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Why financial freedom matters, and how you can achieve it

Everyone has their own idea of what financial freedom means. We consider its value, and the steps you can take to achieve it.

27 July 2022 · Harper Banks

Why financial freedom matters, and how you can achieve it

The term financial freedom is unlikely to invoke the same image for you as for your parents, siblings, friends, or partner. Everyone has their own idea of what the concept means.

We consider the value of financial freedom, and what it entails. We then outline some entry-level steps towards achieving it.

Tip: Reducing your debt is one way to pursue financial freedom. Learn more about debt consolidation.

Why does financial freedom matter?

Fred Wagenvoorde, paraplanner at Fiscal Private Client Services, says that everyone has a different understanding of financial freedom.

“For some, it feels like a destination, while for others, it’s integrated into their lifestyle as a daily process. Personally, it makes me feel confident knowing that I’m taking ownership of my financial affairs and, even more importantly, my life,” he says.

Wagenvoorde explains that achieving financial freedom allows him to do what matters most to him - and he can do this when, how, and as much as he wishes to.

“Financial freedom is the result of making choices that put you in a position of being financially secure, so that you can live and enjoy your life without constantly worrying about money,” he says.

In order to achieve financial freedom, according to Wagenvoorde, you don’t have to be wealthy in terms of possessions, or have a high net asset value. However, you do need to determine what your ideal lifestyle is and align your financial affairs to this.

5 Steps to achieving financial freedom

Wagenvoorde says that achieving financial freedom can be a rollercoaster ride, but it shouldn’t feel like an impossible struggle or an unachievable goal.  

“The majority of people believe they can achieve this freedom, but most of them aren’t willing to work for it. If you truly desire financial freedom, then taking the necessary steps to succeed will be easier than you think,” he says. 

Once you have the foundation in place, Wagenvoorde explains, all that’s left is to maintain the structure going forward. He points out the following entry-level steps.

1. Determine your ideal lifestyle

This is a foundational step towards determining your goals. Without goals, you cannot maintain direction.

Try sitting down with a pen and paper, and outlining exactly how you would like to live your life. If you have a family, make sure you consider this in that context.

2. Determine the amount of money you need

Make sure you consider the costs of living, emergency funds for unforeseen circumstances, and the goals you have in mind. Once you have a figure, consider the cash flow that would enable you to achieve your desired lifestyle.

3. Prepare an action plan

This step does not need to be done independently. You can seek counsel on this, whether it’s someone who has achieved financial freedom, or a financial planner. You may even consider this as your first step. A quick chat with someone you trust may give you the cues you need to put your plan into motion.

4. Educate yourself on the components that make up your plan

Understanding the general outline of your plan will allow you to feel confident and empowered. Without this, you may feel that you’re sitting in the dark, and you may get anxious and look at your finances too frequently.

5. Review your action plan regularly

There are three words you should embrace after creating your financial plan – these being save, invest, and forget.

Forgetting doesn’t mean not reviewing your plan. Instead, it means setting up or automating the process so that you can continuously create momentum and stay the course.

“Financial freedom is the result of years of persistence and sensible money management,” says Wagenvoorde. “You can work toward your dream financial future a day at a time by setting financial goals and reinforcing robust spending and saving habits.”

By reducing your debt, you will feel more financially free – consider debt consolidation.

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