We all are aware that a high income job does not always give you financial independence or freedom from debt. Regardless of whether or not you enjoy your work, you will still find yourself and even noticed the overachievers desperate to make money as much as possible. Do you live and work just to survive paycheck to paycheck?
Financial consultants believe that a successful executive with a flourishing business or career is not to lose life out to working so many hours in a day just to earn a living. What does it take to achieve financial freedom?
Let us define financial freedom first. Financial freedom means being debt free and having enough money coming in that allows you to experience some sense of comfort without getting devastated when crisis comes.
It is actually a process that requires serious hard work before you can achieve it. At the core of this process is simply smart money management.
Smart money management is actually about your spending and saving habits which includes your overall financial goals and economic philosophy. This means that a high income job can’t give you financial freedom if you are living and spending beyond your means.
You have to understand what makes a successful person gain financial independence. Here are the different stages you need to do to achieve financial freedom
Level 1: Clarity
Clarity is to figure out where you are so you can get where you want to be. Once you are clear about what you owe and where you would like to be, learn to track and monitor your expenses. Figure out where you can cut back.
Level 2: Create a budget
Self-sufficiency is the idea of creating a budget so you are able to provide for yourself and live by your own means.
Level 3: Emergency Savings
Save up even just a little amount to cover an emergency. You cannot be totally comfortable without any extra money at all.
Level 4: Stability
When you saved a year’s worth of expenses, then you can breathe and feel stable.
Level 5: Flexibility
Live how you want. Reassess your priorities. Move to the next level.
Level 6: Financial Independence
Having enough money to let you live without working for the rest of your life.
Level 7: Abundant Wealth
This is the stage where you have more money than what you need and start to think about what legacy you are going to leave behind. All of these levels do not happen overnight. You need to work for it step by step.
Maybe at this time, you find yourself not saving enough in a way that you are not able to maintain your current standard of living during retirement age. What you need to do is carefully break up your goals into small chunks so it will help keep you on track and make the process more manageable as well as less stressful.
Even if you start small, that is okay. What is important is that you get started regardless of how old you are right now and whatever situation you are in! Below are the different levels of financial freedom
Level 1: Not living paycheck to paycheck
Pay off any credit card and find a way not to live paycheck to paycheck.
Level 2: Ability to quit your job
Financial freedom would mean you see work as an option and not a must do. It sure is a good feeling you know you can live without your job.
Level 3: Enjoy your money
Enjoying your life would mean having enough money that allows you to make it happen. However, you need to put a leash on your lifestyle and avoid spending what you saved for emergencies.
Level 4: Freedom of time
You can follow your passion without going completely broke doing it. Perhaps you can work remotely and have a more flexible schedule and more time spent with your family or self.
Level 5: Enough money for basic retirement
The amount of money you saved should cover at least some standard of living in your retirement because it practically impacts the choices that you make along the way.
Level 6: Retire well and happy
Doing pretty well and maintaining your standard of living as well as support a lifestyle will definitely make you happy in your golden years. Live your dream life. Travel and fly first class. Think big.
Level 7: More money you can spend
Outlive your money. This is the stage where you have more money than you expected to spend.
At the beginning, clarity and savings should be your priority. Climbing the ladder to financial freedom is not magic. As I have said, it is a process you need to sacrifice some life leisure so you are able to keep your spending without going down into debts!
If your current lifestyle totally depends on your work for financial support or even other people, then you need to figure out how you can break free from this type of financial dependence. There could be surviving stages to attaining your financial freedom, but you can do it!
The least you can do is to figure out how to meet your financial commitments. When your income exceeds your expenses, then you would start to pay off your credit card debts. The rule is not to spend more than you earn.
After a while, you will progress through the stages of financial freedom and hopefully pay all your debt. Would you like that?
You may be able to get additional income doing side hustles. Once you cover your basic needs, you achieve a bit of financial security. Learn how to invest your money wisely.
Try to move slowly from surviving to thriving. As I have said, financial freedom is a process and not a magic wand that will zap out your debts.
Right now, if you want to enjoy complete financial freedom, then assume responsibility for your financial future and run your life like a business without letting your debt drive you to work like a slave. Try to do the right thing every step of the way. The more you work at it, the better life would be!