7 Steps to Set Up Financial Freedom (Despite Inflation)

7 Steps to Financial Freedom

If you’ve been on social media lately, you might have noticed that it’s teeming with young influencers making big promises about how to achieve financial freedom. So let’s set the record straight.

To gain financial freedom, you’ll want to set goals, change habits, and make intentional choices about saving and spending. This may take effort, but the good news is that by taking action, you can put financial freedom within your reach.

Defining Financial Freedom

Financial freedom is the ability to live the life you aspire to without money being an obstacle. It means you have enough to cover your everyday expenses, feel financially secure, and pursue your passions while saving for the future.

It’s not necessarily the same as being wealthy: many people earn large paychecks and still have large debts, enormous expenses, or uncertainty about their future stability.

So how can you gain financial freedom for yourself? Follow these seven steps, and you might be surprised to start feeling more financially empowered.

1. It’s Good to Have Goals

Start simple! Think about the near, medium, and distant future, and clearly define the lifestyle you want. Write down your goals to lay a foundation for achieving them as you follow the next six steps.

2. Adhere to Your Budget

The benefits of budgeting are twofold. First, you can fully understand your needs for the week or month ahead, and what they will cost. Second, you can carefully track what you’re spending money on and think critically about non-essential costs you can live without. For example, you may consider ending subscriptions you rarely use.

3. Live Within Your Means

Living within your means is closely related to budgeting, and it takes discipline. Chances are that inflation has impacted your wallet, but “lifestyle inflation” is a real problem too. This occurs when people develop habits that normalize discretionary spending and continue to splurge until they find themselves in financial trouble.

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You can also find ways to maximize rewards from your accounts.

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7 Steps to Financial Freedom

4. Put a Dent in Your Debt

Ideally, you want to live life debt-free, and the best way to start is by paying off your credit card completely when the balance is due. Not only does this remove a source of high-interest debt, but it’s beneficial for your credit score in the long run—and having a solid credit score can reduce other costs, such as car insurance. With credit cards under control and a responsible budget, your other debt becomes simpler to manage.

5. Be Ready for a Rainy Day

If you don’t have an emergency fund, a single expensive setback can set back your progress toward achieving financial freedom. Some common wisdom is that you should aim to reserve three to six months’ worth of living expenses to cushion your finances if you fall on hard times.

6. Plan for Your Retirement

It’s good to have a savings account that automatically accrues compound interest—but it’s even better to have savings put away for retirement. Start this process as early as possible and take advantage of tax-advantaged accounts like 401(k)s or IRAs.

7. Ask for Help

When you have healthy budgeting and spending habits, less debt, and money in the bank, you’re well prepared to think about how to grow your savings. Investing in a diversified portfolio is a great start—but this is something to discuss with a financial advisor. Seeking advice helps you get an overview of your path toward financial freedom and set tangible targets for achieving your goals.

With financial freedom, the journey is the same as the destination. Every step you take delivers gradual results that can make a meaningful difference in your confidence, security, and happiness.

Talk to our experts to get advice.

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