Dave Ramsey, personal finance guru, touts financial freedom as the idea that you get to make your life decisions without the concerns for financial impact because you are prepared. By being in control of your finances, your finances do not control you.
That’s all well and good, the sentiment is uplifting and motivating. But what does it mean in concrete terms? Well, that depends on your goals. Do you dream of traveling to distance and exotic locals throughout your golden years? Then you’ll need a solid retirement savings plan, a handle on your debt, and a thrifty travel agent. But what if your goals are more modest? And what if you want to exit the rat-race entirely by age 40 instead?
Some would love nothing more than saving up to buy property and be self-sustaining years before others dream of retirement. This means saving up for a down-payment, figuring out housing, perhaps drilling a well and other expensive necessities. But the long-term gains outweigh the short-term grind for those with this dream.
To start on your path to whatever your financial freedom goal is, you have to figure out where you are, what you want and where you want to be. Get clear on your financial goalposts and get clear on how you’re going to achieve them.
Start with eliminating debt. Pay down your debts as soon as possible, making double payments when possible, and paying off small debts quickly. Set up repayment plans and stick to them for bigger debts. The faster you pay off your debts, the sooner you can start realizing financial freedom.
Explore your options for high-interest savings accounts and retirement plans. Research, reach out to a professional and start raking in that interest. This will help you make more money in the long run.
Invest and diversify. Even if you’re only investing $30 a month or buying one stock at a time, having investments and keeping a diverse portfolio will only add to your wealth. Once you’ve eliminated your debt, you can start paying yourself and putting that money (that you previous sent to debt collectors ) into the stock market. You’ll watch your wealth grow at a steady pace with wise investment practices. If you’re not comfortable making your own investments, pay a professional. Your interest from those investments will pay for the professional service easily.
These three steps are pillars for building your wealth and finding financial freedom, no matter what that looks like for you.