Financial freedom is the condition of having all the income sources that would allow you to live comfortably without any financial need to rely on others or being employed. Passive income earned without necessarily having to work a full time job is very commonly known as passive income. This type of income could be obtained through the money that one makes through rental properties, investments, dividends, and stock dividends among others. Financial freedom may also be obtained through one’s own personal saving, if one has a good financial management plan. Although most people who want to achieve financial freedom are not really expecting to become millionaires but simply want a comfortable retirement, financial freedom could also be achieved by starting off with a modest amount of investment capital.
One of the major disadvantages when trying to obtain financial freedom is that most people who are financially independent have experienced some form of financial failure at one time or another. For those who have experienced bankruptcy, they may have developed certain behavioral changes that could affect their ability to maintain their financial independence. These people usually go through a period of depression, feeling lost and full of regret for the decisions that they have made that have led them to this situation. One must be strong to get over these feelings of failure and learn to look at past experiences and learn from them so that future mistakes are avoided. When trying to save up for retirement or for a child’s education, it would be a good idea to open a retirement account and invest it in mutual funds as it is a good way to build up wealth and protect the future.
Debt can be a limiting factor when one desires to attain financial freedom, but it can be overcome easily if a person establishes a realistic plan that involves paying cash for necessities until they have accumulated enough funds to pay cash for luxuries. Financial freedom may also be achieved by using one’s retirement fund or using it to pay cash for housing costs. It is always preferable to use the money that is set aside for savings. It is important not to rely on the credit cards provided to avoid accumulating debt that will have an adverse effect on the future. A well managed retirement account and proper financial planning can help achieve financial freedom without worrying about losing your home or having your lifestyle disrupted by debt.