Ever wondered how to gain financial freedom so you can worry less about money? You might even have some money left at the end of the month. It’s better than the other way around: spending more than you make and going deeper in debt. Contrary to popular belief, you CAN reverse that trend!
The first step is making a financial plan. Having a system helps with just about everything, including finances. Having a system puts you in charge. Without a plan, you may make your financial decisions based on how much money is in the bank right now. That way money controls you. That’s the root of most financial worries and money problems. You need to control your money to gain financial freedom; not the other way around.
Having a financial plan doesn’t necessarily involve day trading, investments, stocks or bonds. It can if you want, but the goal is to control the flows of money first. In my millionaire mindset class, I teach the easiest money management system to do that. You can follow it regardless of whether you have one dollar, a million dollars, or anywhere in between. Most people are completely unaware that such a system exists, let alone that they could benefit from it. In this post I’ll uncover some of the steps to get started on controlling your income flows.
1. Have a budget
Predict how much money you need this week, and in the next few months. Figure out exactly what has you spend, by category, over the past year. This becomes the starting point. Don’t worry about eliminating expenses just yet. True financial freedom means you shouldn’t have to cut out your daily Starbucks habit. Unless you choose to, of course. Your break even point is the minimum amount of income required to stay afloat. Being aware of that number is the first step in effective cash flow management.
2. Create income options
Read my post about asking a millionaire what they do for a living? They have multiple streams of income. Side hustles, as Chris Guillebeau calls it. Once you have your minimum number from the previous step, figure out how to collect that amount. With multiple options, the goal is to do better than breaking even. What would you love to do most, and can you add that in somehow? Remember, you’re going after YOUR financial freedom here.
3. Be aware of your costs of living
Find out exactly how much you owe in bills and other debts. This topic takes a bit of courage to confront. You may have a maxed out credit card or two to deal with. Ignorance here is not bliss. Ignorance can undermine your profit and wealth building progress.
4. See if there’s anything left
By now you’ll have an idea of how much of your income is actually available to spend. Most people forget that when the money comes in, some of it is already committed. When you spend more than you brought in, the difference usually ends up on a credit card as debt. Not good. Financial independence means always spending less than you make.
5. Start a system
Once you figure out the basics, the fun begins. Set aside regular amounts from your income for the future. Always pay yourself first. Part of the money management system I teach in my class is a to put aside 10% from every pay cheque towards financial freedom. (If you think you can’t afford that, implementing the rest of the system does help to free up that amount.)
6. Catch up and save
Use some of your money toward paying off anything you’re behind on. Once you’re caught up, you can start to save for future large expenses. These could be fun, like a cruise or nice vacation somewhere. But it could also be something less fun like a car or home repair. Having money available is key. Careful, consistent money management can speed up your process of building financial freedom.
7. Create even more options
Use any money left over in ways that increase your ability to produce more income. Start something for yourself. Write a book. Start a side hustle. The key here is to add new things, not quit your job and “follow the dream”. Even though that may eventually happen, the goal now is to add income, not remove it.
A while back I wrote about the economy of birds. Whether we like it or not, our western world runs on cash. Everything runs smoother when cash is available. Your cash flow is what keeps you participating in that world at the level you’re comfortable at today. Even if your goal is to be at a different level than you are today, you have to start somewhere. Why not start today?
Sounds simple, right? And it is simple. What I teach is not difficult to learn. It does require some discipline, but contrary to popular belief financial freedom does not require a minimum income amount. What matters is deciding to start and sticking with it. The end goal is to have enough of cash on hand, all bills paid, and plenty of money in reserves to finance whatever you want to do next. That’s where the real fun begins.
Curious to see more? Check out my Financial Freedom class and request your complimentary preview today.