What is financial freedom?
Financial freedom is defined as the act of generating money without taking time or effort to achieve it. It is a heritage that we manage to create and that by itself generates income, whether fixed or multiplying.
But to get to the previous point, there is a whole path of efforts and achievements that you must acquire.
Below we will mention some issues that you must evaluate in order to achieve financial freedom.
We will divide the income into liabilities and assets. The liabilities are those that will provide your financial freedom while the assets generate them day by day with your work force. Effort and knowledge are the main characteristics that distinguish them.
First list all the active income you have. In which in addition to effort and knowledge invest time: salary and wages or fees, that is, your job as such or a business you have.
If you have a business or SME, you may require your time at the beginning. But in the long run as it grows and you get more collaborators can become a passive income.
Self-employment can be an option to achieve it. Being an entrepreneur allows you to open a gigantic step for your financial freedom.
Second, identify what income you get without using your time or a greater effort, such as leasing. Having a property requires previous work, but at one point it becomes an extra income that is generated by itself.
Investments also count as liabilities and are the best option. Many people are afraid to invest but in the long run the benefits they provide are good, the goal is for this income to grow in value and eventually multiply.
In addition to your income, expenses are important, not to achieve more income means that your expenses are more or greater. We can divide them into 3 categories, but in addition to them there are expenses that we acquire, such as credits or financing for a car, home or business, which are temporary.
They are those like basic services, water, electricity, gas, etc. You can save on these and it will not affect your daily life, on the contrary, your income yields more. We can say that they are all those services and products that we occupy to cover the basic needs of a human being.
Those emergencies that you could have, it is good to have a saving and go thinking that these situations can happen. Some examples can be diseases, natural disasters or unforeseen situations. Not because they have a lesser chance of happening, you have to let them go unnoticed. Allocate part of your income to this type of events.
They are all those that satisfy your ego or you may not be aware of the purchase. It is very important to evaluate this point because if you fall into the trap your income, both active and passive, may fall. Become more conscious when acquiring something, ask yourself questions like: will it really benefit me? Can I occupy it more than once? Evaluates the purchase before doing it.
A feeling that you can experience by having financial freedom will be the tranquility and security to enjoy your life. And you can achieve it once your efforts have been the correct ones so that you can generate an income that no longer requires them.
Your knowledge in finance should be adequate to achieve control over what you spend, invest and earn. Today there are some tools that allow you to capture information about your personal finances or for your SME or business.