WHAT IS FINANCIAL FREEDOM?
There comes a point in everyone’s life where they are suddenly closer to their goals. However, there is one big challenge that they have to face before they can finally take a step back and relish in their success: achieving financial freedom.
If you believe that financial freedom is all about money, you are wrong. It’s actually the feeling of independence, when you can do (almost) anything you want without having to worry about how you’ll pay your bills. However, being financially free isn’t an easy goal to achieve. People who are financially free are not bound by such things as they can still persist to live as they were regardless of a job or not.
Being rich has nothing do with being financially independent. The freedom referred to here is the act of living comfortably without having to worry about finances regardless of whether you work or not. If you feel that your business will collapse without you and that you have to always be involved, you are not financially free. This is often the case when the entrepreneur’s direct involvement is linked to his income.
To make things easier, here is a list of things you can try to find out if you are financially free or not. If you have done some of these things, you might already know of the result.
Figuring Out If Your Wealth Is Depleting
You can calculate the total net worth of something by subtracting the total liabilities of that thing from its total assets. This is easiest way you can learn where you stand today. After comparing your net wealth with the previous years, you will be able to understand if your wealth is decreasing or increasing. If it is decreasing, you know that as the years pass, you will lose the ability to spend how you want and therefore will be bound again.
Developing a Strategy
If you really want to ensure you are financially free for years to come, go ahead and plan your expenses. This can help you set different, achievable life goals. It will help you be more aware of how much you spend, improving your financial judgment.
Managing Debt Intelligently
Being in debt doesn’t mean you are making unwise financial decisions. You might have to pay off a mortgage or a car loan. You have to prioritize debts and pay them off as quickly as possible. The best approach is to pay off your bills as soon as you accrue them. Just imagine the increase in disposable income if you don’t have any debt, and you will get the motivation to manage your debts.
This is a tricky question and must be answered by everyone: can you leave your job and your business right now to go do something you really love? If you can, you most certainly are financially free but if you can’t even leave your job to go on a vacation once in awhile, you might want to rethink how you’re doing business and how you’re spending your money. Once you get in a comfortable place where you can take the time off you want without worrying about losing your business, you can consider yourself financially free.