The day when you achieve complete financial freedom may come years before you decide to retire. In fact, highly motivated people who enjoy the challenges and rewards of a successful legal practice often choose to work long after the income is necessary. That's why you might want to stop planning for retirement and start planning for financial freedom instead.
What does freedom look like?
Financial freedom occurs when you are able to afford your lifestyle and protect your assets using all of your own resources. This means you are no longer reliant on your income from work even if you choose to keep working for the intellectual, emotional and financial benefits.
Here are four tips to get you started and keep you on track.
Every decision about money has an impact on how quickly you build wealth and ultimately reach your goal of financial freedom. Start with smaller, attainable goals such as: curbing credit card spending for a month, using your debit card so that you don't rack up high-interest debt, even something as simple as sharing subscriptions with colleagues can help you cut costs and build savings.
MAKE SAVING MONEY A HABIT
Most banks offer apps that let you track your spending. Take a hard look at where your money goes and ask yourself how many of those purchases are keeping you from your larger goal of financial freedom. Consider a spend-cation, where you take a little break from unnecessary spending for just a few weeks or a couple of months. If you do activities like this for an extended period of time, they can become a habit and be much easier to do.
Did you know?
Experts agree that it takes only about 21 days to form a new habit.
AVOID BAD DEBT
Form a healthy relationship with debt and use it to achieve your financial goals instead of letting it prevent you from getting what you want, namely financial freedom. Good debt is money you borrow to advance your wealth-building strategies. Borrowing to buy real estate, invest, or start a business are all examples of good debt that leads greater net worth. Avoid the kind of bad debt, with sky-high interest rates such as credit cards that only detracts from your ability to create wealth.
ENVISION MULTIPLE SOURCES OF INCOME
One of the greatest rewards of saving and investing over time is that you can begin to generate income from multiple sources. Your income as a lawyer will likely be the largest source of income for most of your working years. But the money you make within your investment portfolio, or from rental properties, or through strategic loans to individuals or businesses can all begin to generate additional income. Once you achieve an income level from multiple sources that covers your annual expenses, you will achieve the long-term goal of financial freedom.
Financial freedom is a powerful motive for starting small, making savings a habit, and focusing on good debt. Imagine how all your good habits contribute multiple sources of income and the day when working is a choice you make, not a financial necessity. A financial plan from Lawyers Financial can help you get started and stay on track toward financial freedom.
Originally published by Lawyers Financial, October 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.