“I don’t want to achieve financial freedom,” said no one ever!
When it comes to money matters, everyone wants to have two things: a stable source of income and assurance that you can afford anything you want and need according to your lifestyle. That’s exactly what financial freedom entails, along with the free rein to budget and control your expenses without having to depend on anyone else.
No wonder why a lot of people enroll in a personal finance class to enrich their financial wellness.
Financial independence is a critical component of building your wealth, and it’s a status that most people want to attain. However, the many bills to pay and different opportunities that life throws your way can heavily influence how fast you can start building your future.
It’s not entirely impossible especially with the right financial freedom strategies. Below is a step-by-step plan that can serve as your personal finance guide to reaching financial success.
How to Achieve Financial Freedom
Let’s dive deeper in the concepts mentioned in the infographic. This six-step roadmap is discussed in detail in the book, Hacking Money: How You Can Crack The Wealth Codes To Create Abundance by Mark E. Yegge, but here’s a short discussion.
Learn to Earn
Your parents invested in your education because they knew you’d pick up a skill at school which you can use to make a bright future. This is the heart of the first step: having the proficiency to accomplish tasks that can earn you money. However, learning doesn’t stop after you graduate—in fact, you can switch careers or create more opportunities for yourself through further education.
There are usually four levels of mastery, which are as follows:
Unconscious incompetence — You’re unable to recognize that there’s something you don’t know
Conscious incompetence — You’re aware of your lack of knowledge and you’re addressing it
Conscious competence — You have the basics and working knowledge of your new skill
Unconscious competence — You have reached the expert level and the task is effortless for you to perform
Being well-rounded, versatile, and highly-skilled will get you to many places in the future.
Earn to Save
It’s time to stop living from paycheck to paycheck. Budgeting is crucial, and you need to find the discipline and drive to save up a portion of your earnings so you can create a savings account. These funds are what you will use to grow your financial assets, and what will ultimately cushion you from cash emergencies. As a general rule, it’s wise to save 10–20 percent of your income.
Save to Invest
This is where things start to become interesting. It’s not enough to save money for the future—now, it’s time to grow it. Different investment vehicles can help you grow your savings and help you unlock greater heights.
Investing is not a walk in the park, and sometimes people make the wrong decisions. However, this shouldn’t deter you from doing it yourself. Echoing the first step in this roadmap, you should continuously learn about financial literacy and investment trends so you can keep earning. Investing correctly will help you build more wealth and lead you to the next step.
Invest to Replace
Financial freedom is a long-term plan, and that means thinking about the time when you don’t have to rely on your day job to generate your income. Once you’re at the stage where you’ve grown your assets large enough, it can act as passive income, so you don’t have to worry about working forever.
This stage “advances” your retirement plans so you can reap the rewards of your money at a younger age. There’s no need to wait until you’re in your 60s before you can enjoy all your hard work.
Replace to Protect
This step is all about protecting your hard-earned money and not feeling complacent. Wealthy people can fall victim to unscrupulous individuals or organizations, and you should take concrete steps to ensure your assets are protected. Here are a few ideas on how to do that:
Insurance — Safeguard your business, property, and money through insurance options.
Corporate structure — Identify a structure that will ensure your assets stay owned by you.
Debt — Use debt wisely. Is it for an appreciating (gaining value) or depreciating (losing value) asset?
Diversification — Don’t just keep your assets in one place—spread them out to manage your risk and return.
Partnerships — Strategic partnerships can significantly reduce risk.
Protect to Contribute
There’s probably no better feeling than being so financially secure that you can start giving back to different communities. Giving back can take form in many different ways, such as donating to the less fortunate, passing on the lessons you’ve learned, or volunteering for a cause dear to you. It’s during this stage that you can be in a comfortable position to contribute in making the world a better place.
Quick Tips to Achieve Financial Freedom Faster
Start with your WHY.
If you have a clear vision of what you want your future to look like (e.g., buying a house, traveling the world), you remain motivated and inspired to achieve your financial goals. You need this to keep you anchored during the most challenging times.
Don’t buy a brand new car.
Cars depreciate the moment they step out of the dealership. Used cars do the same job and they cost much less. Don’t be tempted to buy the latest sports car or feature-packed car now. Instead, channel your energy into your savings plan so you can buy whatever you want later.
Pay with cash.
While digitized payments have their pros, paying with cash could help you manage your expenses more. It keeps you limited to a specific budget and allows for a more tangible relationship with your money vs. the arbitrary numbers on your online banking app. Plus, you don’t have to deal with credit card interest rates or hidden fees.
Track your spending.
You’ll be surprised to know just how much you’re shelling out once you see all your expenses listed down in front of you. Seeing it in plain sight discourages you from buying things you don’t need.
Create additional income.
Don’t be content with one job if it doesn’t support your lifestyle. Consequently, adjust your lifestyle to meet where you’re at. Have an abundance mindset, so you create positive experiences with money—attracting it rather than repelling it.
Begin Your Journey to Financial Freedom Today!
The road to financial freedom is a long journey, but it’s not impossible. With the steps mentioned above and by attending a personal finance class, there’s no doubt that it’s within your reach, perhaps much sooner than you expect.
Plus, there’s more where this came from. If you’re interested in learning more ways to grow your wealth, Hacking Money offers the Hacking Money Investing System that will help you reach your goals faster. Join the course today!