Here we will discuss the “7 simple steps for financial freedom“. Everybody in this world wants to be a financially free person.
But most of the people failed to achieve the stage just because of some small but deadly mistakes.
Here we will also discuss the mistakes. Firstly as a recommendation, you need to build up some good habits in yourself. Some of the points you must need to follow are-
Some lessons from the topic 7 simple steps for financial freedom—
|1.PAY YOURSELF FIRST.||1.DO NOT TAKE LIABILITIES.|
|2.LEARN FIRST TO EARN FAST.||2.DON’T WASTE YOUR TIME.|
|3.EARN MORE MONEY TO SAVE MONEY.||3.DON’t SPEND YOUR MONEY WITHOUT BUDGETING.|
|4.INVEST YOUR MONEY.||4.RESEARCH WELL, BEFORE INVESTING.|
Now let’s discuss the 7 points ( 7 simple steps for financial freedom )–
You can find out these steps in the book name -FINANCIAL FREEDOM– by Grant Sabatier.
7.ABUNDANCE OF WEALTH.
Details of these steps-
CLARITY– Here you need to figure out where you are standing right now and where you want to go.
SELF-SUFFICIENCY- In this step, if you can manage your monthly expenses on your own then it is called self-sufficiency.
BREATHING ROOM– If you are not dependable on your monthly salary for your monthly expenses then you are in the stage of BREATHING ROOM.
STABILITY- If you have at least 6 months of your expenses in your savings as well as you don’t have any big liability then you are in this stage.
FLEXIBILITY- Here if you are investing similar to your expenses of two years and you can also redeem this balance according to your need then you are in this stage.
FINANCIAL INDEPENDENCE- when you have the choice that any time you can resign from your job and can live with your passive income then you are in this stage.
ABUNDANCE OF WEALTH– When you have a huge amount of money and you don’t need to think about money then you are in this stage.
Now let’s discuss some important points by which you can get financial freedom
Calculate how much money you need(7 simple steps for financial freedom)–
First, you need to understand how much money you need to become financially free. Let’s take an example according to the author-The author saved almost 1 million dollars at the age of 30.
1 million dollars is a good amount but not sufficient for the whole life.
That is why he invested that amount in various sectors like stocks, a mutual fund where he is getting 7% averagely and he was earning 70 thousand dollars in a year.
With this amount of money, he can live life like a king size but he only spent 40 thousand dollars(4%) to live the life and according to him it was more than enough.
The rest amount he invests again with those 1 million dollars he had.
And by the compounding effect, his profit grows every year and for this, his 4% also increases. By this formula, you can calculate the money you need, and the formula is– You annual expenses*25.
Let’s understand this if you are spending 4 lacs in a year then 4*25=1 crore should be your goal to be financially free.
CALCULATE YOUR NET WORTH ( 7 simple steps for financial freedom )—
When you calculated that how much money do you need for your retirement then you need to calculate your current financial position, which means your net worth.
And the simple way to calculate this is=ASSETS-LIABILITIES.
The assets are something that can give you money like- properties. And liabilities are something that can make to spend money on that.
Now you need to create a table where you need to write down your assets on a side and the liabilities on the other side.
This is an important step to understand your financial condition.
Now you need to subtract your current investment from your goal amount suppose 1 crore and if your present investment is rupees 10 lacs then you need 90 lacs more.
According to the author, you need to calculate your net worth regularly then only you can understand your position.
Know the value of your time ( 7 simple steps for financial freedom )-
The value of time is more important than money. The author says that everybody can earn money but they can’t get their time back.
You can’t buy time from money. That is why we should know about the value of our time like how much money we are spending our one hour.
For this don’t calculate your salary with your working hour. Here you need to add your working hours+travelling e.t.c.
By this, you can get the real value of your one hour. The author says if you know about the real value you can take the right decision.
Suppose if you want to buy a house worth 40 lacs rupees then you can calculate how many hours you need to work for that.
As well as you to remember that if you invest that 40 lacs then it will be better for your future.
SPEND CAREFULLY(7 simple steps for financial freedom)—
According to the author, this is one of the most important parts of Financial freedom. You need to monitor this regularly.
There are three things and if you want to spend on these three things then think once again. And the three things are-
Many people want to buy their house as soon as possible and for this, they spent even half of their age to clear the loan and can’t do savings.
And if you are not saving any money then you can’t invest also.
So before buying you need to think that if this will be good for your future or you need to wait.
And the same concept will work on traveling and food. Just spend carefully and according to your need.
Like if you are buying something you need to ask yourself first that how much importance that to you and how you can maintain that, what amount do you need to spend for that.
These questions can save a big amount of money.
EARN MORE BY DOING SIDE HUSTLE ( 7 simple steps for financial freedom )–
The biggest disadvantage of saving is you can’t save more than your income. That’s why you need to invest your money to grow.
To earn more you can learn some high-income skills and by that, you can earn beside your job.
This is called side hustle. First, you need to learn some skills and by that, you can do part-time jobs or you can be a freelancer.
You can do data entry work, you can work as a translator e.t.c. Now in this world, we have many opportunities.
You just need to grab them. You can get any type of knowledge through the internet as well as you can learn some skills for free here.
INVEST INTELLIGENTLY ( 7 simple steps for financial freedom )–
Warren Buffet says–
“IF YOU DON’T FIND A WAY TO MAKE MONEY WHILE YOU SLEEP, YOU WILL WORK UNTIL YOU DIE.”
If you are earning money and just saving money then that is not just enough. You need to create some passive income source or you need to invest.
By that, you can earn money while you are sleeping.
The money will work for you then. You will not work for money. Otherwise, you need to do work until you die.
You need to increase your investment also according to your earning. And always invest for the long term.
If you are investing in stocks then you need to go for long-term investment and you need to diversify your investment. Here we are not forcing to invest in stocks. These are just some tips-
ENJOY RETIREMENT ( 7 simple steps for financial freedom )–
If you are following these steps then you get financial freedom soon.
But just remember retirement is not that you will do nothing but you will do some works according to your interest or to grow your money.
How do you get financial freedom?
You just need to grow your money. This is the most important thing. Or you can read this article carefully to know more.
What are the 7 Steps to financial freedom?
We have discussed all the points here in this article.
How do you get financial freedom in 5 years?
1. You need to set your goal first that how much money you need.
2. Should be debt free.
3. Invest your money to grow fast.
How much money is considered financially stable?
You have to fix it because it is different for every person.
What are some Financial Freedom Books
There are many books available in the market like- FINANCIAL FREEDOM BY GRANT SABATIER, RICH DAD POOR DAD E.T.C.