Building These Habits Are the First Step to Financial Freedom

17 min read

Building These Habits Are the First Step to Financial Freedo

Everyone desires freedom, whether it’s financial freedom or personal/life freedom, or any other type one can come up with. Unfortunately, if we don’t have financial freedom, it's almost impossible to have any 'luxuries' in life. For example, you’re earning a decent amount of money through your occupation, but you’re far from financial freedom.

This means, if you stop working, you won’t pull through. But, if you have financial freedom, you would have already created sources for a regular income stream. You would have the luxury of trying and/or picking a new venture in your life.

Financial freedom means that you get to make life decisions without being overly stressed about its financial impact because you made preparations. You control your finances instead of being controlled by them. Being rich doesn’t guarantee your financial independence. A person could be worth $20,000 and become financially independent.

On the other hand, a millionaire can be far from financial independence. Interesting, no?

So, which factors decide the financial freedom of a person? Indeed, there are few technical studies that give answers to this question. First, you need to make some life adjustments. Creating good habits is the first step to financial freedom.

Steps to Financial Freedom: A List of Daily Life Habits

As we already mentioned, the first step to financial freedom is creating good habits. We give you insights into some real-life, easily manageable, habits below. And when is the best age to set your habits? We all know the answer. 'Student' age is the perfect time to practice and develop any habit.

Let’s talk about those habits:

S.M.A.R.T. Goals

I know it sounds a little cliché to write down your life goals. I was like most of you before reading the book "The 7 Habits of Highly Effective People". In this book, the author emphasizes, again and again, writing down life goals. It’s not something like 'I will become this or that. Instead, he urges one to set a specific goal. For example, 'by the age of 30, I will have 10 million dollars.

It sounds childish, but please write down your goals on sticky notes, attach them to your desk, screen or fridge, and read them every day. Automatically, your subconscious mind will give you the impetus to work towards your goals. Setting this habit will cost you nothing but pen and paper.

Again, I remind you, restate your goals every day, after getting up and before going to bed. A S.M.A.R.T. goal is the first step to financial freedom.

Learning Through Investment

With the help of technology, the investment industry has been completely revolutionized. The fees have been reduced to a minimum and anyone can participate in investment opportunities. There is no investment too small. You can start investing with as little as $10. Also, almost all of the new generation financial apps give you instant market news, enabling you to adjust your decisions based on market fluctuations.

Youth is the best time for investing because it’s inevitable that you will make mistakes while investing. Since you have some years to recoup any losses and fewer financial obligations, you have the leeway to educate yourself about investment strategies and the market. In addition, investments are the best way to achieve financial freedom. Study about the investment approaches during your free time.

Negotiations

Where possible, try bargaining for any purchases you make. You may be worried about being judged. Don’t worry. Once you make it a habit, you'll hardly bother about those people. The reason you ought to bargain for daily necessities occurs because you need those products daily and, if you can save even the smallest amount, at year-end it will add up a considerable amount.

Will people around you just give you that money? No way! It’s your money; your rules. Stay unbothered. Instead, create this habit.

No Budget - No Progress

How many times have you prepared a budget? And how many times have you forgotten about it? Setting up a budget before you spend is another important step to financial freedom.

The advantage of having a budget, and following it, is that it will help you to keep track of your spending. Also, because you have set your limits, you tend to restrain yourself from purchasing unnecessary stuff.

Every country in the world has a budget and everything it does for a whole year is based on it.

Similarly, suppose you have both a year-long and a monthly budget. If this is the case, you already know what your biggest purchases will be and when, if ever, you can indulge your urges. It will help you to balance your life. A wise policy: Live below your means. Your budget(s) should reflect this.

Show Respect to Credit Cards

Credit cards save us from sudden inconveniences and emergencies. They can also help to increase your credit rating. But using them imprudently can backfire on you. Being unable to pay the credit card bill in time will cost you a high 'penalty'. If you don't meet your credit card due to date every month, the interest owed will be compounded daily and that total will become a considerable sum.

The best practice is to try to set the habit of paying credit bills in due time, i.e., don't purchase a single item with a credit card, unless you have the cash in the bank to pay for it by the due date.

