Financial Freedom Made Simple with Facet - @ecommjess (2024)

FAQs

What is the formula for financial freedom? ›

50-20-30 rules is an easy way to know how to achieve financial freedom in 5 years. Split the cash-in-hand into 3 equal parts as per the rule. 30% of income is spent on wants, 50% on needs, and 20% is set aside for savings and investments.

Financial freedom means you have enough financial resources to pay for your living expenses and allow you to afford many of your life goals without having to work or otherwise commit any of your time or efforts to generating money.

The five pillars of financial planning—investments, income planning, insurance, tax planning, and estate planning— are a simple but comprehensive approach to financial planning.

Regardless of income or wealth, number of investments, or amount of credit card debt, everyone's financial state fits into a common, fundamental framework, that we call the Four Pillars of Personal Finance. Everyone has four basic components in their financial structure: assets, debts, income, and expenses.

Perhaps surprisingly then, financial freedom comes at a much lower price point in the eyes of the average American, according to Empower—about $94,000 a year, is how much they said they'd need to earn to feel financially independent. But that's still about $20,000 more than the median household income of $74,580.

Your net worth is your assets minus your liabilities. It's what you have left over after you pay all your liabilities.

There are a few different ways to invest your money to earn interest and live off of that income. The most popular investments are bonds, certificates of deposit (CDs) and annuities. The interest that you'll earn will depend on the amount of money you have in your account when you go to live off of that interest.

How to be better with money? ›

Psalm 37:21 says "the wicked borroweth, and payeth not again." The minute a person goes into debt, he loses a portion of his freedom. As Proverbs 22:7 says, "The rich ruleth over the poor, and the borrower is servant to the lender."

To Robert Kiyosaki, financial freedom means never having to work again.

And it all begins with your mindset. You need to view money not as a destination but as a means to an end, a tool that helps you achieve your goals and realise your dreams. Achieving financial freedom is more about creating sustainable, practical habits and mindset shifts than get-rich-quick schemes.

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.

The premise of the 30-day savings rule is straightforward: When faced with the temptation of an impulse purchase, wait 30 days before committing to the buy. During this time, take the opportunity to evaluate the necessity and impact of the purchase on your overall financial goals.

The main aspects in achieving financial security is budgeting, reducing expenses, eliminating debt, and increasing savings. These four aspects are the building blocks to financial freedom and will help you kick-start your financial success.