Achieving financial freedom is a goal many aspire to, but how do you know when you’ve truly passed that financial finish line?
Try This: Suze Orman Says You Need To Do This With Your Money Before the New Year
For You: 5 Subtly Genius Moves All Wealthy People Make With Their Money
This concept goes beyond just having a hefty bank balance in your savings account; it’s about living life on your own terms. Whether you have just started investing or have been consistently adding to your retirement accounts, how you reach your short-term or long-term financial goals has many paths.
Financial advisors have an array of methods you should try such as developing passive income streams, diversifying your investment portfolio or even moving your savings to where you can earn the highest interest rates. No matter what financial advice you take, determining when you reach financial freedom will feel differently depending on your ultimate goals.
Here are seven key signs that indicate you’ve reached financial freedom and how you can recognize them when you do.
Trending Now: Suze Orman’s Secret to a Wealthy Retirement–Have You Made This Money Move?
Living within or beneath your means is the bedrock of financial freedom. This doesn’t imply scrimping and saving but rather spending wisely in alignment with your income or when your income increases. When you’re financially free, your lifestyle doesn’t strain your finances.
You can comfortably afford your living expenses and occasional luxuries and still have money left over without surviving paycheck to paycheck. This balance is a clear sign that you’re financially comfortable and managing your resources effectively.
High-interest debt, like credit card balances, can be a major obstacle on the road to financial freedom, especially when it can so easily spiral.
If you’ve reached a point where you’re not necessarily debt-free but free from paying high interest, it’s a significant milestone. It indicates not only that you’ve managed past debts well, but also that you’re likely making prudent financial decisions to avoid future high-interest liabilities.
Learn More: If You’re Thinking About Getting a CD, Suze Orman Says You Should Do It Now — Here’s Why
An emergency fund is your financial safety net, designed to cover unexpected expenses or financial shocks like medical emergencies or job loss.
Having a substantial emergency fund that can cover several months of living expenses is a clear indicator of financial freedom. It means you’re prepared for life’s uncertainties and can handle a multitude of financial scenarios without derailing your stability or spiraling into debt.
