Achieving financial freedom is a goal for many, but it can often feel out of reach. With the right approach and mindset, anyone can take steps towards financial independence. In this blog post, we will outline 10 simple and effective steps that can help to achieve financial freedom.

Step 1: Set Clear Financial Goals

The first step towards financial freedom is to define your goals. What being financially free means for one person might be totally different for another person. By setting clear and specific goals, you can create a map to financial independence. Try to follow the SMART goal-setting system - specific, measurable, achievable, relevant, and within a timeframe.

SMART goals are:

• Specific: Define exactly what you want to achieve. For example, a goal of I want to save $20,000 in 12 months is clearer than just saying I want to save some money this year.

• Measurable: The goal should allow you to track your progress. If the goal is to save $20,000, measure how much you are saving each month, week etc to be able to achieve the goal.

• Achievable: While goals should be a challenge, they should also be realistic. Setting goals that are too far out of reach can be demotivating.

• Relevant: Ensure the goals align with the long-term objectives. If the goal is to buy your first home, then firstly determine the type of property and deposit required and match this with your savings goal.

• Time-Bound: Assign a deadline for each goal. For example, I want to save $20,000 in 12 months.

Setting clear goals will help stay on track and focused, giving clear direction and benchmarks.

Step 2: Create a Budget

A budget is an important tool for managing finances. Start by tracking income and expenses to understand where your money is going each month. Then, create a budget that allocates income toward essential expenses, with the aim of being in a surplus position.

Start by tracking income and expenses for a few months. Break down the spending into categories like housing, groceries, utilities, entertainment, transport and debt repayments. Once you have a clear understanding of your spending, you can create a budget that aligns with your financial goals.

Aim for a budget that allocates a portion of your income towards essential expenses whilst also allowing you some surplus for entertainment and hobbies.

Step 3: Pay Off Debt

Debt can be an obstacle on the path to financial freedom. Especially high-interest debt such as credit cards, personal loans, and car loans which can use up a large amount of cash flow to service. Repaying debt quickly will help to free up additional cash flow which can then be directed towards wealth creation. Becoming debt-free also relieves stress and provides a sense of accomplishment.

Step 4: Build an Emergency Fund

An emergency fund is a buffer designed to cover unexpected expenses or setbacks, such as medical expenses, car repairs, or job loss. Without an emergency fund, you might find yourself using credit cards or loans, which can set back your journey to financial freedom.

As a general guide between 3 to 6 months of living expenses can be held as an emergency fund. However, this can vary depending on your personal situation. For example, if you are self-employed or have irregular income you may want to aim for a larger emergency fund.

Building an emergency fund takes time, but the peace of mind and security it provides are invaluable. You’ll be able to focus on the long-term goals without worrying about the what-ifs.

Step 5: Invest for the Future

Investing is one of the most powerful ways to build wealth and achieve financial freedom. There are many options available for investing and it’s important to research and consider the risks involved before making a decision. If you are new to investing, it can be beneficial to speak with a financial advisor who can create an investment plan that aligns with your goals and risk tolerance.

Step 6: Live Below Your Means

Living below your means is a fundamental principle of financial independence. It involves spending less than you earn, even as your income grows. This strategy allows you to save and invest more, accelerating your path to financial freedom.

One common pitfall is lifestyle inflation. As we earn more, we often start spending more too. Instead of upgrading the car and wardrobe when a raise comes, maintain your current lifestyle and direct the extra income towards areas that will improve your financial position.

Step 7: Increase Your Income

While reducing expenses is important, increasing income can also significantly speed up your ability to achieve financial freedom. Look for opportunities to advance your career, learn new skills, or pursue side hustles and passive income streams.

Step 8: Education

Financial education is important for making informed decisions and avoiding mistakes. The more you understand personal finance, the better equipped you’ll be to handle your money effectively.

There are many ways to educate yourself about personal finance. You can read books, listen to podcasts, and enroll in online courses. You can also work with financial advisors to gain personalised guidance.

Financial literacy is an ongoing journey, and continuing to educate yourself will help you make better financial decisions.

Step 9: Stay Disciplined and Patient

Achieving financial freedom is a long-term goal and requires discipline and patience. Stay focused on your goals, maintain good financial habits, and don’t get discouraged by setbacks. Small, consistent actions taken over time can lead to significant progress towards your financial goals.

Celebrating small wins along the way can help you stay motivated. Whether it’s paying off a credit card or reaching a savings milestone, acknowledge your progress and use it as fuel to keep going.

Step 10: Review and Adjust

It’s important to regularly review your financial situation and adjust your plan as needed as this will help you stay on track towards financial freedom. Life circumstances may change, and financial goals evolve over time, being flexible and adaptable in your approach is beneficial.

Financial freedom is not just about having a large asset base, it’s about having the freedom to live life on your terms and pursue passions without being constrained by money.

About Us

After working as an advisor for a decade, Joel founded Unified Wealth.

Unified Wealth specialises in helping clients who are facing life’s big decisions.

Whether you’re contemplating your first property, growing your family or starting your investment journey we can help you focus on the simple steps to help you make your goals reality.

Our priority is making sure you have all the right information available to make the best possible decisions for you and those you love.

Our company values are:

Unity - We are most effective when we work together as a team

Trust - We are trustworthy and act in your best interests

Transparency - We are honest and communicate openly

Education - We are committed to lifelong education