Is Financial Freedom Possible? Here’s What You Need To Know

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Hey you, my beautiful readers! Today, I want you to really ponder upon this question – is financial freedom possible? Is it reallyyyyy possible though?

If it is, is it the same for everyone?

These are just some of the questions that I’ll be answering in this post. To add to that, I’ll also be sharing 10 steps on how you can be closer to YOUR idea of financial freedom.

The 10 steps below are general guidelines that anyone can use wherever they are financially. These are steps that will make you be more aware of your financial position and will help you create better financial habits that hopefully can take you closer to YOUR financial freedom.

That being said, I will still advocate for you to refer to your own financial advisor to help map out exactly how to achieve your financial freedom given your current financial situation.

As you read through the post, you’ll be able to slowly create a mental map of how you can reach your financial goals while managing the risks that come with it.

So if you’re ready, then let’s get right to the topic 🙂

Is Financial Freedom Possible? Here’s What You Need To Know

Is Financial Freedom Possible? Here's What You Need To Know.

Before we dive into the steps, let’s first define what financial freedom is. Financial freedom is living a life you want without worrying about money. Emphasis on “living a life YOU WANT”.

With that being said, my idea of financial freedom can be very different from yours. The way I see financial freedom is being able to travel around the world with the options of it being a luxurious trip or budget travel – wherein I can easily choose whatever I want.

Do you have your own vision of what financial freedom is? If that vision is unclear, you can think of it this way – what will your life be if you don’t have to worry about money?

Close your eyes and really think about what your life will look like. Really imagine the days you’ll be living in.

Easy, right? But try not to be generic with your answer. Don’t say “a lot of money for freedom”. List out exactly how your life will be like. We all have visions and ideas on how life’s going to be if money isn’t a problem. 

If you now have your own picture of financial freedom, the next question would be – how are you going to reach that life? What things should you do to achieve financial freedom?

To help you with that, allow these steps below to guide you on how you can be a few more steps closer to achieving that goal.

1. Find Out Your Current Financial Situation

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You can’t create a plan without knowing where you currently are. At this step, you need to be honest with yourself – determine how much debt you’re in. Being honest as early as now will greatly help you manage your expectations and strategies in achieving your financial goal.

Another thing that you can do on this step is knowing what your net worth is. Knowing the liabilities and assets under your name will give you an idea of how you’re doing financially. To know the different equations on how to do it, you can check my recent article here.

The EASIEST way and the best way to do this is by filling in your net worth & cash flow statements. Once you’ve done so, you just need to do a few calculations to really analyze how your finances are doing 🙂

If you’d like a FREE Net Worth & Cash Flow Printables, you can grab one below. I’ve also included easy financial calculations that you can do to analyze your finances! 🙂

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2. Develop A Strategy 

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The strategy that you’ll be making here will be in line with your current financial situation AND goals. Once you’ve done the calculation (you can do so with the FREE printables above), you perhaps realize that you are spending more than 50% of your income just paying off debt.

If you’re in that heavy debt, reducing the amount of debt you’re in would be your main priority right now. In my previous blog, I’ve written 18 practical ways to get rid of credit card debt – you can get some ideas there.

Some of the ways on that post can be applied to any type of debt. One of my favorite strategies would be the famous Debt Snowball Method. It’s popularized by Dave Ramsey in his book The Total Money Makeover. It’s a strategy where you pay off the smaller debts first while paying the minimum on the other ones. 

When it comes to your financial goals, it requires you to have BOTH short term and long term views. So when you develop a strategy, you know what needs to be achieved first as a priority and what will be taking the passenger seat, as you work on the things that are most important.

But guys, do remember that you always need to revisit your goals. Your lifestyle will keep on changing and so will your goals. Once you get married or have children, your goals will definitely change as well.

3. Insurance IS Important

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No matter how big your emergency fund is, it’s always a must to get insurance to back you up. Insurance helps you in mitigating one constant variable in life which is risk. When you get an insurance policy, you transfer the risk of a potential loss to the insurance company.

