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Financial Wellness

10 Healthy Steps Toward Financial Freedom

Saving enough money to achieve financial freedom is a huge challenge. For most people, that means having enough savings, investments, and cash so that they can live how they want, regardless of earning a certain amount of money each year. It can also mean having the freedom to retire early or pursue a dream career without economic worry. If financial freedom is something you aspire to, keep reading for ten steps you can take to achieve your goals.

What is Financial Freedom?

Financial freedom means that you can make decisions in your life and not worry about the financial impact because you are prepared. You have complete control over your finances, rather than your finances controlling you. It’s about taking ownership of your finances and living life the way you want because you have cash flow, savings, and investments to support you.

How to Become Financially Free

Financial independence means that you could retire early and continue to live your current lifestyle. So, with your investments, savings, and cash available, you can stop working. When you achieve financial freedom, it doesn’t mean that you’re free from the responsibility of handling money. Generally, it means having enough money to live the lifestyle that you want while responsibly managing your money.

The main aim of financial freedom is security around money. So, what is financial wellness? For many people freedom from finances could look like:

  • Paying your bills on time every month
  • Being able to treat yourself
  • Having an emergency fund
  • Saving for goals beyond your emergency fund
  • Not feeling worried about your finances
  • Being debt-free

10 Healthy Steps to Help You Reach Financial Freedom

Achieving financial freedom is a goal for many people. By creating healthy financial habits, you can take steps toward better financial health. Once you have decided that financial freedom is your goal, you can start working toward it with these ten steps.

1. Set Life Goals

Financial freedom can mean something different to everyone. Don’t just set a generic goal; get specific. Think about how much money you want in your bank account, the age you want to achieve it, and the type of lifestyle you want to lead. Try to be as specific as possible so that you can break down what you need to do to get there.

2. Make a Budget

One survey found that sixty-five percent of Americans don’t know how much they spent last month. Money is the source of stress for forty-four percent of people, and rather than setting a budget, often they find it easier to ignore their finances altogether. But over time, this creates more and more stress.

Young woman doing accounts together with her husband at home, budgeting.
Make a Budget (Image Source: Shutterstock)

Having a budget helps keep your spending in check and allows you to hit your life goals. A budget is simply a spending plan. If you’re wondering how to save money, making a budget is the best place to start.

3. Pay Off Credit Cards in Full

Credit cards and high-interest loans can really impact your finances. When you’re working toward financial freedom and building wealth, pay off your credit cards first. Every month, make sure you clear the balance. Loans like student loans, mortgages, and similar payments usually have lower interest than credit cards. So you don’t need to rush to pay off these types of loans, and they will help you build a good credit score.

4. Create Automatic Savings

One of the best ways to save money is to set up automatic payments that come out of your account when you get paid. Enroll in a retirement plan, match contributions, and withdraw money into your emergency and savings funds each month. This is especially useful for people who find it hard to manage money in their bank account. If it’s not there, you can’t touch it. The right amount to save comes down to your situation and what is feasible for you.

Man saving up change in a jar.
Create Automatic Savings (Image Source: Shutterstock)

5. Start Investing Now

If you haven’t already, start investing now. You can grow your finances over time with compound interest. You can invest in stocks, real estate, commodities, or bonds. Investing your money in the right places is key to making it work for you. Learn the basics and keep up to date with financial news so that you can navigate your investments properly.

How to Start Investing for Beginners

6. Monitor Your Credit Score

It’s a good idea to keep an eye on your credit score. Your credit score will determine the interest rate at which you can borrow money. So, when you buy a new car or refinance your home, a good credit score will help you get the best interest rate.

You can sign up for credit monitoring services that send you a monthly report to ensure you’re staying on track. These services will help you keep tabs on your credit score, spot any fraudulent activity, and prevent missing payments. Some of the top credit monitoring services include:

  • IdentityForce
  • Experian  
  • CreditWise

7. Create Passive Income

One way to get closer to financial freedom is to create multiple streams of passive income. You can do this through investing, owning real estate, and selling digital goods like digital artwork and books.

9 Passive Income Ideas

8. Maintain your Property

Make sure you look after what you have. It costs much less to maintain houses and cars than it does to buy new ones. Everything from your lawnmower to shoes will last longer if you take the time to look after it.

9. Live Below Your Means

Over their lifetime, Americans blow $324,000 on impulses. A frugal lifestyle allows you to live life to the fullest without spending as much. Some of the wealthiest individuals live below their means. It’s about determining what you need versus what you want. That’s not to say you can’t treat yourself and have to live a minimalist lifestyle. It means that you’re not spending up to or beyond your financial limits.

10. Take Care of Your Health

Finally, if you invest in your health and look after yourself, you will feel the financial benefits in the long term. A healthier lifestyle means fewer trips to the doctor and sick days. Health conditions like obesity and heart disease can make your insurance premium sky high and even force you into early retirement if you’re not physically able to work.

Rear view healthy young woman stretching in the park before running at the sunset.
Take Care of Your Health (Image Source: Shutterstock)

Financial Freedom: Health is Wealth

Ultimately, your health is the most valuable and precious thing you have. Your health majorly influences your ability to enjoy your wealth. Wealth isn’t just about money. By taking care of your mind and body, you can live a healthier and happier life.

Achieving financial freedom is a journey; it won’t happen overnight. But by developing healthy financial habits and gaining control over your spending, you can begin to put your money to work. When you create healthy financial patterns, you can get on the path to financial freedom.

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