What is Financial Freedom
Financial Freedom is not about how much money you have or how many assets you have accumulated. It is more about declaring independence and having more cash that is flowing in over cash that is flowing out. Financial Freedom is more of a mindset not wealth status.
Why Financial Freedom is Important?
Financial Freedom is one of the most researched items on the internet. People desperately want to be free from worrying about money. The statistics are alarming.
60% of people report losing sleep over money
75% of boomers will depend on the government for retirement.
This tells me that money is controlling people’s lives. Financial Freedom offers people peace of mind.
Tips for achieving Financial Freedom
1) Determine The Problem
You first need to understand what the problem is before you know where you want to go and how you are going to get there. Most people don’t want to spend time doing some internal examination of their lives and behaviors. Money has no value. The definition of money is either an exchange of value or a store of value. Money follows value. You need to self-examine your life before you begin your journey of Financial Freedom.
2. Identify Your Value/Identity
This is an important part of achieving financial freedom. If money follows value, you need to understand your value proposition. This is crucial. Once you identify the problem, you need to begin to build your identity in order to achieve financial freedom. You can’t begin to even create goals without first knowing how you are.
3. Begin To Dream
What is financial freedom to you? It looks different for a lot of people. You need to start to dream about the kind of life you want to live. You need to start making goals both short-term and long-term. You need to get specific about what you want in life and in your finances. Write down these goals and keep them ever-present in reminding yourself of them.
4. Understand the Difference Between Credit and Debt
There is a big difference between credit and debt. Not all credit and debt are created equal. I can determine in seconds if you have good, moderate, or bad debt or credit with you answering five simple questions. These questions are as follows:
Do you have credit cards?
What is the total amount owed and minimum payment on each card?
Do you have a mortgage and what is the minimum payment owed monthly?
Do you have any debt such as business debt or real estate debt, etc?
for lifestyle use (credit card spending etc.) or expand Credit cards and other high-
There is a big difference between credit and debt. It is all about being unsecured and secured. You might have heard of the term unsecured debt and that is credit. Secured debt has collateral on it and that’s debt. There is a big difference between these two. It is important to eliminate credit as it is unsecured and often unnecessary. Secured debt is often better as it is used to leverage more future cash flow or a home mortgage.
5. Create Cash Flow
It is important to understand the concept of paying yourself first. The government will take 40% from you without you even being allowed to touch it. You need to be wise with the other 60% of your gross income. You need to learn how to create cash flow and have more cash flowing in over having more cash flowing out. You need a cash flow plan. You need to eliminate what I call cash flow leaks, where money is leaking out without you realizing it. You need a plan and you must work on your plan.
6. Acquire Assets
I divide assets into two categories. They either preserve your wealth or create cash flow. Real Estate if done right is creating cash flow. If you buy physical gold you are preserving your wealth. Both are needed in your portfolio. I try and do both. I am looking for ways to acquire assets that preserve my wealth and create cash flow.
7. Find or Create a Team
I am not big into financial advising, but I am big into financial education. I am a proponent of getting educated and then finding a team to help you implement what you have learned to set yourself up for success and to keep you accountable to your goals and dreams. You need to get the right team of people together to help you stay on the right path.
The Bottom Line
These tips are not an end-all be-all in helping solve all your problems, but they will help you develop good behaviors to help you achieve financial freedom.
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