How to Create True Financial Freedom

Financial freedom means different things to different people. To some, it's working only 20 hours a week at a local school. To others, it's retiring to a tropical paradise to live a life of luxury. Either way, a solid stream of income will be required to maintain your ideal lifestyle.

Instructions

1. Define what financial freedom means to you and calculate what that will cost. Living a life of luxury will take far more income than simply retiring to knit and read books. No matter what lifestyle you'd like to have, you need to know how much after-tax annual income will be necessary to support it.

2. Consider your current resources and calculate the gap. Most people have some financial resources. Investments, retirement savings accounts, investment property and privately owned businesses are common examples. From the perspective of financial resources, calculate the gap between where you are today and where you want to be sometime in the future.

3. Fill the gap. Now that you know what true financial freedom will cost and how close you are to it, create a road map to fill the gap. Can the gap be filled with saving an extra $200 a month? Find part-time work as well as a way to cut down on your expenses. Your true financial freedom can only be accomplished when the money necessary has been earned and saved.

4. Look for passive income streams. Passive income is income that you earn even when you're not working. Royalties from inventions or franchises, rental income from real estate and advertising income from websites are all examples of passive income. The more passive income you have, the quicker and easier it will be to create true financial freedom.

5. Don't get caught up in the money. Life is about far more than dollars and cents. Remember why you're trying to create financial freedom. If you spend all your time creating it and don't spend time with those you love, what is the point?

Tips & Warnings

• Be careful of get-rich-quick schemes; the only way to build wealth is through hard work, dedication and smart decisions.