Financial freedom: what it is and what can be done to achieve it

Achieving financial freedom is among the main goals of many people, but do you know what it takes to achieve this goal?

To understand what financial freedom is and how to achieve yours, it is important to pay attention to some tips. That’s because you probably have no idea what it takes to get there.

Keeping the bills up to date and still having fun without having a headache when it comes to money. Understand more about the concept of financial freedom.

Work, pay the house bills, the credit card bill and save an amount every month. All without making big sacrifices or worrying about having a little money left over. This has to do with financial freedom.

You’ve probably heard this term around. But do you really know what it means? And how is it different from financial independence?

Financial Freedom: What is it?

In a nutshell: financial freedom is being able to choose what you want to do with more tranquility. If you are going to travel on the weekend or watch a series without leaving home, for example, keeping in mind that any of the options chosen will not harm the organization of your finances. Your income is enough to cover your expenses and still allows you to invest time and money in leisure.

American author Grant Sabatier, in his book Financial Freedom , says that being able to organize your finances and save money can give you the flexibility to live as you want.”

Many people confuse these two terms. However, despite being similar, they are different.

In everyday life, it is common to hear phrases such as “Today I am financially independent. I moved out of my parents’ house and paid my own bills.” But not quite…

Financial independence is when a person accumulates a certain amount of wealth that allows him to live on income. That is, when the amounts accumulated and invested during life are sufficient to meet needs and meet financial commitments, without depending on any other source of income.

Financial freedom, on the other hand, is actually the autonomy that someone achieves in the field of finance. Thus, it is possible to make financial decisions with greater peace of mind – such as whether or not to buy such a thing or to go or not to such a place, for example. Always remembering your goals and objectives.

How to achieve financial freedom?

If you liked the idea and want to know how to have financial freedom to live life as you see fit, we are now going to show you practical tips for you to achieve this goal.

5 Ways to Improve Financial Health

It is important to note that the 7 steps that we will present below will help you organize your finances and invest your money smartly. But that’s only if you commit and follow our tips to achieve the long-awaited financial freedom. Come on?

Step 1: Understand your spending

Do you know how your financial life is? Are your bills up to date and can you make the money left over at the end of the month ? If the answers to these questions are yes, you are on the right track.

But if the answers are no, don’t despair. It’s up to you to organize your financial life and this is not a complicated task.

When you take the time to organize your finances and understand what goes in and out of your account, it’s easier to get an overview of your financial life and that’s the best scenario for achieving financial freedom.

And you can organize yourself the way you see fit. A good alternative is to use an expense spreadsheet . Fill in all your costs and income to get this big picture.

Then you will be able to see the possibilities of controlling unnecessary expenses and see where you can save. If you have debts, still work to pay them off .

Step 2: Make a financial plan

With everything written down, it will be easier to go to the next step, which is financial planning . He will be your greatest ally in your quest to achieve financial freedom.

Here, it is important to set goals and objectives, always within a deadline determined by you. Anyone who wants to get somewhere needs to have a very well done plan to ensure that the goals are achieved.

Therefore, at this stage it is important to list how you intend to increase your income. And it’s not just about salary, but also about investments (we’ll talk more about that later).

When you are committed to the goal, everything becomes easier. But don’t forget: it will take a lot of discipline, focus and perseverance.

Step 3: Understand your investor profile

If you intend to make any investments, it is necessary to understand what your investor profile is.

It is a rating that each investor or person who invests their money in an investment product receives, linked to the risk they are willing to assume with their investments.

See the 3 main profiles:

• Conservative : Has greater risk aversion – that is, prefers to invest his money in products that present no or low risk. Fixed income investments are the ones that have the most affinity with this profile – since the risks presented are low and there is still the “guarantee” of a monthly income.
• Moderate : is willing to take a little more risk in order to have a higher return; but, at the same time, it does not give up a certain security. Therefore, he invests both in fixed income and in other options, such as hedge funds (medium risk) and even stocks.
• Aggressive : willing to take risks to have greater profitability – and even lose part of their equity in the name of it. In an investment portfolio, most of its applications are in variable income products – stocks, equity funds, options, among others.

4. Make a plan

He will be your great ally to enjoy the benefits of being financially free. Keep in mind (and, why not, in list form?!) your short and long term dreams and goals. This will allow you to keep track of all the information that pertains to your financial life.

But not only that…

Step 5: Invest wisely

Combining your investor profile with knowledge about the types of applications available on the market , you are one step away from success as an investor and, thus, also one step away from achieving the long-awaited financial freedom.

With information, it’s easier to escape these 12 common investor mistakes . After all, you will be able to identify when you will be faced with an opportunity or a ‘trap’.

Step 6: Be Organized and Committed

Okay, now that you’ve studied and know how you want to invest, keep your feet on the ground. It’s not enough to just invest and drop the money there.

You have to have control over your investments and be aware that sometimes you have to change course a little if things aren’t going your way.

Tracking investments is a way to make better decisions faster. After all, the market is always changing – including the ours and global economy.

So, you need to be careful to make the right decisions at the right time. Beware of impulse decisions and avoid extremes: don’t be too optimistic or too pessimistic.

In addition, you need to commit to the goals and objectives that you have outlined throughout your planning. This means that you need to follow what you set out to do if you really want to achieve your dreams. If you do nothing, the money will not multiply by itself.

Achieving financial freedom takes organization and patience. With focus and persistence, you will get there.

Conclusion

Generally, it is assumed that life is linear and that the right path is the same for everyone.

Go to college > get a job > buy a car > get promoted and get a raise > buy a house. This is usually the rule that a lot of people follow.

But having financial freedom makes a lot more sense for you who want to break this cycle.

In this way, we hope that our tips for you to become financially free have been important for you to make the best decisions for your life.

Financial freedom is being able to be who you are and do what you want with your life.

If this is your goal, follow the tips presented and conquer your financial freedom.