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?
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.
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!