All of the recent talk about the U.S. deficit, debt ceiling and speculation about a U.S. debt default has me thinking about financial freedom. Clearly, the U.S. is in a position that is limiting. Poor attention to the basics of good money behaviors has basically backed the country, as a whole, into a corner that leaves few options. This is not financial freedom.

When you achieve financial freedom, you are in a position to make more decisions. You have the freedom to choose from a variety of options, rather than being increasingly circumscribed in your possible course of action. In order to maintain financial freedom, it helps to pay attention to some of the most basic principles associated with the management of money. Here are some of the basics that you should focus on in your search for true financial freedom:

Live Within Your Means

Even though many consider the #1 rule of personal finance to be hopelessly basic, I feel it’s important to consider the concept of earning more than you spend on a regular basis. Despite the simplicity of this oft-repeated advice, many of us fail to live within our means. If you want more financial choices down the road, you need to either earn more money, or you need to spend less. In any case, you need to live within your means.

Borrow as Little as Possible

If you feel that debt is necessary to help you purchase a house, get a good education or buy a car, it’s important to be reasonable about your debt. Thoughtfully consider how much you require, and borrow as little as possible. Borrowing should be done on a modest scale, and should include a down payment in which you pay as much cash as you can toward the total. If you do have debt, it’s important to pay it down ASAP. Debt limits your financial freedom, since it represents an obligation — and you reduce your own available resources through the payment of interest.

Prepare for the Future

When you know big costs are coming, it helps to prepare for the future. This can include building up an emergency fund, so that you have more choices during a financial setback, as well as saving up for goals such as college, a down payment for a home, or retirement. You never know what might happen down the road, but you can still prepare. If you are living within your means, and borrowing sparingly, you will have fewer worries during financial setbacks. And, if you have taken the effort to prepare ahead of time, your options will be greater in number.

Have a Plan

No matter your financial goals and priorities, it is a good idea to have a plan. Whether it is an investing plan to help you retire as you would like, or whether it is a plan of frugality to help you get rid of debt and live simpler, it helps to know what you want to do. Set your priorities, deciding what is important to you, whether it is travel, charitable giving, or building your emergency fund. Realize that your priorities might change during your lifetime, and that the plan might need some tweaking. A good plan will help keep you focused, and ensure that you are moving in a direction to achieve financial freedom.



Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.