What does financial freedom mean to you? Is it not having any debt? Having enough money for random vacations? Not having to worry about your finances? Having money to purchase whatever you want? Whatever it means to you, we all want to achieve some level of financial freedom. We want to take ownership of our finances and have enough money to live the life we want without being burdened by debt. This may sound unachievable, something for the rich only, but wealth coach Derek Moneyberg says that anyone can achieve financial freedom.
Derek is a mentor and wealth coach who guides his clients on ways to achieve success in their lives, careers, and businesses. A successful entrepreneur himself, he has a wealth of experience to guide people on a path to financial freedom. Here are some of his lessons.
Learn how to manage your money
You will not go far if you do not have a proper plan for your money. If you spend randomly without planning, you will find yourself broke at the end of the month, not knowing where your money went.
“Budget for your money and track your spending, accounting for every single dollar, throughout the month. This will give you a sense of your expenditure, and you will know where you are overspending or underspending and adjust accordingly,” advises Derek.
Budgeting is necessary to get your finances in order, to get you on the path to financial freedom.
Pay off your debt
Plan on how you will pay all your debt, such as student loans, car loans, and credit cards, because having debt means that most of your income goes to other people instead of your account. Work on clearing the smallest debt first, then work your way up until all the debt is cleared.
Have short-term savings
While you’re working on your long-term financial goals, you need to have short-term savings to use on unexpected bills. You may need to replace an expensive appliance in your house, your car may break down, or you may have a medical emergency that is not covered by your insurance. Such events that you had not planned for require money, and you should have savings account for such, instead of digging into your investments to pay for them.
Look into the available investment options.
Once you get the basics right, it’s time to ensure that you have a passive income where your money is making more money for you. “Any credible financial advisor will tell you that you cannot save your way into financial freedom. Having money in your bank account that does not earn you anything extra will not make you financially free,” says Derek.
Look into long-term investment options, analyze all the available ones, and look for the ones that best suit you. It could be investing in real estate, the stock market, or even a business.
Have multiple income streams
You may be tempted to have just the one investment option or just one business that is already working for you, but that can only take you so far.
“The most successful and financially free people have multiple income streams that all bring them money at the end of the month,” says Derek.
He advises his clients to ensure that they diversify their investment portfolio, such that if one income stream is affected by factors outside their control (such as the stock market crashing), they have a fallback plan with their other investments.
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