We’re all unique individuals, but I think we share two important and immutable characteristics:
Our desire to find happiness, and our desire for freedom.
While money alone won’t give us either of those things, it can put us in position to have them.
Financial freedom also means different things to different people. Some people feel financially free once they’re debt-free, no longer living paycheck-to-paycheck, and no longer worry about money. To others, it’s no longer having to work a day job to earn a living.
Have you ever thought about what financial freedom means to you? I’d like to help you answer that question and then give you some actionable tips for making it happen.
I’ve been helping people get better at money so they can live how they want for over 20 years. Investopedia has named me a top financial advisor many years running, and I’m financially free. While that doesn’t mean I’m a billionaire, it does mean I’m not stressed or worried about money. But that wasn’t always the case.
I spent my 20s filled with money stress. Burdened by credit card debt and living paycheck-to-paycheck, I avoided my personal finances (even though I was working in personal finance). It’s important for me to share that because I know how it feels to be in a bad place with money. So wherever you are, I’m confident I can get you further along your path to financial freedom.
Here’s what we’ll cover:
- Security first
- What is financial freedom?
- What will it take to achieve financial freedom?
- Keys to financial freedom
Let’s get started.
Security first
Whatever you desire, that’s what I want for you. If you want to be rich, let’s work to make it happen. If you want to get out of credit card debt, let’s put a plan together. Whatever your desired end point, I know this to be true: financial security comes first- then financial prosperity.
So what does it take to find financial security? You’ve got to start by knowing your facts, which are cash flow, budget, credit and beliefs.
The thing about personal finance is, we really overcomplicate things. Once you know how much you earn, how much you spend, how much debt you have, and your net worth, you’re ahead of the game.
Cash flow
Cash flow is simply knowing how much money you have coming in and going out. It’s monitoring it on a monthly basis. Start doing this.
Budget
While I don’t love budgeting, I recognize it as an essential part of my financial success. All budgeting is a creating a plan for your money. Once you’ve it set up, it will tell you if you’re on track to meet your goals and objectives, or if you’re behind. It will also tell you if you can afford do to things; can I go on vacation, out for dinner, or invest in Bitcoin? When you have a budget, you can answer those questions. Create your household budget and review in monthly.
If you like to dig deeper into budgeting, check out our Get a Budget course.
Credit
Credit plays a large role in our lives. It can determine where we live, work, and the car we drive. Therefore, it’s important to develop a healthy credit profile. Every year, it’s wise to review your credit report as well as your credit score.
If you’d like to dig deeper, check out our Improving your Credit course.
Beliefs
Like our phones, we all have an operating system constantly running in the background. This system keeps us alive, but it can also keep us stuck via limiting and or limiting money beliefs. Do you have limiting beliefs about money? I did for a long time, and didn’t even know it. Check out this post for a list of prompts which will help you determine if you’ve got any.
The good news is, once you identify them, you can work to change them.
What is financial freedom?
I touched briefly on this in the opening; what does financial freedom mean to you?
Any conversation about our futures demands we talk about goals. This is another area that I neglected for years. In fact, it wasn’t till I turned 35 that I got serious about it.
Why is goal setting important? In order to live how you want, you’ve gotta know how you want to live. I focus on six key areas, and I encourage you to do the same. In each area, think about what you’d like to have in three years, 10 years, and 20 years. Here are the six areas:
- Family
- Community
- Wellbeing
- Career and financial
- Personal development
- Peace of mind
The more specific you can get, the better. To help you in your process, you can access our Goals course for free. Next, we’ll talk about putting numbers and a plan together to help you achieve financial freedom.
What will it take to achieve financial freedom?
What will it take? You know what financial freedom means to you, you know what you want to see happen in the six key areas of your life, now it’s time to put numbers to everything.
For each of your goals, how much will it cost to make them your reality? In each area, think about and write down how much what you want will cost. For example, perhaps you’d like to take six weeks of vacation a year with your family. How much will that cost?
Now that you know how much it will take, let’s put a plan together for making it happen. You can approach it from each individual area or desire, or from the total number. For example, if financial freedom means you’ll need an additional $20,000 a year, where will it come from?
I’ve found you’ve got three choices: you can earn more, live on less, or a combination of the two. How will you go about it?
Keys to financial freedom
I want to share four key truths for you to follow on your path to financial freedom.
Truth #1: Become the CEO of your financial life. There will never be anyone more interested in your financial success than you are, you need to start acting accordingly. While this doesn’t mean you need to do everything, you need to oversee everything. Meaning, even if you hire a financial advisor or accountant, you still need to pay attention.
Truth #2: Start paying yourself first. If you’re in the habit of paying everyone else first and waiting to pay yourself, you’ll never become financially successful. You do this by enrolling in your 401(k) at work, opening an IRA, transferring money to a savings account, or setting up a taxable brokerage account. On the first of every month, set it up so money is automatically contributed to whichever account you’ve selected.
Truth #3: Stay out of debt. Credit card debt crushes our dreams and keeps us from financial freedom. Do everything you can to get out, and stay out of it. To help you accomplish this, you can access our Get Out of Debt course for free.
Truth #4: Take a diversified approach to investing. Way too many people lose way too much money investing in individual investments like stocks or crypto. While there’s a time and a place for this kind of investing, the majority of your portfolio should be in low-cost, well-diversified investments like mutual funds or ETFs.
Making it real
To begin, begin.
Everyone’s path to financial freedom is different. You may be closer than you think, or further away than you’d like to be. Either way, money issues are time-sensitive, so it’s important to get started as soon as possible.
You’re someone who is capable and deserving of financial freedom and success. Get to work!
Resources mentioned
We’ve got three free courses as well: Our Goals Course, Values Course, and our Get Out of Debt course.
If you’re ready to take control of your financial life, check out our DIY Financial Plan course.
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If you’d like help getting on the same page with your partner, check out our Same $ Page Course.
If you’d like to help your kids get good with money, check out our Teaching Kids about Money course.
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