have many sources of income, that don’t rely on only one income source.
If you work on multiple streams of income and diversify your income, you don’t have to worry if something happens wrong to one of your income sources.
8 – Track Your Spending
If you want financial freedom, then you have to change your spending habits and keep track of your monthly expenses.
The best way to track your spending is to create your monthly budget and stick to it. Keep a record of your expenses and watching them regularly help you to do well financially. It will reduce your financial stress, and make you ready to make prudent financial decisions. It will improve your cash flows. On the contrary, if you don’t track your expenses, simply it means that you don’t know that where your money is going? For what you have spent your money? And how much you have spent? In the end, you will find him in financial stress and your budget will be unbalanced.
So it’s very important to track your expenses if you want to grow financially, and want to achieve financial freedom.
9 – Continuous Learning
“Anyone who stops learning is old, whether at twenty or eighty. Anyone who keeps learning stays young. The greatest thing in life is to keep your mind young” – Henry Ford
Continuous learning is the best key to get succeeded in any field of life. Thanks to information technology, now day’s learning process is at your doorstep, all you need is a computer and internet connection and you can get access to much more stuff to learn and develop your skills. The more you learn, the more you earn.
The key benefits of continuous learning are
Stay up to date and relevant: By continuous learning, you will be more relevant and up-to-date in your commanding areas.
Boost your confidence: It will boost your confidence to take any task.
Innovation: By continuous learning, you will come across new ideas in your field
Future prediction: Continuous learning helps you to see in your future and prepares you for that in advance.
Multi-Functional: You will be multi-functional if you learn continuously; you will be able to do a task in a different way.
10 – Take Care of Your Health
As we all know the wise saying that “Health is Wealth”
No doubt, health is your greatest wealth. All the things come second, your health first, if you are healthy then you can be wealthy, it’s my saying if I am wrong please correct me. If you are not healthy you cannot do anything, even you can lose your life too, and then what else remains? Only if you have good health you can manage all you’re other things. You have the health you can do whatever you want to do.
So if you want to get financial freedom then, please take care of your health first.