There are some people that dream of financial freedom. It can mean different things to different people but generally means that you will be able to have enough money in investments so that you will get paid an income without having to work. This is essentially what people do when they are retired as they have money form their pension or other sources which they use to live off and do not have to work. In the UK, we could theoretically achieve this by just not getting a job and claiming benefits. However, this is not something that everyone wants to do and it is likely that it could not be a large enough income for most people to be able to do everything they want to do. So, what can you do to achieve it?
Find a Good Income Source
You will need to start with a decent income source. This means that you will need to find a job that pays as much as you can get. Obviously, how much we earn will depend on where we live, what qualifications we have and what work experience we have. However, doing a job that is paying below what you can earn is not good, so look around to see whether you are being paid a fair wage according to what people with similar skills to you get paid. You may need to see if you can get a pay rise n your current job, try to get a promotion or perhaps move to a different job which pays better.
Reduce Your Spending
You may also need to start spending less. You will need money to invest and so you will need to make sure that you are not spending all of the money that you are earning. This means that you will need to think about what you are currently spending money on and whether it is necessary. There will be things that you have to pay for, such as tax and rent or mortgage, but you will also find that you buy a lot of things which are not necessary which you can potentially cut out. You can start by looking at everything you pay for and then seeing whether you can cut down anywhere. You may be able to stop buying certain things and also to pay less for some of the things that you decide to still buy. By going through everything you could make significant changes to how much you are spending and create significant reductions.
Pay off Your Debts
It can be wise to start by doing everything you can to repay your debts. This might seem odd as you may want to focus on investing money so that you can start to get an income. However, you may find that the debts will be a big expense for you which means that it will hold you back in how much money you will be able to invest. Of course, you may find that the investments have a much bigger return than you are paying in interest of your debt. However, investments are risky, and you could lose your money, which means that you may then struggle to repay the debt. So, think hard about whether you feel that paying off the debts is worth doing first.
Invest your Money
Investment is tricky. Although in the long term, statistically it should be good as the money should increase in value and might also pay an income, depending on what you invest in, there is always the risk that this will not happen and you will lose your money. You should do a lot of research first, to decide what sort of risk you might be taking, how much risk you are prepared to take and what types of investments there are. Many people will use a financial advisor to make sure that they get the right type of investment to suit them.