What’s Your Financial Freedom Wishlist?

It’s the time of year again…you know, when we all reflect over the past 365 days and vehemently declare to never do those reckless things that we did, ever again.

The problem for many of us though is that no matter how good or noble our intentions are, the goals we aspire to achieve without a plan of action ultimately remain just fanciful and wishful thinking. And many times, otherwise attainable results like getting healthier, learning a new language or saving more money end up resurfacing year after year without having ever gained much traction.

WHY IS THAT?

A lot of times, we simply put the cart before the horse. Our grand and desired end-results make sense, but lack the practical detail needed to build upon. Because this is a finance blog, let’s look at that theory in terms of money goals. If this is the year of Financial Freedom for you, what does such an accomplishment actually look like?

The first step is actually assessing where you are. Before deciding to make 2021 the year of your power move, you have to know what you have and what you don’t. Make a list of the debt you’ve accumulated and add it all up. Then take a look at the money you’ve saved. These are the baseline numbers that are going to keep you honest throughout the process.

Next, you want to write down your financial goals. Don’t be arbitrary in determining what financial freedom means to you (because despite the rat-race that we all run, not all financial goals are created equally). For some, financial freedom means making in excess of what they spend. For others, it means having the flexibility to do whatever they want to do whenever they want to do it. Neither of these notions are wrong, but they aren’t necessarily one-size-fits-all objectives either. Specific targets may be to eliminate all student loan debt before age 30 or make at least $50K in passive income a year in order to retire early. No matter how ambitious the goals, document them!

You then want to affirm. Cite exactly how you are going to achieve the goal. Indicate steps like, “I will begin saving $15K for a home down payment by not eating out for the next year,” or “I will cancel my premium cable subscription and allocate those funds to my savings account.”

Once you are clear about what you want and what you have to do to get it, then start tracking (this is of course, a nuanced word for budgeting :-)). Record all of your income and from it, begin deducting your expenses. Because you’ve outlined in your affirmations all the things you are willing to do to reach your financial goals, your expenses should look less like a spending free-for-all, and more like the payments for necessities and the costs for essential items only. Subsequently, the net amount of your income less your expenses is what you’ll have left. And having something left is one of the most important steps in reaching your ultimate goal(s).

Sure, in fairness, financial experts always make activities like investing, saving and debt reduction sound straightforward and easy to achieve, especially to those who may be marred in debt and feel like there is no way out. But the truth is, these practices aren’t just money management exercises, but ways to realign mindsets. Once a person becomes disciplined enough to stick to a budget, they are more likely to see the necessary financial transformations that they could previously only dream about. So don’t be afraid to plan, vision and goal set around your money this year. Just also remember that no successful results will come to fruition without a clear objective, deliberate strategy and actionable steps.

What changes have you implemented that have positively impacted your financial trajectory? How are you moving closer to reaching your goal of financial freedom in 2021?