Financial freedom is being able to cover all your financial needs without being tied to a job.
It is very directly related to passive income, which does not require constant activity on your part to obtain.
In other words, you achieve financial freedom when your savings together with your passive income cover all your expenses, which means that you can stop depending on a regular job to live.
Some examples of passive income can be:
- Income from the rental of real estate (apartments, businesses, etc.)
- Interest and dividends from your investments
- Recurring income through web pages: advertising, affiliation, passive products
- Royalties and copyrights from the sale of books or other creative endeavors
Although some people have achieved financial freedom through passive income, they continue to work.
“Work for fun, not for necessity.”
Generally, the money they receive is linked to their passive income. This means that although they still need to work to earn money, the hours and effort are minimal.
This income is not 100% passive since it usually requires a minimum of dedication on your part to maintain or increase it.
But there are many advantages. You will stop being tied to a fixed schedule, and you will feel free to use your time as you want.
How to get your financial freedom?
There are two fundamental variables that you must take into account before planning your financial freedom: your money and the time that you are going to remain financially free.
Many people confuse financial freedom with wealth. They think that those who have achieved it can afford a life traveling the world without paying attention to expenses, but that is usually not the case.
The less you need to live, the easier it will be for you to be financially independent because they will also require less income and savings. So the first thing to consider is how much money do you need each month to live? Or rather; How much money do you want each month to live?
Add to that all the possible contingencies, such as parenthood, medical expenses, or repairs. Calculate a realistic monthly amount and always keep it in mind because you will need to keep reasonably strict control of your expenses.
Financial freedom is calculated in years. That is the time during which you could maintain your rhythm of life if you stopped working tomorrow, either using your savings or having an inflow of money that did not depend directly on your work.
- To calculate your time of financial freedom, you just have to divide your savings by the expenses you need to cover every month.
- If you have a passive income system, quantify how much comes in each month and subtract what you need to live. If the result is positive, you will have financial freedom as long as you continue to have that source of income.
In summary, what would be the keys and the strategy to be financially free?
We could say that a state of financial freedom is perfectly achievable as long as the following requirements are met:
- That it is organized based on a passive income strategy.
- There need to be more than one of these strategies.
- They belong to different sectors or formats.
- It does not wholly require your physical presence (hence your greater freedom).
- It can produce ongoing income, in periodic or recurring mode, without exhausting its production capacity.
In this way, you can create your own strategy that allows you to reach the desirable state of freedom gradually.
Is it feasible and possible? YES! You just have to point yourself in the right direction and not deviate from the path.
If you still need more information, you can download this ebook for free at the following link The Total Transformation of Your Money by Dave Ramsey, so that you can transform your strategy and achieve the economic well-being that you have always wanted.
I hope you liked this article. And if so, don’t forget to share it on social media. I wish you a 2021 full of opportunities and growth.