Insights & Stories

Achieving Financial Freedom: What, How, and Why

Reading time: 4 minutes

July 3rd, 2023

woman and dog running on Lanikai beach woman and dog running on Lanikai beach

You achieve financial freedom when you have enough savings and cash to afford the lifestyle you want. It looks different for everyone though — some might dream of a walkable apartment in a large city. Others may imagine a sprawling family home in the suburbs. Even others may view it as a stress-free retirement.

The details usually differ, but one aspect of financial freedom is always the same: comfortably affording the life you want.

What do I want to achieve?

Financial freedom is a big goal that might take multiple years to accomplish—and regular effort to maintain. That's why it's essential to get clear about what you want.

Before taking steps toward financial freedom, assess what it looks like for you.

For some people, financial freedom means better-managing debt or becoming debt-free. For others, it means affording a particular lifestyle without going into debt. But it could also mean saving more toward retirement or paying for children's college expenses. The beauty of financial freedom is that you get to decide what it means for you.

How to achieve financial freedom

Once you clearly understand your goal, it's time to work toward it. Here's how.

1. Set clear and realistic financial goals

Now that you know what you want to achieve, you're ready to make a plan.

Big goals can feel overwhelming. That's why it's essential to set small, realistic goals that help you get closer to achieving your primary goal.

For example, if your main goal is paying off credit card debt over the next year, you could break it down into smaller steps. The steps might include lowering your monthly expenses by 10% to have more to put toward debt, automating your credit card payments or earning extra income from a part-time job.

Start with the overarching financial goal that you want to achieve, and then ask yourself the following questions:

  1. How much does it cost to accomplish this goal?
  2. What is my timeline for making it happen?
  3. What am I willing to change in my current lifestyle?

Your answers to these questions can serve as a guide throughout the next steps.

2. Improve your spending habits

Regardless of your financial goals, you can probably achieve them faster if you change your current spending habits. Here are some simple steps you can take.

  • Cut frivolous expenses: Check if there are any expenses you can eliminate, especially for services you don't use. Consider if there are recurring subscriptions you can cancel or other areas where you can cut back.
  • Effectively track your finances: As you get serious about your financial goals, it might be time to consolidate your accounts to one bank. It can help simplify your finances by making it easier to transfer funds between accounts. Plus, tracking your finances and creating a debt management plan is easier when all the numbers are in place.
  • Stay motivated: Maintaining momentum as you work toward a big goal is challenging. That's why it's a good idea to set smaller milestones along the way, implement healthy spending tips and remember why you set the goal in the first place.

3. Invest in yourself (and your family)

It's tempting to tackle your money goals at the end of the month with whatever money is leftover. But if you do that, there's a risk that nothing will be left. Instead, prioritize yourself and save first.

Once you set aside the money, the next step is to ensure that it earns interest and continues to grow. Consider storing the money in a high-yield savings account or certificate of deposit (CD). These accounts offer risk-free ways for your money to earn interest. It's the ultimate investment in yourself, your future and your family.

4. Strategize for the future

Whether you consider yourself a financial pro or a novice, there's always more to learn about money. As you embark on your journey toward financial freedom, be sure to continue your financial education.

Track what is working for you and what you're struggling with. Maybe you're a whiz with budgeting tips and figuring out debt management. But you might not know how to build credit or the basics of retirement planning.

Once you know which areas are challenging, find resources to help. Consider learning from free financial wellness education or connecting with a professional. No matter where you are in your money journey, you can always learn more.

5. Monitor your progress and celebrate successes

For most people, financial freedom is a long-term goal. As you work towards it, don't forget to celebrate your wins.

Track and celebrate when you pay off a lingering credit card balance, plan how to manage debt, open a new retirement account or stay within your monthly budget.

Your celebration can be as small as a high-five with your spouse or sharing a shave ice with a friend. Just always take a moment to celebrate what you achieve along the way. This will help you stay motivated in the near-term to achieve the long-term.

Bottom line

Financial freedom is an overarching goal that touches every part of your financial life. You must understand what you want and make strategic money changes to achieve it.

If you're ready to take the first step, consider free financial education courses and partnering with a bank that can help you achieve your goals.

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