The term financial freedom or financial independence refers to an individual’s ability to build up sufficient assets to sustain their desired lifestyle indefinitely. Unfortunately, issues such as debt and poor financial management means that a large percentage of the population will never achieve true financial independence.
There is still hope however; by getting the fundamentals right, you too can achieve financial freedom with these 4 tips.
1. Repay your credit cards
With 70% of Americans unable to make their credit card repayments, it is clear to see that credit card debt is a serious threat to your financial independence.
When left unchecked, credit card debt has the potential to grow exponentially. With the extortionate rates charged by banks, ignoring your credit card debt is akin to turning your back on a ticking time bomb.
Rather than paying off the bank, avoid using your credit card where possible to reduce debt exposure. Instead, opt for cash payments and reduce your credit card usage as much as possible. Due to the guilt factor, paying with cash also discourages you from making unnecessary purchases.
On the long-term, you’ll become accustomed to making prudent financial decisions which goes a long way towards helping you achieving financial independence. With zero outstanding credit card debt you’ll be able to avoid expensive interest payments to the bank.
2. Start force saving
A startling number of people do not have savings of any kind. In fact, the majority of us typically live from paycheck to paycheck with little regard for tomorrow. Through a combination of poor budgeting and a lack of financial knowledge, most of us will not be able to save up enough money for retirement.
However, instead of relying on yourself, why not automate your savings?
Take away the fuss of manually putting aside savings by enrolling for a forced savings program. A forced savings program automatically deducts a portion of your salary every month and deposits it into a savings account.
These funds can only be withdrawn after a set period of time i.e. 3 years to 30 years. Thus, totally eliminating the need to discipline yourself as a set amount of your salary is automatically deducted every month.
As a sweetener, many forced savings programs pay a fixed interest rate for funds deposited, this allows you to earn a passive income on interest payments from the bank.
3. Keep in shape
Keeping in shape is one of the most effective methods of achieving financial freedom. From running to swimming or even hitting the gym, sweating it out will have you feeling and looking great.
By taking care of your health, you’ll significantly reduce the risk of developing health problems such as diabetes, heart disease and cancer over time. All of this will save you from a world of pain, while also ensuring that your hard-earned savings are not eaten up by hospital bills.
Think of exercise and a healthy lifestyle as an investment into your health and the future. After all, what’s the point of achieving financial freedom if you’re not alive and healthy to enjoy it?
4. Cultivate passive sources of income
Building up various streams of passive income is essential if you are to achieve your goal of financial independence. Passive incomes allow an individual to earn money with minimal activity required on their end. This can range from investment in stocks and shares or buying up bonds.
With a few wise decisions, you can easily build up a portfolio of investments which can easily see you through a very comfortable retirement. A steady source of passive income that covers all of your expenses will free you up to enjoy life.
If you’ve got an eye for sport, punting on horse racing has proven to be an extremely lucrative investment. Keep up to date with the latest developments by watching free live horse racing streaming. However, it should also be noted that all investments are not without risk. This is why you should always consult a professional before making a serious investment decision.
Financial freedom is a realistic and attainable goal for an individual who is disciplined and focused.