How can Canadians achieve financial freedom?

Highlights

• People who are financially educated and know how their money should work could efficiently build a secure life for themselves and their families with no financial shortcomings.
• A detailed understanding of financial terms, can help people achieve financial success quickly, making them financially stable and resistant to inflation and other economic shocks.
• To enjoy financial freedom, people need to manage their expenses and debt, follow a budget, and smartly invest their surplus money.

Financial literacy is the foremost step towards financial freedom. People who do not realize the importance of efficient money management can eventually become financially vulnerable.

On the other hand, People who are financially educated and know how their money should work can efficiently build a secure life for themselves and their families.

A detailed understanding of financial terms, their cause and effects, market and economic knowledge can help people achieve financial success quickly, making them financially stable and resistant to inflation and other economic shocks.

What is financial freedom?

Financial freedom is a life situation where one can independently take life decisions without worrying about financial pullbacks. A person who has achieved financial freedom can pursue a different career or live a relaxed life while managing income sources.

Young aspirants who work on their financial goals can achieve financial success earlier than others and make new history in the financial world.

To enjoy financial freedom, people need to manage their expenses and debt, follow a budget, and smartly invest their surplus money. One can also look for additional sources of income that would help in effective money management.

Path to financial freedom

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1.    Financial literacy

Anyone can learn anything from the internet. More importantly, it has transformed our lives so much that now it seems impossible to detach from the internet world. Online payments, YouTube, work-from-home, e-learning etc., have become parts of our lives for some good reasons.

One can also get to know the basics or even master the financial world using the internet, which will help in improving financial knowledge.

2.    Savings

You generally get low interest on your savings account, and not to forget, it is also generally subject to taxation. Financial enrichment will help you control your finances and savings from overspending and taxation.

One can learn about Tax-Free Savings Account (TSFA), Registered Retirement Savings Plan (RRSP), and other efficient options to save their hard-earned money.

3.    Investments can help in building wealth

Investing is an exercise where you put your money to make significant gains. Real estate, stocks, exchange-traded funds, index funds etc. are some of the many options that can help you in achieving financial stability.

However, it requires the right skills to judge whether it is a good or bad investment.

Also read: What are the most actively traded Canadian stocks in 2021?  

4.    Establish additional income sources

Rent, dividend or any such additional income that you may earn from a recreational job can back you up when you need extra money. Such passive income can increase your purchasing power and help defend against the ill-effects of inflation in the long term.

Nowadays, establishing an online business has become relatively easy due to the modernization of the internet. With the right skillsets, one can build an empire online by investing a fraction of the cost needed for physical infrastructure.

Also read: ETF vs Index Fund: Which is a better investment option?

Bottom line

Financial stability is an important milestone in achieving financial freedom. So, if you have just begun this journey, first, you need to make sure that you have the required knowledge to efficiently manage your finances.