The Down-to-Earth Guide to Financial Freedom (Yes, It’s Possible!)

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Do you dream of a life where money isn’t a constant source of stress?

Where you can say “yes” to the things you love without much hesitation?

Financial freedom is something that sounds very difficult to achieve for some, but trust me when I tell you that it is easier than you think. You don’t necessarily have to earn a six figure salary or have a trust fund, just a plan, consistency and some simple changes to your mindset and financial habits. 💸

Let’s dive in!✨

Step 1: Define What Financial Freedom Means to YOU

Everyone’s version of financial freedom looks different. Maybe it’s retiring early, traveling the world, or just having a cushion in your bank account. Take a moment to write down your goals. When you have a clear vision, it’s easier to create a roadmap.

Ask yourself these questions: What is it that you dream of every day? Do you dream about traveling around the world? Do you fantasize about having multiple income streams? Or is it to have your own schedule and work at your own pace? Think of all this the things you would like to be able to do once you are financially free.

Photo by Kaboompics

Step 2: Know Your Numbers

I know! For some of us it is very hard to keep track of our finances. For instance, it may be overwhelming to look into your bank statements or the list of bill pending to pay. But trust me when I tell you that, as you incorporate this tracking into your routine, you will feel more and more empowered and in control of your money.

To make it easier for you, first identify your preferred method of tracking. Do you like to write things down, or do you prefer to have an excel spreadsheet with all the numbers? Or do you prefer an app designed for this purpose? Do you see yourself committing to this method? Then, you can choose the frequency.

You can start a monthly review/track just to adjust to this new you! Start little by little, adding micro tasks, like reviewing your bank accounts every Monday or automating your bills.

Remember, there isn't a RIGHT method, and most of all, there isnt a suit everyone approach! You should follow what feels best for you, if not, you won’t be able to keep up.

When tracking your money, start by calculating:

Your monthly income

Your essential expenses (rent, groceries, utilities)

Your non-essential spending (yes, those coffee runs count!)

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Step 3: Pay Yourself First

Sometimes it feels like you are just working to pay the bills. It is true that you have to secure your essential needs first, but savings are also very important. We tend to leave the savings for the end of the month, but what if we were to set aside a percentage of our income the first week of the month? How would that make you feel to see your savings account growing every month?

Of course, this would be different for someone that doesn't have a stable income. Yes, in this case it is possible to pay YOU first, but it is better to have an average monthly income of at least 6 months before starting!

You could follow the 50-30-20 which involves splitting your money into three categories of spending: 50% goes to needs, 30% goes to wants, and 20% goes to savings as it is advised by investment experts to save a minimum of 20% of their income after tax . And remember, don’t leave this money in a checking account that pays no interest. Open a high interest savings account or if you have some knowledge of investing, open a brokerage account and start investing to make the most of your savings.

Photo by Leelo The First

Step 4: Cut Costs Without Sacrificing Joy

After you make peace with tracking your numbers, you can start identifying those small expenses that at the moment may not seem like a big deal, but when adding up, it could make a difference. These include things like: Buying a coffee, snacks, eating out, subscriptions, impulse purchases, etc.

This doesn’t mean that you have to give up your lattes or you wont be able to go to restaurants. This just means that you could adjust your spending habits for your own advantage. For example, you might notice you are paying for a subscription you are no longer using, or doesn't interest you anymore. Or maybe you are spending a lot of money in junk food, and you’d also like to improve your eating habits.

No, you don’t have to give up lattes forever (unless you want to). The key is to identify areas where you’re spending on autopilot. You could ask yourself these questions:

Do I really need this?: Before every purchase, pause and honestly assess if it's essential or a want.

What are my spending triggers? Are you more likely to overspend when you're stressed, bored, or shopping with friends? Identify these triggers and develop coping mechanisms.

Which streaming services do I actually use? Cancel any you rarely or never use.

Can I negotiate a better deal or find a cheaper alternative?

Can I pack my lunch for work?

Do I buy things I don't need or already have?

