12 Tips to Create Your Financial Freedom

Financial freedom is a situation where you are free from debt and can live on the assets you have. You no longer have to work for your money, but you can of course.

Some examples of these types of assets are real estate for rent, stocks, bonds or other things that generate passive money every month.

You have arrived in a situation where you no longer work to survive, but because you like it or because you want money for extras that are not necessary for life.

In this article, I’ll give you 11 tips that can help you create your financial freedom.

Define clear and achievable goals

First of all, before you start creating financial freedom, it is important to define clear and achievable goals.

Where do you want to be in a year? And in 5 years? And how will you achieve this?

It is very important that your goals are realistic and within your own control. Suppose your goal is to invest a fixed amount in shares every month in order to grow your capital. Then your goal should be to invest every month. Not to have your capital double within an X period.

This is not within your control! If the stock market goes into crisis next week and falls 50%, have you failed? No, because this is beyond your control.

However, you can hold yourself responsible for whether or not you invested an X amount every month.

I myself invest a fixed amount of 300 euros in a worldwide ETF every month. Whether the price rises or falls, I buy neatly every month and do not sell. That’s my goal, it can be that simple!

So make sure you set your goals and that they are within your circle of influence. It is best to write down your goals and frame them in a picture frame. This way you are reminded every day of your personal goals.

Write down your goals so you can read them back in the future

Keep track of your expenses

The second tip focuses on your expenses. I must admit that I have a bit more trouble keeping track of my expenses. I simply have to put in more effort into that than for other things.

Yet it is hugely important. You can only get an overview of your financial situation if you also know what your expenses consist of.

You may think you know about it, but you will be amazed at the proportions when you actually put your expenses on paper.

It is best to keep track of your expenses by means of a household book. This does not have to be done with pen and paper, but can simply be done in Excel or online. There are numerous websites that offer such a household book.

In fact, I am considering creating one myself and sharing it on my website. Let’s just say to be continued.

Spend less than your income

This may be an inside match, but it is of course important to spend less than what comes in. This is the only way to keep money every month that you can set aside.

However, you can also broaden this. I recently spoke to a friend who had received a 300 euro pay rise at work. He was very happy with it and indicated that he can eat out at least twice a month for it.

And that’s right, you could do that. He has decided to enjoy his money right now and only worries about the future later. I do not do that. I am now thinking about the future because investing now has a much greater effect than in 20 years’ time (more about that in the next tip).

If I received a $300 salary increase, I would immediately process this in my objective. Suppose that 300 euros gross is about 150 euros net. Then you could also choose to convert your target of investing 300 euros per month into $450 investing per month.

After all, you already live on the salary you currently receive and will therefore not notice if you also set the extra salary separately. When you start living on the extra salary (and eat out twice a month more often), you get used to this. It will be more difficult for the rest of your life to spend less because that feels like a step back.

Invest early

This is one of the most important tips on this list, and hopefully, it will not be too late for you. It is extremely important to start investing early!

A monthly investment from 18 to 28 is worth so much more later than that same monthly investment from 28 to 38. Your money has had 10 years longer to pay off. Due to the effect of compound interest (interest on interest), the difference is enormous!

Earlier I wrote an article about investing as a minor. In it, I gave the example of Niels and Erik, who will both invest. Erik starts at the age of 18 with 200 euros per month, while Niels prefers to eat out twice a month and start investing at the age of 28.

So the difference is 10 years x 12 months x $200  = $24,000 would you say?

Wrong! At the age of 65, Erik has no less than $196,756 more in the capital than Niels. That’s the power of compound interest in combination with starting early investing!

Unfortunately, the bell only started ringing for me when I was 27 and I have not invested in the market until then. A shame, of course, because now that I have started, I have to buy much higher than I could have done years ago.

My savings have been dusting on a savings account for at least 10 years. In fact, it has only decreased in value due to the inflation we know.

In short, start investing as early as possible!

  1. Invest regularly

Investing regularly is also a tip I want to give you. When you invest regularly, you are serious about it and it is not a case that occurs sporadically.

Some people invest a lot of money in one go, and that’s fine. Suppose you receive a large inheritance, then you could invest it in one go, for example in real estate.

When you invest for the long term to create financial freedom, you do well to invest regularly. As I mentioned, I invest $300 every month in a global ETF. In this way, I am working on it (at least) monthly, and I am also reminded of my goals.

Saving on your fixed costs such as transport can make the difference every month

Save on fixed costs

You can spend less than you receive in two ways. You can increase the income and you can reduce the expenses.

Saving on your expenses can be difficult. Still, it is good to take a critical look at your expenses (when you have made the overview of tip 2).

You can make the biggest savings on your fixed costs. Saving on your home is perhaps the biggest hit you can make. Especially when you rent a home you can take a critical look at this.

Are you alone and do you live in a 4-bedroom house? Then you might live too big. Or do you live in the center of a big city while you don’t actually make much use of the surrounding facilities? Then you might be able to live cheaper in a suburb.

