I’m sure you have heard of this before, it’s a concept that is becoming more common, but what does FINANCIAL FREEDOM really mean? The unique thing about financial freedom is that it is entirely dependent on each individual’s wants and goals. I found one concept that gives an excellent overall summary:
When paying with money, you are really paying with the time that you put in to get that money. So, all transactions are made with time. When saving money for your trip, retirement, house, etc. it is all the accumulation of hours and hours of work to generate the money that, in the future, will provide you with free time to not work. Because of this, we need to optimize our money and time. Here is an article that goes a bit more in depth with how to best manage your time. https://andresamaya.net/time-management/
You need to know how to optimize your time to then create a plan that supports, grows, and multiplies your money to achieve Financial Freedom.
6 Steps to Financial Freedom:
1. Cash Flow: How much money are you making? Is that money enough to achieve your dreams? If not, what other sources of income do you have? Numbers don’t lie. You know exactly how much money you are making every month. With that knowledge you can calculate how long it will take you to be able to achieve your trips, houses, cars, education, experiences, etc. From there you can determine if the money is enough, or if you need to find ways to increase your cash flow.
2. Emergency Fund: We cannot control everything in life. Sickness, accidents, natural disasters, pandemics, etc. Things happen. But just because we cannot control these things, doesn’t mean we can’t be prepared for it. It is essential to save 3-6 months of income. Not only do you need to just save, but you need to know where to save it. Don’t go put it in a box under your bed, but rather in an account that will generate compound interest. So that no matter what unexpected situation is going on, you are prepared to deal with it.
3. Debt Management: How many of you have a credit card, school loan, car payment, mortgage payment? Now how many of you know the exact interest rate you are being charged for each of your debts? Being in debt is like being in a hamster wheel. If you do not cut the cycle you get one, and then another, and then another. It builds quickly. However, taking on debt can be a necessity at times, so when it happens make a plan to eliminate the debt that includes a deadline and be sure to follow through with it.
4. Proper Protection: When you complete the first 3 steps, you will begin to notice how your money increases. Step by step you are building your strong foundation, but this hard work requires protection. There are lots of options you can do to protect against loss of income and family assets. Irrevocable Trusts, Cash Value Life Insurance, Real Estate Asset Protection, Etc.
5. Build Wealth: With these 4 previous steps completed, it is unavoidable that you will begin to build up wealth. So now what? Continue to grow. The way to improve is by learning where to put your money. You can learn and do it yourself, or you can give that money to a company specializing in professional money management. Two essentials to include with your money when building wealth are to strive to outpace inflation and to have compounded interest.
6. Preserve Wealth: If you work that hard to build your legacy, the idea is to not lose it. So how can you pass on your knowledge and wealth to your up-in-coming generations? There are multiple options: life insurance, cash value, companies, stocks, etc. The best option really just depends on your own personal goals.
My friends, simplicity is the key to success. If you can complete the 6 steps I can guarantee you FINANCIAL FREEDOM. We’re all at different places, so the first thing we need to do is determine where you are. Maybe you’re at the beginning with Step 1, or maybe you’ve made some progress closer to step 4. Either way, the important thing is that you’re moving forward through the process. No matter where you are, young or old, wealthy or not, we all have to start somewhere. The important thing is to just begin.
When will YOU start?
If you have any questions, please ask me! As entrepreneurs we are always trying to create value. Networking is one of the most valuable assets in our world. If you know this article will benefit anyone, please share it with them. Always remember whatever you give you will receive tenfold. Let’s connect.
Are you giving your 110%?