It can mean something completely different for each and every person. Yet the end result is usually the same.
To sum it up financial freedom means that money isn’t what’s fueling your life decisions.
Let’s dig a little deeper.
The General Meaning of Financial Freedom
While financial freedom can mean several different things there is a commonality. Financial freedom is simply getting to the point to where you don’t have to worry about money.
So either you’ve built up a large cash reserve that you can live on for the rest of your life or you’ve built multiple income streams that can support you. (Or a combination of the two.)
Financial freedom does not mean that you have to retire early. This is a common misconception. Most people who are chasing financial freedom are not doing it so they can sit around doing nothing all day. They’re working hard now so that they can live their lives to the fullest later.
Wouldn’t it be awesome to do whatever you like without have to worry about money?
While financial freedom sounds like a pretty straight forward concept there are several different methods you can use to get there.
Methods of Obtaining Financial Freedom
The path to financial freedom looks different for everyone. Some people like to pinch pennies while others concentrate on earning more money. Some people stash their money in retirement accounts while others build businesses.
What you do will depend upon your personality. Here are some things you can try to reach financial freedom:
Contribute to Retirement Accounts – If your employer offers a 401k with a match you should be contributing at least enough to take advantage of the match. If you don’t have an employer sponsored retirement plan you can open up a Roth IRA, traditional IRA, or if you’re self-employed a SEP IRA or solo 401k.
Buy Rental Properties – Another way to produce a residual income is by owning rental properties. If you can accumulate several rental properties that provide a positive cash flow you’ll be a step closer to financial freedom.
Other Investments – If you max out your retirement plans you can still invest in the stock market by opening up a personal investing account. And don’t forget about dividend paying stocks. These can be a nice addition to your portfolio.
Starting Businesses – Some who reach financial freedom rely solely on their businesses. You can do this by starting businesses and working to make them successful. Once you’re able to delegate work to other (trusted) employees your business can become a source of passive income.
The one thing that will help you to reach financial freedom faster is to start working on it now. The sooner you start the sooner you’ll reach your goal.
What are you doing to reach financial freedom?
Photo Credit: Stuart Miles
Financial freedom for me means peace of mind. Money can be such a powerful force in our lives, but when you can be in control you are doing well. I work hard on my retirement account, but I have also thought about utilizing rental properties as well.