Looking to become financially stable?
Today, I have a great article from Neiko Johnson. Neiko and his wife paid off $240,000 in 27 months. They share their finance knowledge and debt-free journey on their blog Secret to Finance.
Living paycheck to paycheck has become a common reality for many people. Further, it happens in every single income bracket.
That is to say, you shouldn’t beat yourself up over your financial situation. However, you should be focused on finding ways to take control of your finances. When you travel towards success, you must go through the road of pain first.
Use the following 7 steps to finally find a breakthrough to reach financial freedom and master your money.
1. Find Your Purpose and Create a Plan
Before you can reach financial freedom, you must fully understand what it means to you and your family. There are many reasons to want to be successful, and everyone wants to be successful. However, not everyone knows how to be successful. The HOW is the key part of reaching financial freedom.
As we began our debt-free journey, we wanted to change our family tree. Historically speaking, most people carry debt and have no issues with it. Our goal of being debt-free is directly related to wanting to retire early with dignity. Ultimately, living with debt will not allow us to reach our goals.
2. Live on a Written Budget
If you’re currently living paycheck to paycheck, then budgeting may be your problem. Here’s a great article on how to get started with budgeting for beginners. A budget gives you a plan on how to spend your money. Most importantly, it puts you in control and gives you the ability to tell your money how to behave.
Certainly, there are many ways to budget. I recommend you find the best budgeting method that works for your finances. We are all different and may require a different approach to budgeting. However, you must budget!
Most importantly, the average person finds extra money they didn’t know they had when they create a budget.
3. Get Out of Debt
Above all, paying off debt can be difficult and frustrating at times. Further, if you don’t have a plan you may continue to be confused and lose motivation. Getting out of debt requires short-term sacrifice for a long-term gain.
Your life will change as you cut expenses to speed up your debt-free journey. Here’s a great article on if paying off debt is worth it. During our journey, we decided to not take any trips, limit eating out, and stop buying gifts for each other. Ultimately, that allowed us to save thousands of dollars and attack our debt.
Another great option for getting out of debt is starting a side hustle. Our decision to start our blog allowed us to increase our income and use that money for debt.
4. Save Money
Wisdom is knowledge applied. Now that we have addressed getting out of debt, the next step would be to save money to reach financial freedom. Being financially free simply means you control your finances.
Saving money is a key part of personal finance. Having a clutch fund (aka emergency fund) is one of the most critical parts of your savings. Everyone will experience something that requires money. But, being able to pay for it in cash rather than using credit is the best decision.
5. Live on Less Than You Make
Cutting your lifestyle will lead to you having more money. Therefore, just because your income increases don’t mean your expenses have to.
Having a plan and living on a budget aligns with the type of lifestyle you have. Now don’t get me wrong, we all like nice things. However, you must be able to afford the things you want in life without going further in debt.
We have decided to never have debt again. If we can’t pay for it in cash, then we can’t afford it. This lifestyle change has helped us have more control over our finances.
6. Invest in Your Future
The millionaires and billionaires in the world understand that having a budget is important for them to stay organized with their finances. Certainly, with their businesses, they want to make sure they know where all their money is going. Investing in yourself is the best thing you can do so you utilize your money the right way and not waste your time.
You work way too hard for your money to not have a plan for your future. For example, here are a few things you could invest in for your future: mutual funds, real estate, life insurance, kids’ college, etc.
These key areas are important as they allow you to have a plan moving forward. At the end of the day, this is what financial freedom looks like.
7. Be Generous to Others
Being able to give to others shows how you are not selfish and greedy. Selfishness can lead to having a false belief that keeping everything to yourself will make you happy. To clarify, giving is the solution for selfishness.
However, you must first have your finances in order before you can give. It’s a joy to give to others as it shows the character quality of those who win with money. As a result, givers become content because they know buying stuff for themselves won’t make them happy.
Final Words – Live with Financial Freedom
Now that you know how to live with financial freedom, give it a try! Once you get started, I promise it gets easier. Everyone in the world wants to be successful and live with financial freedom. However, you must be intentional and have a plan.
If you still need some help getting started, check out this article 7 Steps to Take Control of Your Finances. My wife and I have used these strategies for more than 3 years and it has made a tremendous impact on our lives.
What area of your finances are you focused on right now?
Do you have a solid financial plan?
About the Author:
Neiko is a former professional baseball player that decided to pursue a career in IT Security after he retired. He obtained his Master of Business Administration (MBA) and Master of Information Assurance (MSIA) degrees prior to finding his passion in personal finance. Personal finance has grown to become his primary focus along with wanting to help others take ownership of their finances in order to live with financial freedom.
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