The term financial freedom is not new, we have often heard it. In fact, this is the dream of many workers out there. This is because by achieving financial freedom, we no longer need to worry about money for living expenses and financing life goals.By achieving this, it is believed that we can live more peacefully and enjoy life. There have been many books that explain how to achieve financial freedom .Are you curious? The LinovHR article below has summed it up for you, check it out!
How to achieve financial freedom for employees
Definition of Financial Freedom
Financial freedom is a condition where a person can fulfill his life needs without having to work harder or depend on other people’s finances.Usually, someone who has financial freedom certainly has more than enough assets.
In addition, someone with financial freedom will develop their assets in order to get multiple profits, and use them to finance their daily needs.Financial freedom does not have to belong to people with high incomes. Everyone can follow their version of financial freedom.
To achieve financial freedom, it can’t only be achieved by looking at a large salary or an increasingly mature age. This can all be achieved from a long process. Therefore, you must be able to appreciate all the activities you do to achieve the concept of financial freedom.
Benefits of Financial Freedom
When someone has achieved financial freedom, he will feel the benefits of being able to be more independent and not depend on other people’s finances.
He will also continue to earn income intensely even though he is not working.
You will really feel the benefits when we are no longer working or are in an unproductive age.
Even so, you will still get income even if you don’t work effectively. This income can be obtained by owning a business, business and others.
Simply put, when you have financial freedom, you don’t have to force yourself to keep working. You can always rest and retire without waiting for old age.
Interestingly, if you want to go on vacation, you can go without worrying about running out of money. Even if you sleep and you already have a lot of production assets, you will still earn.
Now that you know the meaning of financial freedom and its benefits, it doesn’t hurt to think about it.
Many successful people have experienced the benefits of financial freedom from a young age, and it’s not impossible for you to make it happen.
Stages of Financial Freedom
At least, there are 7 stages of financial freedom, as follows:
- Clarity . The first step to carrying out the stage of financial freedom is to examine your financial situation, how much debt you have, and what goals you want to achieve.
- independence . The second stage is to become financially independent without outside help, such as help from parents and others.
- Financial relief . The next stage is to have financial flexibility. That is, the remaining money from the income that an employee gets after meeting his primary needs.
- Stability . This stage requires discipline in its application. Because after paying off all existing debts, then transfer the remaining money to an emergency fund. Usually the emergency fund raised is equivalent to six months of living expenses.
- Flexibility . This stage has an emergency fund that can cover living expenses for 2 years.
- Financial independence . Everyone who has reached this stage can usually make ends meet only from investment income. The investment can be in the form of rental property or stock investment and others.
- Abundant wealth . The last stage is abundant wealth. Usually this stage is people who have quite a lot of sources of income, such as running several industries, top artists, and so on.
How to Realize Financial Freedom for Employees
Of course we want to be able to achieve financial freedom so we don’t feel burdened, here are some ways you can achieve financial freedom for employees.
- Understand current financial conditions and needs
The first step is to understand your current financial condition and financial needs.
If your financial condition has not improved or you have a lot of debt in arrears, then you should need to settle these debts.
If it has been paid off, then you can plan detailed financial needs in the future to achieve financial freedom .
- Have sufficient savings
After understanding your financial condition, then you need to have sufficient savings.
Having savings will be useful in the future, you can prepare for the future from the savings you have.
- Looking for additional income through business
The next step is to build a business from an early age. This business will help supplement your income when you have entered an unproductive age.
Set aside your money to build a business so you can increase your income.
To achieve financial freedom, an employee should invest according to ability.
Start learning a lot about investing early so you can develop assets both in real terms and in stocks.
- Prepare an emergency fund
Basically, emergency funds and savings are two different things, although both have the concept of setting aside funds from income. However, in reality, the two have different goals.
Emergency funds are funds kept to finance uncertain conditions such as accident funds, layoff funds and others.Prepare an emergency fund every month to prepare yourself in all conditions. Usually the emergency fund collected can cover the needs for 6 months.