How to achieve financial freedom in 5 simple steps (2024)

Do you hope and dream of one day retiring and living on the beach somewhere? Or maybe even traveling the country in a RV? Or even taking all your grandkids to Disney World and paying for all of it?

But you’re not sure how you are going to be able to retire comfortably let alone do all that?

It’s good to dream and hope someday you can do those things but let’s talk about how to get there.

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What is Financial Freedom?

Financial freedom or financial independence means different things to different people. It typically means being able to afford to do what you want in life without stressing about money. It also means paying for emergencies without adding debt.

Financial freedom is being able to pay for cash when your car breaks down. Being able to cover your bills during a job loss. Or even paying cash for your entire family to go do Disney World.

It’s being able to do all those things while not going into debt. It’s staying out of debt while building your retirement funds, paying for your kids college and even paying your mortgage off early.

It’s being in the 20% of Americans that aren’t living paycheck to paycheck.

Steps to Achieve Financial Freedom

Financial freedom is going to mean something different to everyone. It is the feeling of peace about your finances. It is the feeling of control over your situation. It’s knowing if an emergency comes up, you can handle it. It’s knowing that if you lose your job of 10 years that you will okay.

Some people call it financial peace because it gives you peace about money.

#1 Make a written plan

Making a written plan is the beginning to achieve all your goals and dreams. The same goes for your financial future. It starts with a written budget which is a plan for your money.

Part of your plan should include what your hopes and dreams are for your life and money. This will help you intentional with your time and money.

You will be able to achieve your goals faster and easier with a written plan.

#2 Change your behavior

Your financial problems are 80% behavior and only 20% a math problem. Being in debt and competing with the Jones is a behavior problem. Once you have your plan, it’s time to build new habits and change your mindset.

This is really the biggest thing in achieving financial freedom and keeping it.

You can’t keep doing all the same things and expect different results. You must change your behavior and situation if you want to change your situation.

#3 Transfer Risk

The next step on your journey to financial freedom is transferring your risk. You do this with insurance. That is all insurance is. You need to have term life insurance so that your family is covered in the event of your death. It should be at least 10x your annual salary. Speak with an insurance agent for your options.

Term life is the best and cheapest option. It is cheaper the younger and healthier you are. Do not cancel any policies until you have a new policy in effect.

You also may have insurance through your job. However, it can be pricey when compared to the open market and you can’t take it with you. So, have your own.

If you are a stay-at-home mom, you still need life insurance. If you were to die, your family would have to pay someone to replace you. Your family would still have to bury you and take time off from work to grieve.

The Simply Insurance life insurance calculatorwill help you figure our if you have enough life insurance and how much more you may need to get.

#4 Estate Planning

I know estate planning sounds like a 1%er word but it’s imperative for everyone to have a plan in the event of their death. You certainly don’t want the government deciding how to handle your affairs.

If you have a will, your family will know how to handle things and be able to do it quickly while they are grieving. If you don’t, it can take months in court, money for attorney and filing fees, and they have no control over what happens.

You do not have to have a ton of money to need an estate plan. A simple will and other documents are important for anyone to have especially if you have a family and kids.

Click here for state specific estate planning laws.

#5 Save, Save, and Save Some More

Once you lay your foundation, it’s time to keep saving. Saving is one of the most important steps in achieving financial freedom.

Your savings is your safety net for life. It is what keeps you calm during the storm.

When you think about what financial peace looks like, it almost always involves having money saved in one way or another.

When your car breaks down, what would keep you calm? Knowing you can cover the cost of dealing with it. Meaning SAVINGS.

Want to stay at-home with your babies? You need to save money.

Want to quit your job? You need a plan and a safety net to cover the transition, i.e. savings.

Having enough money saved is what gives you the freedom to do what you want in life that gives you joy.

Getting there fast

Once you have your plan and start working it, you will want to find ways to speed up the process. Achieving financial freedom fast still takes time and is a process. It will take making your plan, sticking to it, and changing behavior.

But there are some things you can do to help speed up the process.

Sell Everything

Some things to consider is what you can sell that will help you catapult this process. This could include vehicles. If your vehicles take up a huge amount of your debt, think about selling them. Remember it’s only temporary in order to achieve your long-term goals.

Is your car helping you further your goals? If the answer is no, it’s time to sell it. You can get a safe, reliable, car for a cheap price.

You can also declutter and have a yard sale.

Savings Challenge

Challenge yourself to save $1000 in 30 days and see if you can do it. Think about it this way, if you were to lose your job today, what could you do to help get through the transition. What would you do? Even if you get unemployment, there is at least a 2 week window until you get any money. What would you do in the mean time?

No Spend Challenge

A no-spend challenge can help you change your behavior and reset your budget. A no-spend challenge is whatever you want it to be. It can be a weekend, a week or two, or a month, or some people even try a year!

It can be challenging yourself to not spend on a certain item or category or everything. It can be a great way to stash some cash by not spending on things you normally buy.

A lot of people even do a pantry challenge along with a no-spend challenge. This is where you try to clean out your pantry and freezer and not buy groceries. This requires some meal planning and probably buying a few ingredients to start. However, you can save a ton of money by avoiding the grocery store.

Final Thoughts

Remember that financial freedom means something different to everyone. Determine what it means to you and make a plan to get there. You will feel the freedom that plan gives before you even complete all these steps. It will help you worry less and save more.

These simple tips will help you achieve your dreams by managing your money well and setting up a family legacy. It gets easier the more you do it. The important thing is to not give up. It will take baby steps and you will have set backs but as long as you keep going, you are moving forward toward your goals.