What is Financial Freedom? - Money Fit

Independent Income or Abundant Assets ... Financial freedom means you have enough financial resources to pay for your living expenses and allow ... Services MoneyFitAcademy™️ AboutUs (800)432-0310 Back DebtServices DebtRelief DebtConsolidation CreditCounseling DebtManagement PaydayLoanConsolidation HousingCounseling BankruptcyCounseling StudentLoanCounseling MilitaryDebtRelief FirstRespondersDiscount Back MoneyFitAcademy $1,000CollegeScholarship MoneyMotivations MoneyFitPodcast BudgetCalculators CreditReportReview FinancialWellness Videos Back AboutMoneyFit Careers Contact ClientLogin Testimonials SocialMedia InTheNews MediaInquiries ApplyNow WhatisFinancialFreedom? WhatisFinancialFreedomandtheRoadtoGettingThereAttainingfinancialfreedomisanobjectiveformostindividuals.Financialfreedomusuallymeanshavingenoughsavings,financialinvestments,andcashonhandtoaffordthekindoflifewedesireforourselvesandourfamilies.Itmeansgrowingsavingsthatenableustoretireorpursuethecareerwewantwithoutbeingdrivenbyearningasetsalaryeachyear.Financialfreedommeansourmoneyisworkingforusratherthantheotherwayaround.Howdoyoubecomefinanciallyfree?Tobecomefinanciallyfree,youmustpayoffyourconsumerdebts,buildasafetynetofsavingsfunds,andcreateenoughpassiveincomethroughinvestingorbusinessownershiptopayforyourcurrentandexpectedfuturelivingexpenses.Weareburdenedwithincreasingdebt,monetaryemergencies,excessiveconsumerspending,andotherproblemsthatkeepusfromreachingourmostmeaningfulfinancialobjectives.Suchchallengesconfronteverybody,butthefollowingtwelvehabitscanputyouontheidealpathtofinancialwellness. Whenmoneymakesmoney,you’reonyourwaytofinancialfreedom! KeyPointsSetlifeobjectives,bothlargeandsmall,monetaryandlifestyle;createaplanforaccomplishingthoseobjectives.Budgetyourfundssothatyoucancoverallyourneeds;sticktothisplan;payyourcreditcardsinfull,soyoucarryaslittledebtaspossible,andwatchyourcredit.Getafinancialconsultantandstartinvesting;remaincurrentontaxlaws;developautomatedcontributionsthroughyourcompany'sretirementplan;setupanemergencyfund.Livebelowyourmeans;befrugalwhenpossible;anddonotbeafraidtoaskforornegotiateforbetteroffers.Takecareofyourpersonalbelongings,sincemaintenanceismoreaffordablethanreplacement;butmorenotably,takecareofyourselfandremainhealthy.IndependentIncomeorAbundantAssetsFinancialfreedommeansyouhaveenoughfinancialresourcestopayforyourlivingexpensesandallowyoutoaffordmanyofyourlifegoalswithouthavingtoworkorotherwisecommitanyofyourtimeoreffortstogeneratingmoney.Theseresourcesmightincludeoneorbothofthefollowing.IndependentIncomeIndependentincomemeansyouhaveabusiness,governmentbenefits,orothersourcesofregularpaymentsthatdonotrequireyoutowork(exchangeyourtimeformoney).Ifyouqualify,socialsecuritybenefitsarriveeverymonth.Ifyouhavebuiltabusinesstothepointthatyoucanpullbackfromday-to-daymanagement,youcanreceivepaymentsregardlessofhowmuchtimeyouputin.Ifyouownarentalproperty,youreceivearentpaymentonceamonth,althoughpropertymanagementoftenrequirespropertymaintenanceandrunstheriskofrentingtoatenantwhomissesoneormorepayments).Ifyouhaveenoughindependentincometopayforyourlivingexpensesandyourwants,youarefinanciallyfree.AbundantAssetsAssetsthathelpsupportfinancialfreedomtypicallyincludeinvestmentsinsecurities,cashinbankaccounts,andpropertyofvalue.Touseanassetwhenbuildingfinancialfreedom,youfirstneedtoinvestinthoseassets,usuallylargeamountsofmoneyoveralongperiodoftime.Forexample,mostfinancialplannerswilltellyouthatcontributingregularlytoa401(K)iscriticalforyourlong-termfinancialstabilityandsecurity.Thiscanbetrueformanypeople,