Dreaming about a life without financial worry is all well and good, but if you want to see your dreams come true, then you must be ready to make the necessary changes. Often times these changes are simple. However, the problem is that most people think they are above simple change and instead seek complex solutions to simple problems. The answer to financial freedom is much simpler than you would imagine.
Here are 5 skills that are an absolute must if you ever hope to achieve financial success.
5 Essential Skills You Need to Get Financial Freedom
1. Make a Plan and Stick to It
Nothing changes if nothing changes. If you want to end up financially free in a set amount of time, then you need a life plan that is radically different from the one you are following at the moment.
Every great achievement begins with setting clear goals and sticking to a clearly thought out plan on how you intend to achieve those goals. This is easier said than done. According to research carried out by the University of Scranton, a whopping 92% of people are unable to stick to their set goals and plans. The remaining 8% who go on to achieve wonderful things are those who are able to undergo the needed transformation of mind and self in order to attain success.
To achieve financial freedom, you must be willing to go beyond these numbers to realize what they are actually saying: all your dreams are possible. You just need to make up your mind to be among the successful 8%.
You also need to be realistic and recognize that statistically, at the moment, you probably fall under the 92% who aren’t sticking to their plans.
According to life coach and PGI Certified Consultant, Terri Newman-Hodge, you can get anything you seriously want in life, even if you have already tried without success in the past to achieve it. But it will not happen without significant self-awareness and the willingness to change.
2. Learn to Live Below Your Means
On the surface, this appears a no-brainer, but it is perhaps the most prominent stumbling block that most people encounter on their journey towards financial freedom. Because, let’s face it, “more money, more problems” right? Or so the popular 90’s hit song goes.
The reality is, regardless of where you are in life, you are going to have problems and you are going to be exerting tremendous amounts of energy to fix them. So if it is going to take the same amount of daily effort to fix your problems, pick better problems.
As you venture towards your goal of financial freedom, your income will inevitably increase. It is at that point that most people do the natural thing and increase their expenditure and, by so doing, shoot themselves in the leg.
Stay committed to your goals!
Sometimes–especially at the beginning of your journey–achieving financial freedom might even entail cutting back on some expenses like moving to a smaller or less costly apartment, doing away with a car you don’t need, moving your kids out of private school, cancelling that costly vacation trip you were planning–anything that will help you live below your means.
According to Aron Levine, acting head of Merrill Edge at Bank of America, those who ultimately achieve financial freedom are those who learn to stay on track with their savings regardless of what life throws their way–and, yes, that includes more money or income.
3. Learn to Invest Your Money Wisely
Nobody ever got rich by saving…at least not in the short-to-mid-term (Compound interest can work wonders for your nest egg if given a considerable of time). So what’s the alternative? Investing!
Learn to pay yourself first by setting aside 10%-20% of your income for investing. This is money which you never touch; strictly investments only!
To reduce the likelihood of you spending the money, you can automate the entire process by asking your employer to set up a direct deposit agreement with you or ask your bank to automatically transfer a specified amount of your income to an investment account.
In this way, you can set aside money that is working hard to bring in more money for you, generating a stream of passive income that will eventually grow large enough to allow you to live the lifestyle you desire.
If you cannot yet afford to set aside the recommended 10%-20%, you can work towards that goal as time goes on. For example, it is becoming increasingly popular to set up 401(k)s in such a manner that allows a minimum, say 3%, and then increase that amount by one percentage point each year.
4. Learn to Make the Most Profitable Use of Your Time
Not many people stop to think about the important role which time plays in our daily lives. Ultimately, those who make the best use of their allotted 24 hours each day usually end up ahead in any endeavor, and that holds true for those who seek financial freedom.
The most basic understanding of financial freedom is actually not having to exchange your time for money at all. All your efforts towards saving, investing, and increasing your income should be geared towards freeing up more and more of your time.
If you find yourself moving in the opposite direction, then something may be wrong. The more time you free up, the more time you can divert to other activities that will generate more passive income that can be put to work for your financial good. You never want to find yourself in a position where you cannot grow your income because you don’t have enough time.
In keeping with this thought, you want to watch what you devote your time to. Not every “opportunity” that comes your way is worth your time. Some of them may end up taking you farther away from your goal of financial freedom.
5. Never Stop Learning
It’s not a coincidence that the average millionaire reads about 10x more than the average joe on the street. Research shows that Billionaires and millionaires spend 80% of their time reading.
You can do same: learn at every opportunity you can; never stop educating yourself on the things that matter most to your goals. The amount of knowledge you hold is the bridge between where you are now, and where you hope to be tomorrow.