Many people dream about achieving financial freedom. Unfortunately, financial independence doesn’t come easily; we must work to achieve it.
Also, you can’t be financially free if you make a financially wise decision once every year or quarterly. Financial freedom can only result from daily habits.
As you well know, little drops of water make the ocean. Making a wise decision every day ultimately yields a healthy result.
So, if you’ve always wondered how to achieve financial freedom, read this article for the ten habits to imbibe to become financially free.
What is Financial Freedom?
Financial freedom does not necessarily mean being wealthy; it means having enough financial resources to live comfortably without relying on a paycheck.
It is also referred to as financial independence, which means having enough passive income from savings, investments, and other funds to cover your living expenses so that you are well-off even when you don’t have to work.
Based on this definition, it is clear that this is the dream for most people. But how do you achieve it? Let’s take a look.
10 Daily Habits to Achieve Financial Freedom
1. Have a Budget
Budgeting is one of those things that sounds like a chore but is a game changer.
I remember the first time I seriously sat down and created a budget. Before then, I thought I had a rough idea of where my money was going. But after actually tracking it, I realised I was spending way more on random online purchases than I’d like to admit.
Creating a budget gives you control. You get to tell your money where to go instead of wondering where it went.
Start by categorising your income. Then, list your expenses based on priority and put the required amount for each.
Make sure savings and investments are budgeted for as well. I also advise budgeting for entertainment; this way, you don’t feel the need to eat into your savings for entertainment because you feel short-changed.
Including money for entertainment makes it easy to mentally accept the funds slated for your enjoyment instead of spending recklessly.
2. Have Financial Goals
You wouldn’t take a road trip without knowing where you’re going, right? The same goes for money.
Setting clear financial goals gives you direction and makes it easy to spend wisely. If you don’t have anything motivating you to save money, it might be difficult to do so.
So, you need to decide why you are saving. Is it for an emergency fund or towards financial independence?
It could also be for a down payment on a house, planning a vacation, or even aiming for early retirement. Having something specific to work toward is motivating. When you are tempted to give up and remember your goal, it encourages you to push forward.
At first, the goal can seem like a distant dream, but breaking it into smaller, manageable steps makes it much easier to achieve. A dollar here, a dollar there, will eventually add up.
Start by writing down your short-term and long-term goals and tracking them as you work towards achieving them. Trust me, seeing them on paper makes them feel more real!
Additionally, after you have met one goal, work towards another.
3. Save Before Spending
Saving a percentage of my income immediately after getting it is a habit that transformed my finances.
Back in the day, I used to save whatever was left over after spending. As you may have guessed, there was hardly ever anything left! However, everything changed once I switched to saving a set amount first.
Now, I make sure to pay myself first. This means automating a portion of my paycheck to go straight into savings or investments before I touch the rest.
It may seem challenging initially, but once you start, you’ll notice you can still comfortably live with what’s left.
Also, it doesn’t have to be a lot; start where you are, and you will be surprised how much you will save by the end of the year.
Don’t wait until you make so much before you start saving, even if it’s 5 dollars you can afford now. If you insist on waiting, you will never do it, so start where you are.
4. Build An Emergency Fund
Unexpected expenses can be a huge financial setback if you’re not prepared.
Don’t learn the hard way as I did when I had to dip into my savings after a job loss and didn’t have enough to keep me until I got a new job.
Since then, I’ve built a cushion – about three to six months’ worth of living expenses – so that the next surprise doesn’t derail my finances.
Again, you can start small initially and build from there. You’ll sleep better knowing you’re covered.
5. Invest
Saving is great, but investment is how you grow your money. At first, investment can sound intimidating when you hear the jargon. But with some research, you will realise it’s not as complicated as you think.
You don’t need to be an expert to start investing. Even if it’s just a little at first, start contributing to a retirement account.
Your future self will thank you for ensuring you don’t have to work hard all the days of your life.
6. Live Below Your Means
In today’s world of constant consumerism, this is easier said than done, but we must if we want financial freedom.
Trust me, I understand, and I’m not judging you because it’s not the easiest thing for me, either. I have spent my menial savings on shoes before because I love shoes.
However, I soon realised that not only did I not need more shoes, but I was also working towards a financially poor future. That realisation gave me an epiphany, and I changed my spending habits.
You may be wondering if this means living a deprived life. No, it doesn’t; it simply means being intentional about your spending.
For example, when I cut back on dining out, I started enjoying home-cooked meals more, and my bank account thanked me. Look for areas where you can cut back without sacrificing your happiness.
7. Avoid Incurring Debt
If you are just starting off being financially responsible, you may think it’s far-fetched to incur debt. However, incurring debt is easier than you think, especially when you have a credit card that makes it easy to swipe without considering the consequences.
You will be surprised how much has accumulated after three months of swiping without thinking when the interest starts piling up.
The problem is that it drains money that could be used for savings, investments, and other productive purposes.
That’s why I always advise people to pay cash more so they can be more streamlined about their spending. I believe in using loans or credit only for larger assets and when there is a clear plan to pay them off.
But if you use a credit card often, make sure to pay off your credit card in full every month to avoid incurring more because of interest and late payment fees.
If you already have debt, make a plan to pay it off; start with the highest interest rates or use the snowball method to tackle the smallest debts first.
8. Pay Bills On Time
Late payments don’t just affect your credit score; they can also lead to unnecessary fees and stress.
If you need to set reminders on your phone to remind you to pay bills, do it. It will save you a world of stress.
All those penalties might seem small, but they add up and consume money you should be using productively.
You can also set up automatic payments to help you pay on time and keep track of your money.
9. Track Your Expenses
Before I started tracking my expenses, I had no idea how much small purchases could add up.
A coffee here, a takeout there, the expenses added up, and I would always wonder why my paycheck seemed to disappear so fast. Now, I use an app to track my spending, and it’s been eye-opening.
When you track every amount you spend, you start seeing patterns that help you make better financial decisions. A notebook or spreadsheet can do the trick if you don’t want to use an app.
The idea is to be consistent.
10. Have a Positive Money Mindset
It might sound cliché, but mindset matters more than we realise. I had a scarcity mindset for years, constantly worrying about not having enough.
Once I started shifting toward a mindset of abundance and believing that I could improve my financial situation, I began to see opportunities instead of limitations.
Now, this does not mean you have to be overly optimistic or that you should be delusional. Be realistic by spending wisely, but also understand that you can improve your finances through intentional actions.
You deserve financial freedom, and believing that is the first step to achieving it.
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