Everyone wants to achieve financial freedom at some point in their life. Financial freedom is a mindset where you have enough assets to sustain your livelihood. Financial freedom also enables you to live a happy life and pursue your passion. You could be wondering if it is possible to achieve financial freedom in 5 years. Five years seems short but there is a lot you can do within that timeframe.
It is challenging to achieve financial freedom in 5 years, but it is possible. It requires hard work, persistence, and determination.
10 Steps to Financial Freedom in 5 Years
The following are some steps you can take to achieve financial freedom in 5 years.
1. Set Financial Goals
The first step to achieving financial freedom in 5 years is setting financial goals. Your goals need to be specific and have deadlines. It is much easier to achieve financial goals when you are specific about them. You need to determine how much you need to sustain your lifestyle and how much you need to have in your bank account
After that, come up with ways to achieve those goals. For instance, you can decide to stop some bad financial moves like impulse purchases.
2. Check Your Current Financial Status
To become financially stable, you need to understand where you are today and where you want to be in the next 5 years. You need to keep an eye on your income and spending. See what changes you need to make to organize your finances. You can opt to use money management apps to help you organize finances.
3. Come Up with a Budget
To achieve financial freedom in 5 years, you need to have a budget. A budget helps you ensure that you don’t overspend. By sticking to your budget, you can track your expenses, set aside savings and pay your bills on time.
4. Payoff your Debts
If you have personal loans and credit card debts, you need to pay them off. Start with high-interest loans such as credit cards. Then you can pay off other debts like student loans and mortgages. To be financially stable, you must not have debt. Besides, paying off your debts improves your credit ratings.
5. Start Investing
The other way to achieve financial freedom in 5 years is by investing. Investments generate a passive income without requiring you to work. You can invest in stocks, precious metals, real estate, REITs, and savings accounts. Investments offer compound interest, hence allowing you to grow your wealth exponentially.
You can invest using brokerage accounts. However, if you are a novice and have little money to invest, you can use robo advisors to invest.
6. Increase Your Earnings
You also need to increase your earnings to become financially stable. You can do so by investing or increasing your savings. You can also take a second job or start a side hustle. You need to have an active income and a passive income. Strive to generate other income streams without having to take a loan.
7. Get Some Financial Literacy
To become achieve financial freedom, you need to be financially literate. You need to know how money works and other important issues like tax and how you can avoid taxes legally. You also learn how to invest and grow your money. Learn how the stock market works and other financial developments. With financial knowledge, it also becomes easy to hedge against inflation and fraudsters.
8. Live Below Your Means
To achieve financial freedom in 5 years, you need to be willing to live below your means now. Living below your means leaves you with some money you can save or invest. You will note that many rich people lived below their means before they rose to affluence.
You need to distinguish between the things you want and the things you need. Strive to spend on the things you need only. You can then invest or save the remaining amount.
9. Get a Financial Advisor
Once you have amassed wealth, you need to find an expert to help you manage your finances and make financial decisions. They will help you make informed decisions on how to manage your wealth and grow your money. Wealthy people spend their money on paying professionals like financial advisors.
10. Invest in Your Health
Health is wealth. You need to take care of your health by ensuring you stay fit. For instance, you need to get visit the doctor regular for check ups and also have a medical cover to cater for your bills in case you are hospitalized. Investing in your health, lowers your medical bills.
Summary of How to Achieve Financial Freedom in Years
It is possible to achieve financial freedom in 5 years. However, it requires hard work, persistence, and determination. It also requires financial literacy and planning. You need to find other sources of income besides your regular income to achieve financial freedom. Passive income sources are the best so that you don’t have to work continuously to make a living.