The urge to buy a car, build a house, and start a family in your 20s is understandable. To keep up with this pressure and meet the cost, most of the youthful population has to find a job and make some cash flow. This is okay too. But due to insecurities, most youths are sceptical about breaking away from their routine working life after a while and taking a right and bold step to financial freedom.
Just imagine life as a 30-year old retiree who makes substantially more than you could reasonably spend. You have no money worries, hardly do any work, and your wife or family do even less. Therefore, you choose to go anywhere or do anything that makes you happy even if it is not income-generating. That is financial freedom in every sense of the word. You are financially free when your passive income is enough to cover all your living expenses and still allow you to grow.
Financial Freedom is different from being Rich.
Most young people will read and get fascinated by the story of young millionaires like Mark Zuckerberg, who got lucky with investment and cashed out in their 20s before retiring young. However, the idea of getting filthy rich in your 20s may not be feasible. Making millions in your 20s is extremely difficult. Very few from humble or middle-class backgrounds manage to become millionaires by 30.
Financial freedom is one thing, amassing a decent amount of unbound riches and rising to affluence is another. You are financially free when your passive income is enough to cover all your living expenses and still allow you to grow. Remember, the costs of living vary. So, if you have fewer living expenses, you will achieve financial freedom at a much lower threshold than those living on the first lane.
As a young person, achieving this independence is only possible by developing the practical strategies and healthy financial habits discussed in this post.
- Come up with a Plan
To achieve this noble goal, you have to lay down a financial strategy. Formulate a practical plan, a workable system, and strategic lifestyle changes that will dictate how to live and work to freedom, and follow it strictly. Set a regular cost-effective life routine and prioritize urgent and essential expenditures only. Plan for any income you expect and stick to the plan when you get the funds.
Document all your money, belongings, and available resources, including what you have in your bank account. Moreover, be goal-oriented and set and write down a set of achievable long term and short term goals that will propel you to your ultimate goal. Allocate time for work and time for family, friends, and social events.2.
2. Exploit your Skills and Make money
You are your first and biggest financial asset. As a young person, your energy is immeasurable, and the potential is endless. Find an income-generating career, interest, or talent you are good at and passionate about. Put all your skills to work and make money with them
Continually upgrade your expertise in the subject and perfect other related skills to make sure you’re best at what you do. To have better odds of achieving your goals young, you will need to work your butt off and make as much as you can.
3. Spend less
Financial freedom demands fiscal responsibility, discipline, and careful planning. In an era where people want to judge you on how affluent you appear, the temptation to spend 150% of what you earn and live a high-end lifestyle is irresistible. However, the importance of living below your means cannot be overemphasized. You need to resist this pressure and define what you need and what you want. Prioritize necessities only and cut back on luxuries. You can save thousands by practising the following;
- Negotiating and Bargaining for price cuts when making purchases.
- Buying products on offer, discounts and other exclusive deals
- Avoiding to buy on credit and only buying when you can afford
- Going for cheap quality products and services
- Avoiding impulse buying and sticking to your budget.
Resolving to pay yourself first is a winning idea. Work harder and make more than double what you need. Make it your habit to save every surplus the very day you get a paycheck. Consider activating automated deductions to your savings account to avoid the temptation of spending. Enrol in several savings schemes and retirement plans and increase your contributions as your income increases. Build the savings up until you have at least five years of living expenses and leave it liquid.
5. InvestEfficientlyand Wisely.
Having investments that generate passive income is the ultimate form of freedom. As soon as you have gathered a reasonable amount, put your money to work. Set up a primary buy and sell enterprise and have your income building. Do market research, seek advice, put up the business and push for some sales. Do not put all your eggs into one basket. Also, think long-term. As your income grows, diversify into real estate, stocks, and other businesses. With time, minimize the time you spend working and focus more on your investments.
6. Pay your Debts
Living debt-free is almost impossible for many. However, I only recommend borrowing for investment where what you gain will cover the costs of borrowing. Never borrow to finance luxuries and conspicuous spending. You should also borrow precisely what you need. This will save you from getting locked into a cycle of debts.
Pay all your debts, loans, and pay your bills in time to prevent higher interest and additional charges and fines. Reckless borrowing habits and low credit is good sign of recklessness in other aspects of living, like working and family. This habit may ruin your good name and reduce the odds of landing serious opportunities.
7. Prepare for Storms
Life holds countless uncertainties. Just in case calamity strikes, natural or human-made, you need to be prepared and cushioned from every eventuality. Consider enrolling for an insurance plan on your health, life, and essential assets. That is not all, set up an emergency fund to cater for any crisis and emergencies that may come up.
8. Avoid Suspicious Deals
Keep off from fishy ventures since they may cost you your fortune. The world out there is full of devious and ruthless scam artists. These scammers are quick to take advantage of your ambition, whatever-it-takes attitude, and willingness to take high risks. The get-rich-quick schemes will always find an eager and vulnerable audience. Research properly and seek expert advice on any venture before ploughing your money into it.
9. Taking good care of yourself and your property
Take good care of your physical, mental, and emotional health and well-being, live a healthy lifestyle and take control of your life. Exercise frequently and maintain a healthier diet. Put your money in good health and visit the doctor regularly for checkups. Poor health will hurt your productivity and lead to a notable loss of funds on hospital bills and high health insurance premiums.
Apart from that, take good care of your property and belongings. This will save you the cost of replacement, which is lower than what you will pay for maintenance.
10. Seek More Education, Information and Financial Advice
You are more likely to attain financial freedom by the end of your third decade if you are financially literate. Besides, having financial knowledge gives you defence against those who prey and rip uninformed investors. So you need to seek additional training, find expert advice, and keep up with financial information, news, and developments in the financial world.
You cannot amass enough to sustain an upper-middle-class lifestyle overnight. So, starting early in your teenage would be ideal. But even if you are in your 20s, you still have good odds of having a secure future. You may not solve all of your money problems, but making the right moves in the early years will save you years of struggling, pain, and frustrations. The best part is when you are young, you recover faster from financial storms and mistakes. So you should not be afraid to dream big, think big and, most crucial, act big.