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What Can You Do to Get Closer to Financial Freedom?

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financial freedom

Financial freedom means being able to live without worry. Getting to a point of financial independence can be really challenging. There are a lot of different roadblocks that come up. Accidents happen, bills pile up, and you find yourself back at square one.

If you are trying to become more financially responsible, you need to consider a few things. You should consider how much you spend. You have to think about what you can and should save. You also have to find a way to protect yourself. Finally, you have to work on your debt.

Consider What You Spend

Many financial advisors will tell you that you need to work on a budget. This will help you consider what you spend each month compared to what you make. You should not spend more than you make. You have to take responsibility for your budget if you want to successfully keep some money in your bank while still paying for everything that you actually need.

Consider What You Save

Part of your budget should be considering what you save, and how you save. Many experts say people should try to save about ten percent of their income. But how should you save this money? Start with an emergency fund, that way you will be prepared for the unexpected adventure called life. After your emergency fund, you can start looking to retirement and saving for your children’s college. You can use a 401(k), Roth IRA, stock, bond, and CD.

Consider Your Insurance

Reaching financial freedom cannot happen without a safety net. That’s why you want to work on building up your emergency fund before saving for anything else. Another way you can protect what you’re earning is by getting insurance. Talk to an insurance agency to find out what kinds of insurance you need to have in order to protect yourself and your money in order to reach your goals.

Consider Your Debt

Before you can reach this freedom, you have to be debt free. You have to consider your debt, and start working towards a debt-free life. Start by paying more than the minimum whenever possible. Also try to stay out of debt by considering if you actually need what you’re about to purchase. If you’re buying a car or a house or going to college, it’s reasonable for you to get a loan. If you’re getting a loan for anything else, you should figure out if you actually need it even though you clearly can’t afford it.

Spend Little to Save More

The bottom line is if you want to reach financial freedom, you have to start living responsibly. You can’t spend money whenever you want something. You have to spend less now, so you can save more. The money you save will help you have a great retirement and live a less frugal life in the future.

Many people are striving to reach financial freedom, but it is not an easy thing to achieve. You have to be smart about how you spend your money if you really want to get there. Spend less than you make, save at least ten percent of what you make, get insurance and try to stay out of debt.

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{ 9 comments… add one }

  • Michael @ Financially Alert January 20, 2016, 10:22 pm

    Joe, this is a great list of strategies to achieve financial freedom quickly. I think an interesting thing is a lot of people don’t realize is that financial freedom is a lot easier to achieve than they think – thus they don’t even begin. But, it’s definitely worth the effort and so rewarding once you no longer feel bound by money constraints. I’d also echo the insurance component… it’s an area often overlooked, but can provide a good deal of peace of mind.

  • Brandon January 21, 2016, 5:01 am

    “Before you can reach this freedom, you have to be debt free.” I have to disagree with a blanket statement like this. I plan to have my mortgage when I am financially free. I also plan to have mortgages on all of my investment properties when I become financially free. Most people by this point have a fixed mortgage in the sub-4% range. It would be foolish to pay down that debt when there are so many better places to put your money. If you are paying down debt, make sure you think about opportunity cost. If you have a 19% credit card, then by all means pay that down asap. However, if you have secured debt against an asset that is sub-4%, then take your extra money and invest that in something that can earn you a better ROI.

    • retirebyforty January 22, 2016, 10:23 am

      I think mortgage debt are neutral as long as the interest rate is pretty low. Mortgage debt on investment properties are good debt. There is no reason to pay those down.

  • Money Beagle January 21, 2016, 6:05 am

    Your net worth equals your assets minus your debt. To get to financial freedom, you want to increase your net worth, by some combination of increasing your assets and reducing your debt. How you do it, well there’s a million ways, but it really boils down to what I just mentioned. Keep improving both sides of the equation and you’ll get closer and closer to your ‘freedom’.

    • retirebyforty January 22, 2016, 10:24 am

      Yeap, it’s simple, but very difficult to execute.

  • Jim @ Route To Retire January 21, 2016, 1:14 pm

    These are great tips – simple and straightforward. The more enveloped I’ve become in wanting to reach financial freedom, the more I’ve noticed that I watch what I spend even more closely. Right now, we’re saving about a third of our income and I’m seeing the light at the end of the tunnel! Hopefully this year we can nudge that number up a little bit more.

    — Jim

  • Pennypincher January 21, 2016, 1:49 pm

    I’m free finally. I’m old (not that old). And I couldn’t be happier. Starting right out of college, investing in the stock market. Never panicked over a market correction or crash, just believed in it so strongly, and still do today, that I never touched the money. Life is good!

  • SavvyFinancialLatina January 21, 2016, 3:39 pm

    This year my goal is to invest heavily in our taxable brokerage account.

  • Aaron Smykowski January 22, 2016, 2:24 am

    To me the key here is awareness and prioritization. Money and finances triggers a strong emotional component in people. When there is financial pressure there is personal stress leaving people uncomfortable and unhappy. Just like with losing weight there’s no quick fix to undo the poor choices that led to a bad financial situation. Instead of burying your head in the sand in an attempt to avoid the stress you need to do the opposite and confront the situation head on. Become aware of why your cash flow is negative and how to fix it. Come up with a budget. Come up with a plan to attack debt. In the end freeing yourself financially is about facing your fears, learning, planning and executing.

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