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Editor’s note: This is a guest post from Julia Slovich
Millions of people would answer this question with, “Yes, I’ve got financial freedom. I have a roof over my head, nice cars, I take lots of vacations, and my kids have everything they want.” While having a great life is definitely of value, this is not the right answer to the question of financial freedom. People who are financially free (or financially independent) are not held in bondage by debt, like so many who live extravagant lifestyles are. So what does a financially independent person look like? For starters, it’s not always the person with the nicest house and most possessions. Here are some characteristics of a person with financial freedom.
1. They live below their means.
Instead of living their lives in financial bondage, financially free people are sticklers for their budgets. They don’t spend all of their paycheck every month and don’t have huge credit card balances (if any). They have money in reserves for emergencies and rarely splurge.
2. They allocate their time, energy and money efficiently, in ways that will build wealth.
They take time out of every month to evaluate their spending and make sure they don’t spend more than they have allotted. When they do purchase on credit, they are able to pay it off every period instead of carrying a balance and racking up interest fees. A financially free person uses discretion when spending and knows what they need to purchase and what they can survive without.
3. They believe that being financially independent is more important that showing off nice things and a high social status.
The financially free drive used cars, live in regular middle-class neighborhoods, and look “like everyone else.” While many have enough money in their bank accounts to be considered wealthy, they look like your average joe family who takes one vacation a year and stays with relatives. The financially independent are not trying to be deceiving, they know that if they live this lifestyle they will not have to be worried about their future when it comes time to retire.
4. Their adult children are economically self-sufficient.
Parents who give their adult children an “allowance” of some sort are rarely financially independent. This allowance could come in many forms: paying for a vacation, for their grandchildren to attend private school, their daughter’s apartment, or overly generous holiday gifts.
5. They choose the right market opportunities.
Financially free people have investments in a number of places. Most have savings accounts that they can get to in case of an emergency. Money in 401Ks and in the stock market are the next most common. Some have even taken advantage of low real estate costs and purchased apartment buildings or duplexes. These people like to invest and are smart with their investments.How do you measure up when evaluated against these characteristics? Are you really a financially independent person after all? If it looks like your not on the right track, it’s not too late to change your habits! Don’t let yourself be a slave to your debt. It takes a lot of hard work and discipline, but if you stick to a plan you won’t need to worry about your future because you will be on your way to being financially independent.
About the author: Julia is a writer passionate about health, fitness & blogging. When she’s not running her dog she can sometimes be found writing about Smartlipo, finances and a myriad of other topics.
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