That’s why when you purchase a home or a car, it’s always recommended to get insurance. The same goes for the risk of you getting sick or having dental issues, let your insurance company handle the bills because we all know how expensive a trip to the clinic is.

Also, having insurance will make you sleep better at night knowing that whatever will happen tomorrow, your insurance company can cover for it.

In essence, there are two different categories of insurance

Both are important but let’s go through life insurance first.

1) Life insurance

is basically a value-based contract that you will sign with your insurance company for the “price tag” of your life. But remember, your life is priceless. This is just a contract that can help you greatly if you have a critical illness, disability, and of course death.

I will definitely go even more thorough on this in another post because everyone NEEDS to know the real importance of having a life insurance policy.

2) General insurance

includes your medical insurance, insurance for your property, vehicles, and others that go back to the principle of indemnity. Basically, it will help you to get back to the financial situation that you’re in before you incur your losses.

For example, if your car got stolen, the insurance company will give you the money that amounted to the market value of your car, not the price that you bought the car. It is not for you to get any gains.

>> If you’re in debt, have you ever look at getting your debt insured? If you have, take a double look to make sure it’s properly insured.

4. Sort Your Emergency Fund

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If there’s one thing that I’ve learned from the recent pandemic, it’s the importance of having an emergency fund. Just this year, the US has reached an all-time high unemployment rate of 14.70% – more than 12.6 million Americans are currently unemployed and have lost their jobs.

It’s quite scary just to think of it.

That’s why as early as now, you need to start you building up your emergency fund. Building such a fund also helps in managing the risk that can happen in your life. It can also cover things that you didn’t allocate a budget for such as car repairs, medical costs, house repairs, and other unexpected happenings.

To know more about how you can effectively save up for an emergency fund, you can check out my post here.

5. Check Your Spending Habit

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If you’re in debt right now, one major cause for that could be because of your spending habit. That’s the reason why nearly half (47%) of US adults are in credit card debt. 

Bad spending habits can lead to major problems down the road – it can affect your future and your goals. So as soon as you finish this post, make sure to take note of your spending habits and reform it for the better.

If you’re already satisfied with your spending habit, there’s always room for improvement. Ask yourself how you can improve it and what other habits can you add to make you be in a better financial position.

If you’re like to get started with budgeting, you can grab my FREE Yearly Budgeting Template below 🙂

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6. Consult A Professional

It’s nice to read up on different blog posts about what you should do financially but it doesn’t hurt you to consult a professional. These financial advisors can also help you make better financial decisions.

Financial advisors can help you determine whether paying your long term debt is a wise decision or not. They can advise you on whether your extra money should be used to pay your debts or would it be better to invest that money. These professionals can also give out tips and strategies for attaining your financial goals with REAL calculations.

From saving, budgeting, investing, debt management, to health care planning, all of these topics can be discussed with a financial advisor.

By the way, did you know in the US, you don’t need to get certified to give out personalized financial planning to others? So it’s up to you who you want to seek advice from.

I personally have a financial advisor who’s certified as a financial planner and I’m more confident to take personal financial advice from her. It’s not that you can’t read from articles but to get a very detailed and personalized plan that has YOU in their best interest, I’d still prefer to go for someone who’s certified and fiduciary.

I’m NOT yet certified, hopefully by end of next year! *fingers crossed!*

But one of the common remarks I’ve heard about getting a financial planner is the cost. Now, you can engage with a financial planner once a month/quarter/year on an hourly basis which can be expensive upfront. Or another way is that you can pay your financial advisor commissions when you take her advice on investment or even insurance.

But they MUST declare that they are attached to those companies to you first.

An Option

There’s also a service that I think is worth checking out if you need more guidance on this on a 1-on-1 basis – Financial Gym. I personally haven’t engaged with them yet but I do feel like giving them a try. And if I do, I’ll make sure to review them here if they are any good for you guys to join 🙂

7. Plan Your Estate

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Estate planning is the preparation of handing down your assets to your beneficiaries when you pass away. Yes, we need to plan that ahead. Doing so will give peace of mind to you and your loved ones. It will make you relax that your assets won’t be disputed once you’ve passed.

