Having enough money which can be used for savings, investments, and to live a decent lifestyle for ourselves and our loved ones is what can be said as achieving financial freedom. However, achieving this is a dream for many, and we all work hard in our life to achieve this dream.
What pushes us back in order to achieve financial freedom are debts, these are basically financial burdens which can make us a slave and curb our happiness and peace by eating up a large portion of our earnings. Apart from this, financial emergencies, profligate spending, and other issues that thwart us from reaching our goals.
How can we achieve this?
Setting financial goals, clearing debts, keeping track of expenses, and well-planned investment strategy can help us to achieve financial freedom. However, it needs full dedication and regular practise in order to reach the goal sooner. To start with making a concrete plan is important to break free from the shackles of debt and live a peaceful and debt-free life.
Recognizing Bad Debt
Debt is borrowing money from a second party in order to fulfil your financial requirements when you don’t have enough of it. For many, it starts with a credit card, personal loan, student loan, car loan and home loan.
Well, debts are never good to have as you need to repay it along with a huge interest. But, still, if you are able to create some asset, or if you are successful in building more money out of your borrowed money then it is considered as good debt. Whereas the loan/borrowing which eats up a major part of your income is considered as bad debts. Credit cards and other loans with higher interest rates and loans which don’t give any ownership unlike car loans and home loans can be said to be bad debt.
These debts are awful and will drastically limit your monthly cash flow, which is what is keeping your Gap of Opportunity from being a force for financial freedom.
So, if you truly want to enjoy financial freedom, you need to know the difference between good debt and bad debt. Important of all, you need to repay your debts with planning. The best debt is one that is paid off comfortably and at the earliest.
This can be considered as the most important thing which will help you to achieve financial freedom. The more you earn, the more capable you become to reach your goals.
Wealth building can be achieved through:
- Earning money: To increase your income, you can start taking freelancing projects, part-time jobs. You can also use any of your passions such as art and craft, painting, cooking, etc to add extra income to your pocket.
- Spending less money: Even if you earn more and keep on spending in the same proportion then, it’s not going to help you. Spending less when practised regularly can soon be reflected in your bank account as you will be witnessing more money there.
- Paying off debts: Paying off your debts can save you a lot of money which was earlier consumed on EMIs. And if you are able to end your debt sooner it is going to save even more which you would have spent on the interest.
- Savings: Always try to save from anywhere possible. To perform it perfectly even before spending, set a fixed amount as your target to save. Keep that particular money aside and then start spending from the remaining.
- Investment: It’s a proven fact that savings are never enough to enjoy a financially free life. You need to use your savings and invest it to make more money. Doing this not only grows your money but also makes your future financially secure.
Achieving financial freedom is very important to establish and maintain a standard of living. It secures your life financially and makes your tension free for the future.