solongastheystartinvestingearly(intheir20s,30s,oreven40s).However,thosewhowaituntiltheir50sorlatertostartinvestingwilllacksufficienttimetotakeadvantageofthepowerofcompoundinterest.Theircontributionswilltypicallynotevendoubleaftertakinginflationintoconsideration.Usingassetstobuildfinancialfreedomcanleadtopotentialproblems.Thinkofitasabalancingact.Usingthismethodtopayforyourlivingexpensesandwants,youneedtosellanassettohaveenoughcashforyourbills.Troublescanariseifyouhaveproblemssellinganasset(realestate,forexample)fastenoughtomakethecashavailablebeforeyourbill’sduedate.Peopleinsuchcircumstancesmightbecalled“cashpoormillionaires.”Theirassetsmightbevaluedatover$1M,buttheycan’taccessthatvaluefastenoughtouse.Anotherpotentiallybiggerproblemhappenswhenyourunoutofassetstoconvertintocashbeforeyoudie.Basically,ifyougothroughallyourassetstoofast,youwillbeleftwithnothingtopayforyourbills.Mostfinanciallyfreehouseholds,useacombinationofbothofthesemethods.Theymayreceiveindependentincomefromsocialsecurity,fromabusiness,orfromdividend-payingsecuritiestheyhaveinvestedin,buttheyalsoprobablyhaveaccumulatedenoughassetsinthestockmarketandthehousingmarkettoprovidethemfinancialsecurity,knowingtheyhaveplentytofallbackonifnecessary.LifeGoalsJotdownhowmuchmoney(assetsandincome)youneedtopayforthelifestyleyouwant.Includetheyearwhenyouwanttoachieveyourgoalsandwhetherorforhowlongyouwillneedtopayforthosegoals.Themorespecificyourobjectives,themorelikelyyouaretomakethemareality.Then,countbackwardtoyourpresentageandestablishfinancialmilepostsatregularintervals.Thesemightincludecertaindollaramountssavedorassetsacquired.BudgetMakingamonth-to-monthhouseholdspendingplanandadheringtoitisanimportantmethodtoguaranteeallbillsarepaidwhileinvestmentsandindependentincomebuildingareontrack.Budgetingyourmoneyroutinelyclarifiesyourobjectivesandbolstersyourwillpowerratherthanlettingyourselffallbeforethetemptationtospendlavishly.Chargecardsandhigh-interestconsumerloanspresenthazardstoyourwealth-building.PayYourDuesandDebtsStudentloans,mortgages,andsimilarloansusuallyhaveamuchlowerrateofinterestthancreditcardsandretailstorecards,makingthemlessdangeroustoyourfinances.Withcreditcards,youmightendupamassingthousandsofdollarsofhigh-interestdebts.Drowningindebtforyearsisthecompleteoppositeofindependence.Debt,afterall,insinuatesobligationandevenbondage,bothofwhichclearlycountertheideaoffinancialfreedom.SavePayyourselffirst.Thatisastandardrecommendationfromfinancialexperts.Registerforyouremployer'sretirementplanandmakefullusageofanymatchingcontributionbenefit.Itislikewiseanexcellentideatohaveanautomateddepositfromyouremployerintoanemergencyfund(oranautomatedtransferfromyourchecking)thatcanbetappedforunanticipatedexpenditures.Additionally,consideranautomatedcontributiontoabrokerageforanIndividualRetirementAccount.Regardless,keepinmindthatthesuggestedquantitytosaveiswidelydebated,andthesuitabilityofsuchafundissometimeseveninquestiongivencertaincircumstances.InvestThereisnothingmuchbetter,andnomoretriedandtruewaytogrowyourcashthanthroughinvesting.Whetheryouchoosea401(k)oranIRA,nowisthetimetodoyourresearchanddecidewhichdirectionyouwillstart.Butstart!Thatisthemostimportantstep.MonitorYourCreditAperson'screditreportinfluencesanyinterestraterelatedtocar,truck,orhomeloansorrefinancesaswellascreditcardsandstorecards.Itlikewiseimpactsunrelatedthings,suchascarinsuranceandlifeinsurancepremiums.Thelineofreasoningisthatsomeonewhoisrecklessintheirfinancialroutinesmightalsobecarelessinotherareasoflife,suchasdrivingandconsuming.Therealityisthat,asagroup,individualswithlowercreditratingsgetintomoreaccidentsandsubmitlargerclaimstotheirinsurancecompaniesthanindividualswithhighercreditratings.Thisdoesnotmeansomeonewithpoorcreditisabaddriver,justasamalewhois23yearsoldandnotmarriedisnotapoordriver.However,hewillpayhighermonthlypremiumsbecauseheisyoung,single,andmale.Poorcreditisjustoneofmanyriskpoolsinsurancecompaniesusewhendeterminingyourmonthlypremium.BargainManyAmericansarereluctanttonegotiateforpurchasesandservices,believingitmakesthemappearcheap.ManyfromothercountrieswouldrecommendAmerican’sconquerthisculturalhandicap.Youmightsavethousandsofdollarseachyear.Smallermerchants,inparticular,tendtobeopentonegotiation.Purchasinginbulkorwithrepeatedtransactionscanopenthedoortogooddiscounts.LearnWhatMustbeLearnedStayup-to-datewithfinancialnewsandeventsinthestockexchange,anddonotbereluctanttoadjustyourfinancialinvestmentportfolioaccordingly.Knowledgeistheverybestdefenseagainstthosewhovictimizeunsophisticatedconsumerstoturnaquickbuck.Intermsofyourcreditcard,makesureyouknowyourcreditlimitsoyoudonotoverspend.Itisyourresponsibilitytostayawareofsuchdetails.TakeCareofYourThingsTakinggoodcareofyourhomeandyourpossessionsmakeseverythingfromautomobilesandlawnmowerstoshoesandclothinglastlonger.Imagineifyoudidnothavetobuyclothingandshoesasoftenasyoudo.Youcouldholdontoyourcarlonger,spendinglessintheprocess.Maintenanceisthekeytosavingmoney.LiveBelowYourMeansMasteringafrugalwayoflifebyhavingamindsetoflivinglifetothemaximumwithlessisnotasdifficultasitmightseem.Manywealthyindividualslivedfrugallybelowearningtheirabundance.Frugalityisnotanobstacleortheadoptionofaminimalistapproachtolife,norisitacalltodumpsterdivingortoextremehoarding.Frugalityisthewisepurchaseofimportantitemsandtheresponsiblestewardshipofsuchpossessions.GetExpertAdviceEvenifyouarenotyetatapointwhereyouhavebegunamassingwealth,gettingexpertfinancialadvicetoeducateyourselfandhelpmakegoodchoiceswillhelpyoupreventproblems.Fromnonprofitcreditcounselingagenciestoyourlocalcountyextensionspecialisttoaccreditedfinancialcounselors,thereareplentyofreliableexpertsavailabletohelpyouatnocostorforminimalfees.StayHealthySomecompaniesofferlimitedsickdays,soitisanoteworthylossofincomeoncethosedaysareusedup.Weightproblemsandailmentsleadtoskyrocketinginsurancepremiums,andpoorhealthmayrequireearlierretirementwithlowermonthlybenefits.Takingcareofyourhealthwillnotsolveallyourcashproblems,butitwillassistyouindevelopingpracticalhabitsthatcangetyouonthecoursetowardfinancialfreedom.IntheEndAskyourselfifyouaredoingeverythingonthelistnow.Thenaskifyouhavetheabilitytodoeveryitemonthislist.Chancesareyouranswerswillbe“no”then“yes.”Yourlikelihoodofachievingfinancialfreedomincreasedramaticallyifyoucansavemoney,controlyourcreditandminimizeyourdebt.Youwillbebetterabletoprovideforyourfamilyandyourself,nottomentiontheawesomefeelingofbeingdebt-free. RelatedVideo:  ToddChristensenAbouttheAuthorAstheeducationmanagerforMoneyFit,author,speaker,andfinancialeducator,ToddChristensendevelopsfinancialeducationprogramsandprovidescreditanddebtcounselingforindividualsandgroupsaroundthecountry.In2014,Toddpublishedhisfirst5-star-ratedbook,EverydayMoneyforEverydayPeoplebasedonstoriesandideashehadheardinnearly1,000workshopshefacilitatedonbudgeting,credit,debtreduction,saving,andidentityprotection. ToddChristensenOctober8,2021money,personalfinance,habits,saving Previous CopingWithFinancialAnxiety RichardMunsterOctober11,2021financialanxiety,counseling,SelfImprovement,wellness,self-care Next MyLifeMyChoices™StudentEditionSurpasses10,000CertificatesofCompletion ToddChristensenOctober7,2021mylifemychoices,financialeducation,education,update