Financial Freedom: What it is & how to achieve?

Achieve Financial Freedom

Financial freedom is the ambitious goal individuals today want to achieve. It is all about having enough income to cover all your financial needs without having to work much. Setting priorities, controlling spending and developing a strategy to generate income are key to achieving financial freedom that many people today want to aspire.

How “financial freedom” became popular?

The term ‘financial freedom’ became popular in USA at the beginning of the century by authors such as Robert Kiyosaki and the precursors of the FIRE movement, an acronym for Financial Independence, Retire Early. This school has many followers among millennials around the world and is committed to combining a simple lifestyle and an intelligent investment of savings with an objective to generate an income that will allow them to stop working in less time.

More and more people realize how contradictory it is to wait until retirement to start living and, therefore, decide to dedicate their time and effort to a job with the purpose of having financial freedom when they are still young.

This concept refers to a person’s ability to earn an income and be able to cover all his or her financial needs without having to engage in any type of activity. After the COVID-19 pandemic, free time and not being tied to a routine, obligations, a schedule… is more valued.

Role of Passive Income

Passive income is what can help a person achieve such freedom and financial independence. Income that, once the initial investment has been made, generates returns on a constant and regular basis without the need for much additional dedication.

E.g. Buying a property – movable or immovable – and renting it out to generate an income. Financial freedom can also be achieved by writing a book and earning income from royalties or by participating as an investment partner in someone else’s company. That is, by contributing capital, which entitles you to a proportionate share of the profits based on the capital contributed.

Benefits of financial freedom

(1) Having financial freedom can bring multiple benefits

In addition to improving one’s quality of life, one gains autonomy and decision-making power. Many followers of financial freedom have achieved financial independence and retired before the official retirement age.

Among the advantages of having financial freedom is that you stop experiencing stress due to financial problems. You are covered against life crises that can be solved with money and you can also work in what you like, since you have the economic freedom and peace of mind of not depending on your salary to lead the lifestyle you want.

In addition, some people can be more successful professionally, since they can be themselves at work and are not afraid to give their ideas and contribute. Also, if you work on what you like, you increase your chances of performing better.

(2) Long-term financial planning and control

But achieving financial freedom is not easy. In fact, not everyone can achieve it. Whether or not it is achieved depends, in large part, on the ability to generate high income that allow you to save large amounts of money. People who tend to achieve financial freedom are big savers who exercise tight control over their money outflow and look for innovative ways to earn more money. In other words, they make their capital generate a high return and have a long-term vision.

In order to achieve financial freedom, it is important to:

  • Establish priorities
  • Control spending
  • To draw up a strategy to obtain money

It is essential to establish a method that allows to generate several passive incomes that belong to different sectors in order to diversify risks. It is important that the set forms a system that works in automatic mode or almost, that is to say that it does not require physical presence, to achieve greater freedom, and that does not exhaust its production capacity.


Nikesh-Mehta-AllOnMoney

Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].


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