Let’s face it, financial freedom is one of the most important topics that you can ever discuss or talk about with your friends or family members.

The bad news is: you were never taught about financial freedom at school so, you probably don’t have any background knowledge that allows you to get involved in such discussions.

Personally, I believe that realizing financial freedom should in every human beings’ bucket and to-do list. Because, unless you realize it, you won’t live your life outside the boundaries of debt and never-fulfilled wishes.

Customise it – Make it your own

So, today’s article deals with one of those topics that you need to bring a notebook for.

Today, I will be teaching you step by step how to realize financial freedom so that you won’t have to sleep the upcoming nights with a tear on your face because you couldn’t buy organic food.

So, I suggest that we skip the formalities and get to business:

#1 Create an emergency fund

Emergency funds represent the money that you have to put aside in a safe place and use only in emergency cases like sudden sickness for example. This is not money that you can use for a holiday travel or to buy a cold drink late at night or to pay the pizza delivery guy who you didn’t expect that he would deliver your order this fast.

To do so, you need to put aside a sum of money. It can be any sum that you think would come in handy in cases of emergency. If you think that $100 dollars would be enough then take a 100 and put it in your safe or in your closet or drawer.

If you think that you need $5000, then go ahead champ, put aside $5000 dollars. Although I wouldn’t suggest that you put $5000 dollars in your locker, a hidden safe might be a better choice.

By creating an emergency fund, you are giving some space for yourself indirectly and as a result, you will make better money decisions because you won’t be worried anymore about worst case scenarios.

#2 Pay off your debt

Now this step is simple, but it might not be as easy as it sounds, especially if you have multiple debts to pay. The worst part is that it gets even worse when you are obliged to pay the debt in addition to their interest.

What I want you to realize is that, unless you pay off your debt, you will never ever realize financial freedom no matter how hard you work.

You can think of debt as a hole in a ship that you are sailing with. The good thing is that you have a friend on board of this ship as well who, apparently, at the moment, is doing a great job using a bucket and emptying the water which got in the ship.

So far you might say, big deal! As long as my friend is doing his job at a good rate, I have nothing to be afraid of, right?

Not really. And the reason I am saying this is that the hole is getting bigger and your friend is getting tired with time and may fall sick at any time, let alone that he might faint or feel dizzy because he has been working for a long time now.

You see, that hole represent the moment you got indebted and the hole is getting bigger because of interest. So, you can figure out by yourself that the water is the money that you have to pay.

Your friend represents your salary or income and the reason why I said that he might fall sick is that you may fall sick as well or get fired from your job and this means that you won’t have the money to pay off your debt and you will drown in those debts as a result.

And here’s a thing pal, the more debts you have, the more holes there are in your ship and I think you can figure out the scenario by yourself.

Customise it – Make it your own

So, what I suggest is to choose a way to pay off your debts by deciding which debts to pay off first. You can either start by paying off the debts with the highest interest rate or you can start by paying off the debts which are bigger and have a lower interest rate. Either way, once you start paying off those debts, you’ll begin to gain momentum and the remaining debts will be paid off as a part of a “momentum chain reaction”.

The best part is, once you pay all your debts, you’ll start thinking in a clearer way and you’ll make wiser money decisions because the shackles that used to hold you off have been broken and now you can spend money the way that fits you.

(Disclaimer: I am in no way promoting the purchase of drugs by any means, lol. I said spend the way you want but not on drugs.)

Customise it – Make it your own

#3 Create a retirement fund

Now this is one of the most amazing techniques that I have ever learned in my entire life, simply because it has taught me how to master the magic of compound interest, how little savings can turn into huge sums of money that will help you in the long run.

The trick is simple, all you have to do is to put aside a little sum of money of your monthly income in a safe. This sum can be as small as 5% of your monthly income. Once you put it aside, leave it there and whatever happen do not use that money.

Now let’s say that you want to start your retirement fund at the age of 22 and you want to retire by the age of 60. And let’s pretend that you earn around $5000 a month. What you need to do now is to put aside $250 a month (5% of $5000 dollars = $250 dollars. It can be more or less based on your income, but remember, the more, the better)

Now, multiply $250 by 12 that’s $3000 a year. And now multiply $3000 by 38 (subtracting 60 from 22 “the age that you started your retirement fund in”) that would be: $114.000 dollars my friend!

So, if you spend only $3000 per month, you’ll have money to live on till your 98^th birthday. Magic, right!

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