For myself, financial freedom simply means being able to do what I want, when I want, with who I want… without having to worry about money! In this post I want to outline 5 steps to financial freedom that we can all follow to achieve our dreams and live the life we have always imagined.
What would you do if you never had to worry about money again?
Travel?
Give to your favourite charity?
Spend your days fishing or playing golf?
Still working, but because you want to, NOT because you have to?
To be able to live this lifestyle you need financial freedom.
Here is how to achieve it in 5 steps.
Step 1. Pay yourself first
Most people worry about paying their bills and what ever other commitments they may have.
But what about you own financial future?
If you want to achieve financial freedom, you need to cultivate the habit of paying yourself first.
Open yourself up a separate high interest bank account and set up a direct debit, so that at the VERY moment that you get paid an amount is transferred straight into this bank account.
This money is then to be used for investing in things that will eventually make you rich.
I like to call this account my “financial freedom account” (FFA).
The key is to transfer this money as soon as you get paid, and ideally you would start with 10% of your income.
But if you can’t afford that much, just transfer as much as you can afford… the habit is the key and you can build up over time.
Step 2. Invest
Most people believe that investing is for rich people, but the fact is that it is the opposite… you NEED to invest to get rich!
Once you build up your FFA account, you can start investing in shares in quality blue-chip businesses which allows you to let compound interest work it’s magic, and over time you can build up a sizeable nest egg.
You can also invest in real estate that will eventually grow in value over time.
Eventually you will build up a large asset base that will give you financial freedom.
A metaphor that I like to think of is that this asset base is the goose that over time, will lay the golden eggs of financial freedom.
Step 3. Cashflow is king
While it can be very easy to put all of your money into the latest hot stock tip or mortgage yourself up to the hilt in a hot market with a heap of investment properties, it is always wise to remember that cash flow is king.
I always want to keep cash flow under control when investing because the market can turn downwards just as quick as it can go up in a hurry.
I always make sure that I have plenty of buffers available if and when I need them, and a good rule of thumb is to have a minimum of 3 to 6 months worth of living expenses available if required.
Step 4. Eliminate debt
Bad debt such as credit card or personal loan debt is not only a huge burden on your cash flow, it also makes it a lot harder to get further loans for good debt such as investment properties.
It also makes it harder to save in general, so debt must be eliminated as soon as possible.
The best way is to start is with your lowest debt first.
Make sure you don’t run up any extra debt on this one while you pay the minimum on your other debts, then pay as much extra as you can until it is paid off. Then you can pay this extra amount on the next debt and so on until all of your debts are paid off in full.
Now you can use this extra money for investing!
Step 5. Add an income accelerator
Investing will help you eventually achieve financial freedom over time.
But what if you want to speed up the process?
You need an income accelerator.
There are various vehicles that you can use such as network marketing, share trading using options or fourex trading.
But what I personally love and have found to be a brilliant income accelerator, that if you are committed and determined enough, can even replace your income from that crappy job that you hate, is an online business.
The internet is certainly not going away in a hurry and the potential to make money online is amazing.
In summary
So in summary if you follow these 5 steps to financial freedom you will be well on your way to that dream lifestyle that you have always imagined… without the money worries.
So start today and make financial freedom a reality… the time is NOW!
To your success,
John W. Newman
Dream It, Believe It, Then Achieve It!
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I’ve been avoiding my debts for a descent amount of time and I think your blog post was a sign that I should just take care of my debt.
In the future, I might want to take a loan for a good debt such as an investment. So, it’s necessary that I pay things off.
Thanks for you comment Tomas.
Yes definitely sometimes we like to put debt out of our mind and hope it goes away, but it never does!
Glad you are going to take the first step to clear your bad debt! You can do it!:-)
Hi
Well, thanks to me finding this site about 7 months ago and joining Wealthy Affiliate I am now on my way to working my way through your list, it’s not easy, but no one ever said it was but it is fun, so hopefully I will be financially free while enjoying the path to success.
Thank you for this article
Paula
Thanks for your comment Paula!
I am glad that in some way I have contributed to your success.
You are right… creating financial freedom isn’t easy, BUT it is fun!
To your success! 🙂
You have outlined some awesome steps to financial freedom here, John. I will definitely be putting these in to action too 🙂
I also relate to the first step too because when I first started out earning money online, I was more concerned about paying my bills, but I failed to actually focus on “paying myself.”
However, now I do transfer money in to my savings account each time I get paid from my online business AND I have made a major investment in to my future by upgrading to Yearly Premium membership at Wealthy Affiliate.
If you’re reading this article, follow all of John’s advice and you will achieve financiel freedom.
Neil
Thanks for your comment and feed back Neil!
Sounds like you are taking all the right steps towards financial freedom yourself!
Onwards and upwards from here! 🙂
Hi John,
I really enjoyed your post and I have followed some of your 5 steps. Having always been self employed my first priority was always paying my bills, after that if there was money left over it was for me.
Then, when I had accumulated some money I invested it mainly in real estate, but with the economic situation, I don’t know if that was a good idea.
I feel an online business is definitely the way to go. With a lot of motivation and perseverance anything is possible and as you say the time to start is now.
Thanks for your comment Peter.
I invested heavily in real estate as well but I became unstuck due to not having my money management in place properly.
That is why I have started my online business… it is great for cash flow and I can start funnelling the extra money back into growth assets like property without all the headaches!
Hey John, great post as always. It’s funny that everyone we talk to in life always wants financial freedom. Even those you love their career, want to be free of things. However, not everyone knows how to get there. Or, they are just unwilling to take the first step. I can see this post leading people towards their goal, as well as motivating them to start.
Thanks for the support Abraham!
I certainly do hope that it leads people to start creating financial freedom for themselves.
The first step to change is awareness!
What would I do? I would buy a new house then go and do as I please. I agree if young people would start putting away 10% of their income when they first get on the working scene, they would be surprised at how much they saved by retirement age.
I agree with Cathy about all the new gadgets. How many are really needed?
Thanks for your comment Virgie, totally agree!
One common thing I see with young people these days is that the moment they have got some cash in hand, they spend it on luxurious stuff/habits – mostly electronic gadgets, a heap of wardrobe and lots of drinking. I don’t get it – how many phones and shoes do you really need? Is Saturday drinking even necessary on a weekly basis.
When asked, some of these kids don’t even know what a medical card is. They can really be that clueless when it comes to managing their own money. Obviously these kids are loaded and are probably going to inherit from their parents. So why bother right?
I have done Step 1 all the way to Step 4. Now, I am just waiting for Step 5 to pick up speed 🙂 and I can be FREE!!!
You are on the right track then Cathy! Great to see 🙂
You are absolutely right about young people these days, it is a shame because if they set themselves up from the start they can have such abundance throughout their lives.
I guess I was similar when I was younger, but there weren’t all the different toys then that they have nowadays!
Thanks for the comment!!