Do I often return items I purchase?

Step 5: Start Building Passive Income

While cutting expenses is a great way for saving money, it is also good to build wealth by having multiple passive income streams. If your goal is to be financially free, passive income can help you earn more and tide over high cost of living, or situations like unemployment or just voluntarily time away.

With passive income, you are able to earn money even while working full time, and this can help you to retire early. This provides you with extra financial security. Keep in mind that you may have to do some work or invest some money upfront, and that oftentimes some additional labour may be required along the way. For example, if you have a rental property, you need to keep it well maintained so the income keeps flowing, so you need to stay committed.

Here are some ideas to generate money event when you’re not actively working:

Write an e-book

Thus can be a great opportunity to take advantage of the low cost of publishing and the worldwide distribution that platforms like Amazon can provide. E-books don’t have to be long, around 30-50 pages can be enough, and it is very cheap, since they rely on your expertise. Try to pick a niche that you are passionate and expert about. You can quickly design books on platforms like Canva.

Invest in a high-yield CD or savings account

Investing in high-yield certificates of deposit at an online bank can help you generate passive income and also get the highest interest rates in the country. Do a quick search of the country’s top CD rates or top savings accounts.

Sponsored posts on social media

If you have a strong following on social media, you could get a growing consumer brand to pay you every time you post about their product/services, or if you feature it in your feed.

Advertise on your car

By simply driving your car around you can generate some money. Get in touch with a specialized advertising agency so they can evaluate your driving habits. If you pass their tests, the agency wraps your car with ads at no cost to you. Keep in mind, these agencies usually look for newer cars and drivers should have a clean driving record.

Create a course

Another way to make money online, is to create an audio or video course, and sell it on platforms such as Udemy, SkillShare and Coursera. For this you need to build some free content as a demonstration of expertise and to attract the audience looking for your course.

Rent out useful household items

You may have household items collecting dust in the garage, like mechanic tools, tool box, lawnmowers, etc. Look for high-value items that people use for a short period of time, and then find a way for them to discover your inventory (facebook market or facebook groups for example).

Photo by Kaboompics

Step 6: Tackle Debt Strategically

If you have debt, try to stay on top of those high interest loans!

It is not like you can't invest while having debt, but it is good to tackle strategically.

There are two ways to tackle debt:

1. The Avalanche Method, which prioritizes paying off debt with the highest interest rates first. The purpose minimizes the total amount of interest paid over time, saving you money in the long run.

To use this approach:

a. List all your debts, including interest rates.

b. Make minimum payments on all debts except the one with the highest interest rate.

c. Allocate as much extra money as possible towards the highest interest rate debt.

d. Once that debt is paid off, move on to the debt with the next highest interest rate.

2. The Snowball Method prioritizes paying off the smallest debts first, regardless of interest rates. The focus is providing a sense of accomplishment and motivation as you quickly pay off smaller debts. This can help maintain momentum.

This is how it works:

a. List all your debts, from smallest to largest balance.

b. Make minimum payments on all debts except the smallest one.

c. Allocate as much extra money as possible towards the smallest debt.

d. Once that debt is paid off, move on to the next smallest debt.

Step 7: Stay Consistent and Celebrate Wins

Consistency is a powerful tool for achieving goals and improving overall well-being. By consistently engaging in positive habits, we create lasting change. Consistency allows for gradual progress and it leads to increased confidence and a greater sense of control over your financial life.

Financial freedom doesn’t happen overnight, that is why you have to celebrate small victories along the way — paying off a credit card, hitting a savings goal, or sticking to your budget for a month. You’re building a new future, and that’s worth celebrating.

Conclusion

You don’t have to be super rich to reach financial freedom, as long as you are committed to making small, consistent changes to your financial routine. Financial freedom is about creating a life where you feel in control of your money.

And remember not to compare yourself with others' journeys! Each one of us has different circumstances and possibilities. Just let others be an inspiration for you and make your first steps to be financially independent right now! 💸

Written by:

Anabel Gonzalez