Turnitin Tslb3262 Task 2

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The term of financial freedom is one we have heard often, but does anyone know
what that really means? People believe it has something to do with earning a lot, but that is
not the case. In fact, earning a lot of money has got very little to do with financial freedom. It
actually how you handle your income wisely.
Now, imagine waking up every day knowing that your finances were secure and you
had the time to do the things in life that matter to you, such as spending time with your
family, pursuing a passion, or even planning your next adventure. Isn't that just the best thing
you could imagine?
So, I will be showing you three major lifestyle decisions that could bring you closer to
financial freedom: living below your means, mindful spending, and avoidance of debt. These
are basic choices with quite compelling power once done constantly.
Let's first start with the foundational principle of financial success: living below your
means. The concept behind it is rather simple: spend less than you earn. It sounds rather
easy, but most people can't practice it because of lifestyle inflation. Lifestyle inflation occurs
when your income increases, and you start spending more rather than saving or investing.
You might find yourself upgrading your phone every year, buying an more expensive car, or
moving into a larger house because you can 'finally afford it'. The thing is, these upgrades
are often very rewarding in the immediate sense but usually leave you little to save and
invest for the future.
Living below your means first requires the creation of a realistic spending plan. Next,
take a look at your income and list all your expenses. Subtract the expenses from the
income, and you should have a positive balance. If not, time to rethink some of the lifestyle
choices. Ask yourself what you can cut back on. For doing so, tracking your spending is a
helpful tool. This means writing down every transaction you make, be it large or small-for
snacks or coffee. Many people are surprised to see how much money they spend on
unnecessary items. A study by Davydenko et al. (2021), utilizing self-control strategies rather
than relying solely on willpower can significantly reduce spending and increase savings. So,
by reducing these small expenses, such as eating out frequently or buying branded items,
will enable you to save more.
Being frugal is not about being cheap; it's about being smart with your money. For
instance, instead of buying new clothes at full price, you could shop at a thrift store or wait
for sales. You may even find ways to reduce your monthly expenses: use less electricity,
downsize your phone plan, or cancel subscription services you never use. Living below your
means does not mean you need to give up things you like; it just means you are conscious
of how you spend your money and your expenses align with your financial goals.
Next, let's discuss mindful spending. According to Ashley (2024), mindful spending is
an intentional act in the way one uses his money. It is not about denying yourself all the
pleasures but making sure your spending reflects your priorities and values. The next time
you are going to buy something, pause and reflect for a second. Ask yourself if you really
need it, whether the purchase aligns with your financial goals, or whether it will truly bring
satisfaction long-term. This mere habit prevents unnecessary, spontaneous purchases that
you might regret later.
A good practice of mindful spending is paying with cash instead of credit or debit
cards. Spending cash feels so much more real because you actually see the money leave
your hand. The use of a card feels effortless at times and sometimes leads to spending
much more than what you had budgeted for. Paying with cash simply makes you feel more
aware of the amount you are spending, and you might give it a second thought before
making an impulsive buy. Research by Van Der Horst et al. (2018) shown that paying with
cash reduces unhealthy purchases by 12.3% compared to paying with cards.
Another vital aspect of spending mindfully involves your understanding of what you
want. Individuals need to critically examine their motivations behind purchases and prioritize
needs over wants (Mazlan, 2024). Set clear, short-term and long-term goals. For example,
you may have aspirations to save money for travel in the coming year or a goal to buy a
house within the next five years. Such identified needs might help in making choices that
could keep you on track with what really counts. This way, you will be less likely to spend
money on things that do not contribute either to your happiness or success.
Now, let's go back to one of the biggest barriers to financial freedom: debt. Debt has
a very real possibility of putting you on a never-ending merry-go-round of payments and
interest, beyond which it becomes very difficult to save or invest. According to Marron
(2015), debt can subvert individual will and undermine the capacity for self-determination.
For most people, a credit card is a facility for buying things they can't afford with the hope of
paying it off someday. This thought process can easily bring them to serious financial crisis.
High debt-to-income ratios make individuals difficult to manage their finances effectively
(Krumer-Nevo et al., 2016). The best way to stay out of debt is a very simple one: anything
you cannot afford without a credit card, do not buy. Instead, save up for what you want.
Waiting could take some time, but it would save you money and stress in the future.
The second vital way to avoid falling into debt is building an emergency fund. A better
financial behavior leads to more emergency funds and adequate savings. The emergency
fund is one kind of savings that you would use in times of sudden/accidental needs, such as
medical bills or repair of the vehicle. Without this savings, most people borrow during these
times of emergency or use credit cards, leading only to an increased burden. According to
Babiarz and Robb (2013), higher financial knowledge and confidence in one's financial
ability are significantly associated with increased likelihood of having emergency funds to
cover 3 months of typical expenses.
Limiting the number of credit cards you have is also helpful. Having multiple credit
cards means you need to track several payments and due dates, which increases the risk of
missing a payment and accumulating interest. Focus on using one or two cards that you can
manage easily. This approach simplifies your finances and helps you avoid unnecessary
charges.
Financial freedom is not an unattainable dream, nor is it solely reserved for the most
affluent. Rather, it is an attainable goal for anyone who works toward it by making conscious
choices about one's lifestyle. Living below your means, mindful spending, and avoiding debt
are powerful strategies that could potentially revolutionize your financial future. These habits
might be small, but their impact can turn lives around once consistently put into practice.
Take time today to think over your financial behavior. Do daily decisions you make
bring you closer to your goal of financial freedom, or do they hold you back? Think of ways
to make adjustments-even slight ones-that will better your financial situation. Remember,
financial freedom isn't about the money; it's about living your life independent of money
stress. By taking control of your finances today, you will have a brighter and more secure
future. Thank you.

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