savvynuggets.com | financial freedom

The 7 Top Habits of Financially Free People

Financial freedom is a goal desired by many people. Most people rarely achieve it. According to Business Insider, 54% of Americans live paycheck to paycheck, with 40% of high earners unable to fund their expenses.

You are considered financially free when you can live life without needing to work to earn income, and you can generate a consistent passive flow of cash that funds your dream life.

Everyone’s dream life is different and so is the amount of money required to fund it. 

People define financial freedom differently. Your definition of financial freedom is personal to you. Do you have an idea of what your dream life looks like?

Contrary to widely held assumptions that you need to be a millionaire to be financially free I’m here to tell you that anyone can become financially free.

Once you change the habits that keep you broke and replace them with habits that lead to financial freedom, you will change your circumstances for good.

 

What is a Habit?

Wikipedia defines a habit as a routine of behavior that is repeated regularly and tends to occur subconsciously.

Merriam-Webster dictionary defines it as a usual way of behaving: something that a person does often in a regular and repeated way.

This means that habit is your way of life. An act, which you almost do subconsciously.

Your habits are behavioral inputs that lead to certain outcomes that reflect the kind of habits that created them. Bad habits most times create bad outcomes.

Likewise, financial outcomes are no different. In many cases, the way you handle your money is a function of how much and how well you understand money management – your money habits.

In addition, your attitude towards money determines the results you get in your finances.

Let’s take a look at the 7 top habits of financially free people.

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The 7 Top Habits of Financially Free People

  1. Financially Free People Dare to Dream
  2. Financially Free People Read Books
  3. Financially Free People Set Financial Goals
  4. Financially Free People Create a Plan of Action
  5. Financially Free People Stay Focused
  6. Financially Free People Develop a System
  7. Financially Free People Scale Outcomes

 

 

 

  1. Financially Free People Dare to Dream

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You can create your reality by the thoughts you think. It does not matter what your current situation looks like, it is subject to change.

Many times your reality reflects your thoughts. Before financially free people start anything that is physically seen, they have completed that project or venture within their thoughts.

It is not easy to know who is financially free except you know every component of their net worth. To ascertain if you are financially free your income should not be at the mercy of your debts.

If that is the case, no matter how comfortably you might be living, the reality is that you are not financially free.

You, therefore, need to think and dream differently about the kind of life you want to live.

The power of dreams has been shown to lift men from a mediocre existence to innovative breakthroughs.

For Example

According to the Telegraph Bill Gates’s dream was, “A computer in every home”. This was a simple but profound dream that spawned the creation of Microsoft.

One mistake a lot of people make is to associate financial freedom solely with the direct pursuit of money. It is much more than that.

As Forbes put it, “Passion fuels the rocket, but vision—a big dream— points the rocket to its ultimate destination”.

It is on record that Steve Jobs once told a Disney Executive to “Dream Bigger” when asked how he could increase sales.

Dare to Dream

Dreams are the bedrock of bigger things. Money is just a by-product. A dream is the rocket lift to financial freedom. Though not automatic.

There is a process by which every individual can create enough wealth to live financially free. You only need to uncover and follow the process.

What is your dream about financial freedom? What do you see when you think of being financially free? What does financial freedom mean to you? What does it look like?

You have to answer these questions within yourself.

Does it mean a bigger house, bigger car, more money in the bank, a hefty retirement income, independent college-trained children,  peace of mind, a  minimalist lifestyle, more travel, or maybe all of these?

You need to articulate to yourself in exact terms what being financially free means for you and your family? Have a visual image in your mind of that life. Then pursue it.

This pursuit empowers you to work towards it. Dare to dream!

 

 

2. Financially Free People Read Books

 

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Reading books that enrich your mind in the area of life where you seek to succeed is perhaps one of the best-known ways many financially free people develop themselves.

Like I said before, anyone can become financially free. The road to financial freedom requires a certain kind of knowledge to reach your destination – It requires Financial Savvy.

How many financial books have you read? Which one are you currently reading? Well,… You are reading this piece so I must commend you for taking the necessary steps to address any gap you might have noticed in your current financial knowledge.

You need to realize that financial Knowledge is a key requirement to achieve financial freedom.

Financial Savvy

According to Business Insider, less than 12% of millionaires read for entertainment purposes. Most of them, believe it or not, read to learn. Billionaires like Warren Buffet and Mark Zuckerberg are avid readers, who read to learn.

Becoming rich requires work and the very wealthy who became so by hard work, put in the work. You need the relevant financial knowledge to succeed.

