How to kickstart your journey to financial freedom

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Financial freedom can mean many different things to different people. To some, it could mean simply not having to live paycheck to paycheck. To others, it could mean having more money than you would ever know what to do with. 

Financial freedom can encompass a range of individual goals, priorities, and financial situations. But, for the sake of simplicity and inclusivity, let’s keep the definition straightforward—financial freedom is the ability to make enough money to lead the type of life you want without financial pressure. 

Yes, it may seem broad, but it also gives you the ability to decide what it means to you. Using that definition, here are some steps you can take to kickstart your journey toward financial freedom. 

1. Track your money

Determining both your needs and wants in your monthly spending is important. Calculate how much you need to cover your essential expenses like rent or mortgage, loans or credit cards, healthcare costs, utilities, and food or household supplies. The remainder is what you’re working with for discretionary (or nonessential) spending, including savings. Financial freedom means being able to cover life’s little luxuries too, so factor those into your budget.

Tracking your spending is fortunately easier than ever. There are a wide variety of tools and apps at your disposal, and online banks and budgeting software can help let tech do the heavy lifting. Sync your bank accounts with your online tools or apps to ensure your spending automatically gets tracked. 

Remember, it’s important to know what you’re spending both in terms of meeting your monthly budget and setting yourself up for success with future financial goals.

2. Build your safety net

Financial freedom can also mean having enough cash on hand to deal with the unexpected. That’s why it’s vital to have an emergency fund, or a large, easily-accessible sum of money set aside for when the worst happens. As a general rule, aim for enough to cover at least 3 to 6 months’ worth of expenses. 

Once you’ve got a handle on your spending, you can adjust accordingly, trim any fat, and start setting aside a financial safety net. That might mean ditching a couple of subscription services you don’t need, scaling back on dining out, or cutting back on online shopping. 

Calculate how much you want to set aside and then make a timeline to reach it. When you’ve hit your emergency fund goal, keep contributing to a savings or retirement account to help your money grow.

3. Define what financial freedom means to you

What does financial freedom mean to you? Essentially, there are no wrong answers, nor is there  a one-size-fits-all approach. For some, it may mean simplifying everything by cutting all major expenses, selling valuables, and moving to a cheaper area while working a minimum amount of hours per week. For others, it means working a steady, well-paying job and building savings to retire at 70. 

The most important thing here is to determine how much money you need to be happy and make a plan to get there.

4. Reach for the sky

Once you’ve defined what financial freedom means to you, it’s time to invest your time and resources accordingly. 

If you’re taking the traditional route of rising up in your career or industry, look at what other successful people have done to get there and learn from their accomplishments. Ask other professionals or mentors for advice, take community college courses, or get the certifications required to elevate your career to the next level. 

Many people even decide that the path to financial freedom means switching careers entirely, as they may find that their talents are better used elsewhere. Others may decide they want to quit their 9-to-5 altogether and start their own business or live off passive income. The trick here is to strive to do something that both makes you happy and makes financial sense.

5. Share your success

No one is an island and success is generally not achievable without help from others. This goes both ways, as you should seek help from those that have blazed the trail before you, while also sharing with others what you’ve learned along the way.

When you do find your path to financial freedom or success—whatever that means to you—give back. Try to help people who might be less fortunate or those in a more difficult situation than you learn what you’ve learned as a way to help everyone rise together. You may find this even more enriching than the relief you gain from your own financial freedom. 

Remember, it’s never too early to start to chart your course toward financial freedom. You’re in control of the steps you can take to reach a future in which financial strain no longer prevents you from living the life you want. Progress may be slow, but if you start now, who knows where you’ll be in 6 months, a year, or even 10 years from now. 

Unless otherwise noted above, opinions, advice, services, or other information or content expressed or contributed by customers or non-Varo contributors do not necessarily state or reflect those of Varo Bank, N.A. Member FDIC (“Bank”). Bank is not responsible for the accuracy of any content provided by author(s) or contributor(s) other than Varo.