One thing I learned more recently, accepting the offer of a credit amount increase, on one's credit card(s), helps to raise your credit rating. In no way does this mean that you should use the card more. If you find it difficult to restrain yourself from using your credit card when you don't have the cash in the bank, then take a tub (one liter in size, perhaps), fill it 80% with water, drop your credit card(s) in and put it in the freezer.

This way you have a little time to reflect on whether you really need whatever you intend to purchase, or if it would be better to put it off for some other time.

Living a Frugal Life

There are a number of views regarding frugal lifestyles and/or achieving financial freedom. Well, this strategy has its pros and cons. You’re welcome not to if you don’t find it attractive to lead such a life.

There is no shame in following a frugal lifestyle. But look at it from another point of view. You know a100 different ways to spend your money both effectively and efficiently, like avoiding bank fees or private transportation costs, or .... anything. For more sage advice, I suggest you follow the blog "Mr. Money Mustache", especially if you're interested in a frugal lifestyle. He is the master of guiding people who are wanting to lead a life below their means.

Ask Seniors for Financial Advice

Getting Financial Advice

As you’re a student and you don't have enough real-life financial experience, it’s expected you lack financial knowledge. It is for this reason that you should never hesitate to ask for help. It would be best to get assistance from a professional financial advisor, but it is doubtful you can afford one in your student days. There are always alternative ways to get advice.

Just look around you; for sure you can find at least one financially savvy person. Speak with that person (and otherwise ones) to get every possible financial tidbit you can get.

Nonstop Education

Educating yourself is the best investment you can ever make. In this instance, I am not referring to institutional education. I mean that you ought to be continuously educating yourself on financial matters and various strategies. Seek information from any reliable source you can find.

Do you know about 'Mr. Money Mustache'? Check out his website. Once an engineer, he now advises on financial 'life hacks' and lives a financially independent life. He is continuously educating himself and then sharing his knowledge with others.

Begin your education today and soon you will never be defeated by a financial setback again.

Prioritize Property Management

When it comes to owning property, either you inherit it, or you have to acquire it. Many people own a piece of property; some large and some tiny. Since you’re a student, you believe you don’t have time to concern yourself with this. Wrong. You're never too young to learn about maintaining property and property management. Just being observant about properties around you is a start.

Let me tell you about my close friend's personal experience. He is a university graduate and works in a top tech company. Most people say he is highly educated, but he hardly knows a thing about the rules and regulations of managing his family's properties. On the other hand, his younger brother, who is very close to their dad, frequently asks their father regarding the maintenance of his properties.

After a few years of doing this, the younger brother is making family decisions and increasing their property value through proper management. So, don’t ignore any chances to get educated in property matters.

Learning the best practices of property maintenance and management helps people build a strong perception of wealth and what is required to keep it. You will learn to easily distinguish the differences between wealth and money.

Health is Greater Than Everything

Your Health is More Important

Health is the best investment you can make. Without good health, everything is much more difficult. Think about this viewpoint: If you are not healthy, what’s the point of acquiring all the wealth? How will you enjoy it? I believe that a person with a healthy mind and body will always be able to 'go the extra mile.

Eat a healthy, balanced diet, develop an exercise regimen and take care of your mental health. Make these all a priority. The rewards will be plentiful.

Minimalistic Approach

Most of you are from 'Generation Z'. You are supposedly the more pragmatic generation. You grew up in a recession. But, just take a look at your friends and family. People are buying unnecessary stuff all the time. For example, one day you get an ad about a 70%-off winter sale at a name-brand store, so you decide to buy a new shirt, even though your closet is full. You think that you’re saving 70 percent. WRONG! You’re wasting the 30 percent you pay because you didn’t need the shirt. You have just fallen into the marketing trap.

It's time to practice avoiding impulse buys and learn to make it a habit from now on.(Remember the frozen credit card?) Learning the habits I've mentioned will help you acquire ample money to invest in a variety of money-generating sources, over time. Sometimes, just one habit will start you on your journey to financial freedom.

Attaining financial freedom is not rocket science.

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# Financial Intelligence # Financial Freedom

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