These things can save hundreds of dollars a month, which you better investment than throwing into the bottomless pit called rent.

In addition, you can save on fixed costs such as transport, internet, and TV, telephony, insurance, etc.

I myself I am considering exchanging my car for a smaller model. A while ago, I made this article on driving a smaller car, where I calculated what it would save me in the long run.

But you can also save money on the internet and TV. Have you been with the same internet and TV provider for years? Call them with the notification that you would like to cancel. A world of discounts will open up for you!

You can also save a lot on your telephony. I have had a SIM-only subscription for about 3 years and I buy my phones separately. I’m not the type to say “I can pick a new phone”, because that really doesn’t make any sense (and you hear it so often). I think that my phone can last for at least 3 to 4 years and would rather buy the penultimate model separately instead of the newest models.

The moral of the story; check your fixed costs and see how you can save on them. These are the easiest savings, as they come back every month.

Save on luxury

Besides saving on fixed costs, you can of course also save on luxury. I myself am not such a luxury horse (neither are many of my readers), so there is less to save for me.

But think of saving on outings, dinners, holidays, and clothing. Personally, I love going to a nice and affordable local restaurant just as much as to some expensive star restaurant. For me it’s about the atmosphere and the coziness. If the food is better, it is okay.

The holidays can be a bit more expensive for me. For the past 3 years, I have been to New York, Dubai, France, Italy and Brazil.

Fortunately, I could stay with friends in New York as well as in Brazil, which saved a lot of costs. The flights were therefore fairly expensive (both about $700), but the stay was limited.

And also on vacation, I prefer to spend my money in the supermarket or a bar, then at some chic restaurant.

Share the costs

You can see the sharing of costs in the broadest sense of the word. There are so many ways to share costs.

A friend of mine bought a two-story apartment. He lives in the top floor himself, while he rents the bottom floor. That way he lives for free, as it were. The mortgage is backed by its tenants. The only expenses he has now been gas, water, and light.

A home is of course the biggest savings, but what about transport? Unfortunately, I haven’t been able to find anyone to share transportation with me, but it’s definitely an option for me! I use my car about once or twice a week, the rest of the week it stops. If someone else nearby is in the same situation, sharing the costs may be an option.

But you can also save on small things by sharing the costs. I don’t know if it’s allowed officially, but almost everyone shares their Spotify or Netflix account with someone else. I wouldn’t be surprised if they let this happen on purpose and make some kind of update in a while where it is no longer possible. But for this one time, they have a then natural and special sacrifice for us.

In any case, sharing costs is often forgotten, but can work very well. Especially when you have like-minded people around you with the same objective as you (tip 12).

Create extra income

Until now, we have mainly talked about investing and saving. But a higher income can of course also help on the road to financial freedom.

They don’t say for anything that the average millionaire has no fewer than 9 sources of income.

I myself have 3 main sources of income, the third of which is divided into all kinds of smaller parts. I have the salary from my work (I work 32 hours), I receive compensation for voluntary work that I do (small amount) and I am registered as a self-employed person.

The income as a self-employed person naturally consists of all kinds of other sources of income. Previously, these were mainly customers, nowadays more and more passive income. I put everything I earn as a freelancer apart, so I will not live a more luxurious life. I want to use this money to invest for later.

Prepare for adversity

Investing in financial freedom is fun, especially when things are going well. But I have news for you; things don’t always go well.

As an investor, I have never experienced a recession in the stock market. The last crash was in 2008, but it probably won’t be long before we start seeing another crash.

Fortunately, I have gained experience in the world of cryptocurrencies in the past 2 years. I’ve been through days when my investment made -30%.

In fact, I have experienced a peak of $18,000 bitcoin and a dip of about $3,000 bitcoin. My investment was no less than 85% less true at the low point than at the peak! Luckily I didn’t buy at the peak, but it did teach me to keep calm.

Especially when you invest monthly, a crash in the market (in the long term) is not such a disaster. In fact, you can buy cheaply! The money is made when the blood runs through the streets.

In any case, make sure you know that such a situation will also occur and think about what you are going to do. My tip is not to sell anything and leave all your investments. Where possible, you prefer to buy extra. You know that it will all turn out fine in the long term.

Notify your family and friends

I have put this tip a bit lower on the list because not everyone agrees. Should you or should you not inform your environment of the plans you have?

In my opinion, it is best to do it. They know better why you don’t go to winter sports every year or why you don’t necessarily have to go to the most expensive restaurant during that weekend with friends.

However, whether they really understand it is another matter. People who are not concerned with financial freedom do not really understand. But it does help to avoid getting an awful lot of questions. If only because they say “Oh yes, he is so frugal because he wants to stop working 2 years earlier”.

Leave them, I guess …

Get in touch with like-minded people

Finally, I would like to give you a tip to contact people who are involved in the same financial matters. This can be done physically, but also on social media or internet services such as YouTube or Telegram.

It helps to learn from each other and it feels nice when there are other people who understand you.

Felix Tammi

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