All the steps above teach you the defensive side of reaching financial freedom – managing risk, planning your strategy, getting tips from professionals, and what toxic spending habits that you need to change. 

Now the next three steps are the offensive side of the journey. You’ll learn more about how you can earn more money and invest wisely.

8. Get More Income Streams

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In today’s age, the opportunity of getting more income streams has increased. And it has increased drastically. If before you need to be a part-time employee in a physical store, now you can be one without leaving the comforts of your own home.

The online jobs space is a vast one and caters to many fields of work. Think about any job you like and there’s a good chance that’s available online. And that’s all thanks to the internet. It’s such a waste of opportunity if you’re looking to get more money yet you’re not leveraging the opportunities that the internet gives.

Full-time jobs, part-time, and freelance – all of this is available online. In my Make Money section of the blog, I’ve probably written all the possible ways to make money online. And I’ve even written a post about the most popular and highest paying online jobs.

When you leverage the internet, you even get the opportunity to acquire passive income. Wherein you still earn money with only minimal work and supervision.

You can even start a business online – you can sell a product or a service. All of which are done without meeting in person or setting an appointment to meet somewhere.

9. Invest Your Money Based On Your Goals

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When it comes to this step, you NEED to know what you’re investing for. Are you investing for your retirement? To have a passive income? Or for your kids’ education?

For me, a large proportion of my investment is for my retirement. I’ve placed my money in different kinds of funds (and property!) that are usually more profitable if to be held for a longer timeframe. Which is perfect and in line with my investment time horizon.

If you’re going to invest for your kids who’re going to college in a couple of years, then long term investment vehicles might not be the one for you. There are other investments that are more fit for your goals such as a 529 plan and prepaid tuition plans.

If you’re aiming to invest so you can have extra money going into your account on a monthly basis, investments such as bonds, annuities, and dividend-paying stocks might be an option for you.

As you can see, there are different investments for each personal goal. My investments can differ from yours yet we have the same objective- to make more money.

Another deciding factor that will separate investors from one another is risk appetite. Determining your risk appetite is important as well.

Depending on your risk appetite, you can go for risky investments or to safer ones. Remember, most investments pay bigger when it’s riskier. As for the safer investments, it gives out lower returns.

There are investors that would rather go for safer investments just to have peace of mind. While there are others who want to risk it for greater returns.

Similar to having financial goals updated every now and then, your investments also need to be relooked once there are big changes in your life. While I might be going all out on buying equity funds right now (that is high risk) that might change once I have a family.

10. Be Dynamic

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Financial freedom isn’t a one-time thing wherein you do it once and you’re set. To achieve it, you need to constantly work for it day in and day out. As mentioned earlier, reaching that goal can’t be done overnight. 

Plus, your vision and idea of financial freedom can change as the years go by. It can change once you get married and have children. But what’s important is you’re constantly improving your financial situation and you’re moving closer towards your goals. 🙂

Now there are other topics that I didn’t cover here such as tax planning, financial literacy and to be honest, a lot more other factors that need to be accounted for in reaching financial freedom.

That’s the reason why I highly advise you to consult a certified financial planner that can really help you draft the plan.

If you’d like a FREE Net Worth & Cash Flow Printables, you can grab one below. I’ve also included easy financial calculations that you can do to analyze your finances! 🙂

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Is Reaching Financial Freedom Possible?

If you plan your money right, you might just get there. When you think of a person who’s achieved financial freedom, there’s a good chance that he or she has worked for it for years. Some even attained it after a decade. But what’s important is they’ve reached a point in their lives that they don’t have to worry about money.

The same can happen to you. You can use the steps above as a guideline to keep you on track to reaching your financial goals.

The journey might be a long one, but wouldn’t you do everything in your power to achieve a life where you can do whatever the hell you want without having money bogging you down? 🙂

Let me know in the comments section what’s your idea and vision when you think of financial freedom 😀

If you find the post helpful, please share it around!

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