To become financially free you need knowledge on how to increase your income, reduce your expenses, eliminate debts, grow your money, save money, invest, and many other things. Most knowledge in this sphere you get by reading.

There are many ways to make money but not all ways will work for everyone. That is why you see millionaires in every sphere of life because everyone has their unique path to riches.

Your passions, personality, past experiences, character, abilities, and skills will greatly influence how you become rich.

Making wealth has to flow along your natural path of life or you will be working against the grain, which breeds frustration and lack of staying power.

Educate yourself on how to make financial progress, and adapt to your specific circumstances.

 

 

3. Financially Free People Set Financial Goals

 

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The victory in a football match is decided based on the number of goals scored by the winning team over their opponent.

The goal post was set before the match. The players have to hit the ball into the net for a goal to be accepted and recorded. Hitting anywhere else misses the mark and does not count towards a victory.

So, to achieve success in your quest for financial freedom you have to set goals that you have to hit. Just like hitting the bullseye in a game of darts.

Financial goals that are simple, measurable, achievable, relevant, and time-bound are otherwise known as S.M.A.R.T. goals should be set. This is the bullseye you need to hit.

What do we mean by S.M.A.R.T. Financial Goals? Let’s unpack “SMART”.

Simple Financial Goal 

It is a goal where you state a particular yearly or monthly income you want to meet. For instance, making an income of $100,000 per annum.

This is a simple but clear statement – making an income of $100,000 per annum is easily understood. The $100,000 is what you are aiming for. State your financial goal.

Measurable Financial Goal 

Simply means that an income goal of $100,000 is measurable. It is not vague. If you say for instance, “I want to do much better this year than I did last year”.

It is difficult to measure. “Much better” can mean anything, but $100,000 per annum is specific.

You can either make that amount or more for you to meet your goal. If you make $95,000, which is less, then you have fallen short of your income goal of $100,000 per annum by $5,000.

It is therefore easy for you to know if you met your targeted amount or not. While $95,000 is a great amount to make, it is not your goal.

So being specific keeps you focused and accountable. Be specific in setting your goals.

Achievable Financial Goal 

To determine what is achievable, you need to look at where you are now and where you could be.

Ask yourself do you have the potential to make such an amount, in this example $100,000 per annum, within the time frame of one year? If yes, how?

If the answer is “no”, then you revisit your financial goal and keep it where you can reasonably, given your current circumstances, stretch to.

Maybe your best efforts can stretch you as far as $80,000. Then, you keep the goal post there, aim for it, and hit it. 

The next year you reset it to $100,000 per annum. That way you progress naturally and steadily with progressive wins that further energize you to greater heights.

By all means, dream big but know that for you to meet your goal you need to stretch. It could be that you might need to engage in a lucrative side hustle. Check out my posts on 6 Top Tech Platforms for Remote Work and 9 Freelance Platforms to Earn Extra Income.

So, you need to think of how. Think and achieve more.

Relevant Financial Goal 

Your goal has to be closely connected to your overall financial freedom strategy.

It has to tie in with the bigger dreams you have of financial freedom. Using our example of $100,000 per annum, does that amount make sense in the larger scheme of things, or was it arbitrarily decided?

Why $100,000 per annum, why not $50,000 or $150,000? To arrive at your financial goal you have to itemize critical components of what you want in your dream life e.g. let’s say your dream life is a bigger house and more opportunities to travel?

Did you put a figure for that bigger house and a cost for the yearly travel to the specific places you desire? If yes, does $100,000 per annum help you get there? You might need something more or less.

If $100,000 is what will fund your dream life then it is relevant to your financial freedom journey. So your financial freedom dreams drive your goals. Download my free financial planner to help you plan.

Time-bound Financial Goal 

It is a goal that is meant to be achieved within a set time frame. Setting your goal to be achieved within a specified time is key to focus. It is an antidote to procrastination and laziness.

The set time specified for achieving the goal is the operational boundary within which all efforts to reach that goal should be applied.

It forces you to be serious with your goals and provides direction. It also forces you to be creative in finding solutions, pushing you out of your comfort zone. 

All known billionaires are incredibly hardworking and productive. Even as they age they keep on adding value in their area of endeavor.

Set a time-bound goal to keep you in line.

 

 

4. Financially Free People Create a Plan of Action

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A plan of action is key to achieving anything of note. The army uses it to protect the territorial integrity of the country. Organizations use it to achieve business objectives. Political parties use it to win elections.

So, why would an individual not use it?  You need a plan of action to guide your mission to achieve stated financial goals.

A popular maxim states “If you fail to plan, you plan to fail”. Using again the example of the football game, no team goes into play without first strategizing. Their plan of action is usually created by the coach and executed by the players.

