What is financial freedom and how to achieve it

Financial freedom can be defined as "being able to live without worrying about money." Others define it as the amount of time you could live if you stopped working right now. It is a concept directly related to autonomy and passive income. It's not about getting rich, but achieving economic well-being for oneself. It's important to note that although an individual may have financial freedom, they don't necessarily need to have a high level of income, but rather a high amount of free time. Let's say wealth is in time, not in money. Additionally, one of the pillars on which it stands is minimalism, meaning, learning to live with just what is essential. To clarify the concepts, passive income refers to avenues of income generation that do not depend directly on the time invested in working to obtain them. These should be sufficient to maintain a certain standard of living, covering regular expenses, without actively working to earn income. For most people, working is not an option but a necessary method to earn income for living. In this article, we will explore alternatives for earning income that do not depend on time invested in working to obtain them, with the aim of achieving financial freedom or, at least, some extra money to add to work earnings. Financial freedom is in vogue, and more and more books are being published analyzing how to achieve it. Some of the best-known ones are "Rich Dad, Poor Dad" by Robert Kiyosaki, "Think and Grow Rich" by Napoleon Hill, or "The Formula for Success" by Agustín Grau. From all of them, and other publications, we can conclude that the formula to achieve it is as follows: "Financial freedom = Savings + Passive Income < Expenses" This implies that the sum of savings and passive income must exceed the necessary expenses for living. Additionally, the savings and passive income among monthly expenses allow us to know the months of financial freedom. Levels of Financial Freedom There are different levels of financial freedom depending on each person's economic situation and the goals they want to achieve: retiring early, stopping working, working part-time, or having supplementary income that allows them not to worry if they are without a job for a while. These are the levels, from basic to complete:

• Financial security: Passive income covers the basic needs essential for living (rent or mortgage, bills, food, etc.).
• Financial independence: The flow of passive income allows maintaining the standard of living one would have while working.
• Absolute financial freedom: Passive income exceeds the standard of living. That is, in addition to maintaining the standard of living one would have while working, one can save or invest. This level of absolute independence is reached when passive income is so high that even if you wanted to, you couldn't spend it.

How to Achieve Financial Freedom First of all, you have to realize that it's a long-term project, and it requires a lot of effort to achieve the desired results. But when is the best time to start? It's not an excuse to be late for New Year's resolutions; the best time is now, no matter when you read this, the sooner, the better. Get to work:

1. Analyzing your initial situation: Before setting where you want to go, you must know where you are. To do this, we recommend making a list of your debts and funds. By subtracting debts from funds, you'll have your starting point.
2. Define real objectives and goals: Buying a house, retiring early (FIRE movement: Financial Independence Retire Early), and paying off debt are some examples. This way, you'll have motivation to reach your ultimate goal. Usually, it's about progressively achieving each of the levels defined above. Once you have them defined, detail short and medium-term goals, such as monthly and annual savings figures, to be able to analyze periodically if you're on the planned path or if adjustments are needed. It's important that all the goals you set are realistic and achievable, otherwise, you'll become demotivated.
3. Control cash flow and save: Develop family budgets to control all your movements and thus find where you can reduce your expenses, without forgetting about extraordinary or unforeseen income and expenses to avoid surprises. A good way to save is through responsible consumption and minimalism.

Now that we have defined our starting situation, objectives, and control our income and expenses to maximize savings, it's time to generate passive income. There are many ways to achieve this, but it's advisable to choose something you enjoy. Consult with yourself to see what might suit you, considering your hobbies and skills. Here are some examples to show you that the possibilities are extensive and, in passing, give you some ideas.

• Start your own business: Once developed, it allows you to earn income passively or can be sold to profit from it.
• Invest: Make the most of your savings by investing. There are different methods: investment funds, stocks on the stock market, etc. But do you know about invoice financing? At Inversa, you can profit from your money in the short term through this avenue, whether you're already familiar with investments or if this whole world is new to you. In our academy, you'll find a guide for investors, and we'll be happy to assist you if you have any doubts.
• Create a digital product: What can you offer that would be useful for others and they'd be willing to pay for? With self-resources that users have to pay to download, like video courses or ebooks, you'll receive immediate income every time a user buys them. There are many possibilities: stock photos, designing merchandise, platforms for doing freelance work online, like Upwork or Twago. An online store offers many possibilities, like dropshipping.
• Write a book: It takes a lot of time, but once published, any sale you make doesn't depend directly on your active work but generates certain passive income.
• Rental income: If you buy and rent out movable or immovable property, you can enjoy a fixed monthly income without having to spend too much time managing it.

Have you already come up with a project to achieve the desired financial freedom? While you think about it, why not start making your savings profitable by financing invoices with us? You can start from €20, and soon you'll see how your money grows with simple management.