Most people think of financial freedom as a far-off dream, something that’s impossible to achieve without winning the lottery or becoming a millionaire. But that’s not the case at all!
In fact, you may be a lot closer to financial freedom than you think.
In this post, we’re going to discuss the real meaning of financial freedom and some practical steps you can take to achieve it.
What Financial Freedom Isn’t
Most people’s definition of financial freedom is that they need the yacht, the fancy car, the big mansion and millions of dollars in the bank and this somehow equates to financial freedom.
So what happens is they work their butt off trying to get to this BIG goal to keep up with the Joneses.
That’s not financial freedom. What they are chasing is financial abundance before even getting to financial freedom and there is a very big difference between the two.
This is also why most people don’t get started on their financial freedom journey — because it feels so far away from where they are now.
But the truth is, in many cases, it’s much more achievable, and you can get there much faster than you think.
The Real Meaning Of Financial Freedom
Financial freedom isn’t about having a fancy lifestyle. It’s not about being able to buy whatever you want, whenever you want. It’s not even necessarily about having a lot of money.
All it simply means is having enough passive income to cover all your basic lifestyle expenses — so you don’t have to do things you don’t enjoy (like work a soul-sucking job) just to put food on the table.
This means that if you lost your job or chose not to work, you would still be able to maintain a comfortable lifestyle without fear of financial ruin.
What’s Your Financial Freedom Number? (Calculate It Here)
To demonstrate how much easier it is to achieve financial freedom than most people think, let’s say Person A currently has:
- $4,000 per month in ongoing living expenses
- $1,000 per month in passive income from a rental property or share portfolio they own
In this case, what they need to reach financial freedom – in other words, freedom from having to work to fund their ongoing living expenses – is $4,000 in monthly expenses minus $1,000 in monthly passive income, which equals $3,000.
This is their Financial Freedom Number – $3,000 per month, or $36,000 per year.
So in other words, Person A only needs a further $36,000 in passive income per year to be able to have the freedom to do what they want, the way they want to.
Everyone will have a different Financial Freedom number depending on their circumstances, the lifestyle they want, and the cost of living in the area they live in.
But you can see that it’s much easier to be financially free than the previous example of owning fancy cars, yachts, mansions and having millions in the bank.
You can do the same calculation for yourself – simply have a look at how much passive income you’re currently generating, and then subtract that from your monthly expenses to determine how much more passive income you need in order to be financially free.
Practical Steps To Achieve Financial Freedom Faster
Now that we’ve established what financial freedom is and how to calculate your Financial Freedom Number, it’s time to discuss practical steps you can take to achieve it faster.
1. Track Your Expenses
The first step to achieving financial freedom is knowing where your money is going each month. Start by tracking your expenses and categorizing them into needs (e.g., rent, food, utilities) and wants (e.g., entertainment, luxury items). This will help you make better spending decisions and identify areas where you can cut back to help save money.
2. Increase Your Income
The best way to get closer to financial freedom is by increasing your earnings so you can increase the amount of passive income available for your lifestyle expenses. This could involve getting a promotion at work, starting an online business or side hustle, or investing in real estate.
3. Automate Your Savings
Once you’ve identified areas to save money and increased your income, it’s time to automate as much of your savings as possible. This could involve setting up a regular direct deposit into a high-interest savings account or investing in index funds.
4. Learn Passive Income Strategies From A Mentor
Finally, you should look to learn strategies from a mentor who has achieved the level of financial freedom that you’re aiming for. They’ll be able to show you practical steps and strategies on how to increase your passive income generation so that you can reach your Financial Freedom Number faster.
Conclusion
By taking these practical steps, you’ll be able to get closer to achieving financial freedom much faster. So don’t let the flashy lifestyle of luxury cars and mansions fool you – financial freedom is achievable, and it starts with tracking your expenses and increasing your income.
Just remember, it’s not about having a lot of money – it’s about having enough passive income to cover all your basic lifestyle expenses so you don’t have to work for them. That is the true definition of financial freedom.
But in order to actually get there faster, you need to take action. So start today and make sure you’re on the right track towards better money management and financial freedom.
Terry
P.S. If this post makes sense to you and you’d like some help with learning passive income strategies, here are some resources you might find handy:
- The first is my comprehensive blog post: Going From Absolute Novice To Confident Investor (The Complete Stock Investing Guide). It goes through all the steps you need to take in order to become a confident investor and reach your financial goals.
- The second is our FREE 10 Stock Criteria Checklist, which helps you identify what I consider to be the financially strongest 1% of stocks in the market at any time in less than 5 minutes. Click here to learn more.
- The third is our FREE 90-Minute Online Masterclass, where I’ll show you how I personally anticipate market crashes in advance and prepare for them. Click here to learn more if you’re interested.
