Financial freedom entails having enough savings, investments, and cash on hand to live the life you want, as well as growing a nest that will allow you to retire or pursue the career of your choice.
Unfortunately, far too many people fail. They are burdened by mounting debt, financial emergencies, frivolous spending, and other issues. Then, there are unexpected events that upend plans and reveal previously unseen gaps in their safety nets.
12 Ways You Can Achieve Financial Freedom
Fortunately, you can achieve financial freedom and independence by planning for it. While it may appear challenging, there are steps you can take to gain complete control of your finances.
1. Turn Goals into Milestones
It’s important to visualize your goals to be reminded of what you are working for. Whether it’s getting out of debt for good or saving for the down payment of a car or house, it’s recommended to make a list of how much money you need in your bank account, what you’ll use the money for, and when you want to have it.
Then, set financial milestones at regular intervals. The more specific the goals, the more likely they are to be met.
2. Learn How to Budget
Making and sticking to a monthly household budget ensures that your bills are paid, and savings are on track. Make a list of the expected expenses, such as debt and utility bills, to be reminded to pay them first. It reinforces your goals and strengthens your resolve in the face of temptation to splurge.
3. Live Within Your Means
It takes self-control to save money for a better future rather than spend it with reckless abandon. The earlier you learn how to live within your means, the greater the impact.
It is not as difficult as it appears to be. In fact, some wealthy people continue to live within their means, if not below it. Making small adjustments by knowing what you truly need versus what you simply want is a financially healthy habit to cultivate.
4. Track your spending
Tracking your spending allows you to prioritize, which aids in the elimination of wasteful purchasing habits. When you know how much money you take out of your bank account, you become more aware of your spending habits, allowing you to manage your finances better.
There are several useful apps for tracking expenses. They give you an update on how much money you’re spending, which categories you’ve overspent in, how much is still in your accounts, and how much debt you have remaining. You can, of course, go the traditional pen-and-paper route if you prefer.
5. Pay Off Your Debts
After you pay off your debts, the amount of money in your bank account will gradually increase. Credit cards and other high-interest loans are harmful to wealth creation. Make it a habit to pay off the entire balance every month. Meanwhile, student loans, mortgages, and other similar loans typically have lower interest rates, so you can repay them slowly.
Paying on time is also essential and will help you build a good credit rating that will help you qualify for low interest rates, allowing you to save money while paying off debt and avoiding credit card mistakes.
6. Start Investing
It is critical to save for a rainy day. Experts recommend putting three to six months’ worth of your salary aside. Begin with an amount you can afford, such as Php 2,000 per month, then increase it as you earn more. Look into retirement plans, as well. Your employer may be offering salary deductions that go into a retirement fund. Then, check it regularly to see how your savings are growing.
7. Get Insurance
If you have insurance, you are financially protected in the event of an unexpected crisis. A health insurance plan, for example, can cover your medical expenses. Meanwhile, life insurance can provide compensation in the event of a life-or-death emergency.
Getting insured is essential to achieving complete financial freedom because it provides a consistent cash flow that allows you to deal with emergencies confidently.
8. Get an Auto Savings Plan
It’s also a good idea to set up an automatic withdrawal for your emergency fund and an automatic contribution to a brokerage account or something similar.
Through this, a fixed portion of your salary is deposited into a separate bank account regularly. This allows you to gradually increase your savings without having to deposit funds every few weeks manually. Talk to your employer about your company’s options for this type of arrangement.
9. Maintain a Good Credit Score
A credit score reflects a person’s credibility when it comes to debt repayment. It determines the interest rate they can receive when, for example, financing a home, purchasing a car, or obtaining insurance.
Those with low credit scores typically have a more difficult time obtaining a loan because they have a history of not paying their bills on time. A high credit rating, meanwhile, indicates a high likelihood of repaying the loan without difficulty.
10. Continuous Education
Financial policies and regulations change, so it’s a good idea to review relevant tax laws yearly to make sure you’re taking advantage of all possible deductions. Be updated with financial news and stock market developments, and don’t be afraid to adjust your investment portfolio accordingly.
Most importantly, remember that knowledge is the best defense against those who prey on people through scams.
11. Proper Maintenance
Outlive a device or furniture’s warranty—the more durable your possessions are, the more you can save. Taking care of your property extends their lives, from cars and lawnmowers to shoes and clothing. Because the cost of maintenance is a fraction of the price of replacement, it is an investment that should not be overlooked.
12. Strive to Take Care of Your Health
The principle of proper maintenance applies to the body, as well. Invest in your health through regular consultations and follow medical advice for any problems you encounter. Many issues can be alleviated or even prevented by making lifestyle changes, such as increasing physical activity and eating a healthier diet.
Some companies have a limited number of sick days, resulting in a significant loss of income. Obesity and illnesses raise insurance premiums, and poor health may necessitate an earlier retirement with a lower monthly income.
These 12 steps will not solve all of your financial problems, but they will assist you in developing healthy habits that will put you on the path to financial freedom. That way, you can afford the lifestyle you envision for yourself and your family.
About the Writer: Carlo Rosales is the Chief Marketing Officer of Kwik.insure—the online insurance marketplace dedicated to making insurance more accessible for Filipinos. With years of expertise in building brand awareness, user engagement, and ROI-driven marketing campaigns, Carlo never fails in bringing brands and products to life. Outside of work, he enjoys spending time with loved ones, discovering new things, and traveling.