Steps to achieve your financial freedom

These days, you hear a lot about the words 'financial freedom. ' Sitting on a beach day trading or living abroad with an online business. In fact, only working a few hours a day is unlikely for most of us. 

What is financial freedom? 

How much money do you need to be financially free? Research suggests that a single person in the UK would need an income of £33,00. A couple would need an annual combined income of £47,500 to have a retirement with few or no money worries. According to some calculations, we would need to tuck away 20 to 25 times this amount to generate these incomes. Therefore, achieving financial freedom is never an easy task.

The ongoing cost-of-living crisis does not make it any easier. Pension pots are not going as far as they used to.

Financial freedom is still within reach, but you need to plan how to get there.

Financial freedom is simply being able to spend our lives as we please. Financial freedom means having enough resources to meet needs without relying on a job for income.

This means having a dependable cash flow without worrying about how to pay your bills or unforeseen expenses.

Make a realistic plan

Unless you are incredibly fortunate. Achieving financial independence cannot be achieved easily.

Just as you would unlikely be a top sportsman without years of dedication. You cannot expect to retire on your terms without dedication. This means savings and making sacrifices during your years of employment.

The good news is that you decide your plan; the earlier you take action and write down a plan. After all, everyone's financial journey is unique, and there's no one-size-fits-all approach to financial planning.

The key is to set clear and achievable goals and work towards them as soon as possible. They should include:

• Deciding how to spend your free time
• Working out how much money you need
• Where will this income come from?
• The age you plan to stop working
• Where you would like to live 

Remember that your financial plan will change. Likewise, it can be refined to reflect changing goals and circumstances. The key is to take that first step toward securing your financial future.

Start saving and investing now

Every robust plan requires a savings and investment plan. The phrase "the early bird catches the worm" is very true here. The earlier you plan and start acting on it, the better. Above all compound interest highly favours time. Meaning you should invest sooner than later, even if its tiny amounts.

To illustrate the significance of starting early. If you were to invest £100 per month from age 25 to age 65 and an average return of 7%, you could accumulate over £300,000 by the time you retire. However, if instead, you started at age 35 on the identical rate of contributions and rate of return. Your retirement fund would total approximately £150,000 less.

The key is that time is an asset in retirement savings. The sooner you save and invest, no matter how small. The better the opportunity for compound interest to take hold and generate phenomenal growth. Being financially disciplined will let you ahead of everyone else  and ensure a comfortable retirement. This financial discipline will put you ahead of everyone and give you a comfortable retirement.

Become debt-free.

Becoming financially independent is more challenging if debt, such as mortgages, credit, and loans, is incurred. In recent years, volatility in interest rates has made otherwise affordable debt burdensome. This is not only bad for your pocketbook but also for your health.

This means redirecting discretionary income towards paying for your mortgage while working. It is equally important to focus on maximising other financial aspects. Such as your pension, as the government will top up your retirement with free cash tax through tax relief.

However, ensuring debt repayment before you plan to retire is vital. Not only financially wise however provides a peace of mind of ultimately owning your income.

Don't rely on inheritance

In the last decade, 11 million Britons have received an inheritance. The average age to get on is 47. The average net estate value was £334,173 in 2019/20.

While it's natural to consider future windfalls like inheritances as part of your financial planning. It's indeed risky to rely solely on them for your financial future.

Not only do you know how long your parents will live. At the same time rising care home costs and the growth of equity release products meaning there is no guarantee that there will be anything left to inherit. Therefore, wise to treat inheritance as a bonus, enabling your financial future to remain in your hands. 

Get expert advice

According to the FCA, roughly 3.1 million people have a financial advisor at the end of 2020. If you are going to reach the goal of financial freedom, you will need the services of a financial advisor.

You will also require commitment, perseverance, and discipline to reach financial freedom.

At Regulated Advice, we have over 250 advisors on the platform. With over 1,000 consumers each month who are looking for financial advice.

We can help secure your best financial future today.