Financial Freedom can be achieved by building a business you have passion for and that produces enough income to cover all your daily, weekly, monthly, yearly and in fact living expenses. When this happens, and you no longer require a regular paycheck that comes with the regular standard employment, then you are financially free.
Financial freedom cannot be achieved without saving. With little or no savings, it virtually impossible to attain financial freedom. Saving rate is derived by subtracting your expenses from income.
That is (income– expenses) /income = saving rate.
Saving rate can only be increased in two ways
1) Increase Your Income
An increase in your income can grossly increase your saving rate. Increasing your income requires putting in an extra effort. This might also require extra time. As a result, there is be a need to adjust your schedule. However, an increase in your income can only increase your saving rate where your expenses remain constant.
2) Decrease Your Expenses
Decreasing your expenses is another and the most important way to increase your saving rate. An increase in income would be useless in attaining financial freedom without a decrease in your expenses. Here is what happens when you decrease your expenses.
1) When You Spend Less, You Require Less
As you reduce your daily or living expenses, your saving rate will automatically increase. Spending less and requiring less plays a large role in attaining financial freedom. If you always require more and spend more, rather than attaining financial freedom, you will run into more debt. So, as much as possible, require less so that your investment portfolio can produce enough passive income to cover all your daily, weekly, monthly and living expenses.
2) When You Spend Less, You Save More
Just as It is impossible to attain financial freedom without savings, it is impossible to save without cutting down on your expenses. Assuming there is no increase in your income, or your income is constant, spending less would automatically mean saving more. And as your saving rate increases, so will the value of your investment. And as your investment portfolio grows over time, so will your monthly passive income. And this will help you achieve financial freedom more sooner than later. Though when it comes to spending less, it is very difficult for some, and some might say it is impossible.