12 Steps to Achieve Financial Freedom
12 Steps to Achieve Financial Freedom
This guide lays out everything you need to finally master your money.
By Maryalene LaPonsie | April 26, 2021
What is financial freedom?
Ask a room of people to define financial freedom, and you’re likely to get a dozen different answers. For some, financial freedom means being able to pay the bills with money left over each month or having a fully funded emergency account. Others may want to retire early and travel extensively.
Regardless of how you define financial freedom, everyone can benefit from taking a comprehensive approach to money management. “It’s important to think about your finances holistically,” says Elisabeth Kozack, co-head of consumer lending at Marcus by Goldman Sachs.
The following 12 steps will help you achieve your vision for the future.
Commit To Living Within Your Means.
The path to financial freedom begins with a step many people overlook. It starts by developing a mindset in which you prioritize building a strong financial foundation of savings before you move on to spending and investing. “You’ll never get ahead if you’re always putting the cart before the horse,” says Charles Czajka, CEO of Macro Money Concepts in Stuart, Florida.
People need to analyze their beliefs about money and examine their relationship with it. Rather than assuming wealth is something attainable only by those with high incomes, recognize that even middle-class families can move from living paycheck to paycheck to a financially comfortable lifestyle so long as they spend less than they earn.
Know Your Current Financial Situation.
Regardless of whether you are just out of college or getting ready to retire, its essential to understand where you stand financially right now. “Completing an honest assessment of your personal financial situation is a critical first step on the journey to establishing financial well-being,” says Dave Kilby, CEO and president of FinFit, a financial wellness employee benefits platform.
That means adding up debt, calculating expected income and identifying holes in your financial picture, such as a lack of insurance or emergency savings. Consulting with a professional may be helpful in this process, particularly if you have complex finances or are approaching retirement.
“I think everyone should have a financial advisor,” says Wilson Coffman, president of Coffman Retirement Group in Huntsville, Alabama. These professionals have experience and expertise that other individuals may not. What’s more, they aren’t emotionally invested in your money, which means their advice should be neutral and objective.
Open The Right Accounts.
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