A plan of action provides you with a roadmap and keeps you on course. Without a plan, certain actions could be taken that might sabotage the very essence of the financial freedom you seek to have.

A plan of action tells you what to do at each point in time concerning your project and directs you to the men and resources required to achieve it.

In your quest for financial freedom, you may have a plan that involves having to track your expenses, living below your means, shopping only with a list, creating and sticking to a budget, etc.

It could be anything you want that flows into the achievement of the goals you already set for yourself in your journey to financial freedom.

According to Business Insider, millionaires are deliberate about what they do to keep themselves financially independent because they have a plan.

 

 

5. Financially Free People Stay Focused

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Focus is critical to achieving your financial goals. It gives you tenacity. Life happens and there is no guarantee that all things will go as you anticipated on your journey to financial freedom.

You can, however, put contingencies in place. When you are focused no matter what shows up, you use it as a stepping stone to your next phase in the journey. It is important to keep your dream and goals before you.

Take Needed Action

One thing that has worked for me is writing it out and pasting it on my closet door. When I was studying for my Ph.D. it was hard because I had three young children to take care of.

But I typed out the three critical steps I had to take each day to meet that goal. One of the steps was to research and write every day for six hours except for Saturdays and Sundays.

Each day I woke up, I saw my plan of action. For me, the closet is the most visited part of my room so it was in my face all day.

It surprised me that not only did I finish my graduate school work ahead of the time I put on my plan of action, but I also published a book and wrote several articles accepted for presentation at international conferences within the same time frame.

These were unplanned outcomes I enjoyed because I stuck to my rigid schedule. Once you focus on your goals, write them down. If you consistently follow through, you will exceed them.

 

 

6. Financially Free People Develop a System

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A good habit is to put a structure in place in everything you do. When you systemize your behaviors, it becomes a ritual.

In my example above, my daily commitment to six hours of research and writing became part of me. It took me a long while to scale down my work schedule after I graduated.

My body had recognized it as a daily routine. Any plan of action that facilitates the success of achieving your financial goals must be systemized. It has to become a part of your body system and way of life.

Most millionaires it turns out have daily morning rituals, which they don’t compromise on.

So if your success steps involve actions to increase your income, reduce your expenses, eliminate debts, grow your money, save money, and invest, don’t stop.

Internalize such actions and let them be structured into your daily living. If it becomes a way of life then you will find yourself consistently meeting and exceeding your defined financial goals.

 

 

7. Financially Free People Scale Outcomes

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Financially free people are result-oriented. They can follow the process so they get outcomes that align with their expectations. They can replicate this success over and over again.

When you get desired outcomes, you rinse and repeat the process. You can reproduce the same result in other income-generating ventures. Many millionaires put in a lot to become successful the first time.

In like fashion, they move on and create other success stories with other ventures at the fraction of the time in which they hit their first success. These other ventures further bring up their net worth.

Similarly, these millionaires scale by riding on the earlier ventures created, which results in success at a lower cost. They scale their business and their net worth. 

To scale can be in two ways,

1) Use the main success vehicle to sprout other businesses still within the group like Jeff Bezos is doing with Amazon, or

2) Create diverse vehicles from money and goodwill already existing from the initial success to create another vehicle that will further consolidate their financial independence like Bill Gates did with Microsoft and The Bill and Melinda Gates Foundation.

This is not by accident. It is not just their initial success alone that automatically re-created other successes. Remember I told you earlier that many of them read to learn.

They allowed themselves to learn from the process, in addition to preparing for their next steps. Many of them pioneered their areas of achievement.

They have no blueprint to follow but that which they created for themselves. They have to read to stay at the cutting-edge of the business landscape as a guide on how to further develop their business offerings.

Keeping ahead allows them to tweak the value they provide to ever-changing global demand. Innovation is not by accident.

Likewise, you have to consistently build value into yourself so you can create value for others. You cannot give what you don’t have.

If you focus on creating value for others in your journey to financial freedom, you will have an easy ride when you need people to buy into you again.

A good example of this is Elon Musk, who only needs to tell investors of his next big thing and they are on board.

The vehicle for achieving financial freedom is different for everybody. Actualize your dreams of financial freedom by emulating the seven top habits of financially free people.

 

 

Conclusion

Many people have become financially free by practicing these habits. The examples you see here are of people we know are already financially free because their dealings are in the public space. However, many everyday people are financially free. You can be one of them. Start your financial freedom journey now.

Also, find out if you are good with money by taking this financial quiz. 

Are you good with money? Take this free quiz, to find out.

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Check out your Money Personality also by taking this easy test.

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