3 Easy Steps to Financial Freedom

We all want financial freedom. In my years working with people helping develop financial plans, I never once heard someone say, “I would love to live paycheck to paycheck for the rest of my life.” What I did hear quite often was that people want to retire as early as possible. They want to break away from the constraints of working for a living, and be able to enjoy their financial freedom. Unfortunately, most people don’t have a clue how to achieve financial freedom. Fortunately, if you spend the next 7 minutes reading this text, you will be vastly ahead of your peers.

Start Saving

Even though most Americans understand the need for an emergency fund, most don’t actually have one. For some reason they feel that if they can’t save a lot, then a little won’t matter. This couldn’t be further from the truth.

Consider the fact that most emergencies cost less than $1,000, and you realize that saving $1,000 isn’t that difficult. Here’s how to do it.

Look over your budget and find where you are overspending. It could be on car insurance, cell phone bill, cable TV, eating out, smoking or drinking. It doesn’t matter where you cut an expense; the idea is that you need to cut $10 per week from your budget. Take that $10 and have it deposited into an emergency fund for you (you can set it up to go out automatically). In one year you will have over $500, enough to sustain yourself through an emergency car repair.

Start Earning

Most people feel that their full time job is not enough to make ends meet. So they have to pick up a second job. This can be done by working for another person in the evenings, or you can start a side business. Here’s how I did it.

I didn’t like my income at my full time job. After requesting a raise (and showing how I have added value to the company) I was denied. Since I didn’t want to go through the process of finding a new job (and the hassle of learning a new job), I branched out on my own. I had dabbled in freelance writing, so I pushed that direction. Within a couple of months I was making an additional $600-$800 per month in my spare time.

Since that point in my life I have expanded my freelancing into a full time career. I haven’t been to the office in over a year.

Start Investing

Emergency funds are great for protecting against the little setbacks, but you will never be able to save enough to be financially free if you don’t invest your money. You need the 8-12% interest that only the stock market can offer.

Take the money that you make from your side job, and invest it. If you invest $600 per month for the next 30 years, you could have over $900,000 (assuming 8% interest). That’s a pretty tidy sum to help boost your retirement.

If nothing else, after you receive your tax return, invest that money. Spend $100 on yourself, and dump the rest into a Roth or Traditional IRA.

Obtaining financial freedom doesn’t need to be some mystical goal that only the elite get to have. In fact, if you start when you’re 18, you could have vastly more than your peers by investing just a couple hundred dollars per month for 10 years. But don’t take my word for it, see for yourself. It’s just math.