Financial freedom means something different to everyone you ask. In short, it means that you have not just the resources to live the life you want, but the time to be able to do it.
Is financial freedom something the average person can achieve? Absolutely. But most people don’t because they fail to follow a few simple strategies that work.
We were never taught about money in school. Society doesn’t preach financial freedom. Instead, our culture tends to lead people to a path of financial burden. If you behave differently than the crowd, not only can you build a way to financial freedom, but it also becomes a literal matter of time.
To avoid financial problems, try THIS instead of common saving advice
Often, personal finance experts will talk about cutting your expenses to save money. This is a viable strategy, but it’s also important to focus on the strategy that makes it much easier to save.
The strategy is simple: make more money.
When you don’t have enough income coming in each month, saving money can feel like a strain. You’ll often hear this from people who live paycheck to paycheck and say they simply don’t have enough money to save.
If you can combine increased earnings with maintaining your current lifestyle, you have more resources you can use to invest in your long-term wealth. So how can you get closer to making more money every single day?
Spend time each daylearning and implementing skillsthat can help you grow your income. If you want to make more money at your job, this could mean getting an additional degree or certification. You can also focus on building a profitable skill you can use for a side hustle.
We’re continuing to move into a gig economy—meaning it’s more common for people to make extra money doing contract work or finding extra income sources outside of their 9-5 jobs. Side hustles come in all shapes and sizes from delivering food via Doordash to becoming a freelancer who provides tech work for companies.
The key is to choose a means of making an income that makes sense for you.
Making extra money isn’t a get-rich-quick scheme. But with daily due diligence, you can learn to add a lot more to your bottom line.
Next, focus on saving money (the right way)
You do also want to focus on areas where you can save some extra cash. But you want to do it in a way that’s sustainable for you. Just like going on a strict diet doesn’t usually work well for most, developing a savings strategy that makes you feel deprived of fun and joy won’t work well either.
So what do you do? Develop a savings plan that’s akin to eating healthy foods you enjoy. There are certain things you enjoy and like to spend money on. There are other things that you don’t enjoy all that much, but still spend money on anyway. Cut the things you don’t really enjoy or use and be conscious about spending money on the things you enjoy.
Remember, traditional budgeting is a waste of time. Most of us are going to spend this money regardless of whether we’ve told ourselves not to. You might as well decide how much you’re going to spend on fun stuff rather than ban yourself from spending altogether.
Some common items people tend to waste money on
Monthly subscriptions: When was the last time you went through your accounts to look at all the subscriptions you’re signed up for? You’d be surprised at how many you barely use.
Eating out: If enjoying luxurious restaurants and takeout food is part of your conscious spending plan, great. But if not, consider whether or not it’s worth it to continue spending large amounts of money on food.
Stuff: How much old stuff do you have sitting around that could be sold at a garage sale or placed on sites like Craigslist? No need to have these items collecting dust at home if you’re not using them.
Get rid of wasteful spending and save money by negotiating
You can negotiate:
Your phone bill
Interest rates on your credit cards
Cable and internet bills
You’d be surprised how far you can get by simply picking up the phone and politely asking if there’s something the company can do to help you out. Remind them that you’ve been a loyal customer who makes payments on time. Let them know you’d like to continue that positive relationship. Often, they’ll be able to find a deal for you. You just have to ask.
On a day-to-day basis, focus on being mindful of what you spend. Again, don’t overly restrict yourself. But when you’re making purchases, ask yourself if you really need or want the item as opposed to just buying it.
Start building a foundation for wealth
When you have some extra cash handy, it’s time to put that money to work. For most people, a simple investing and savings strategy makes sense. Having to constantly monitor your savings and investments takes willpower—and many people aren’t disciplined enough to do both.
There’s a way to save more money and grow it on autopilot once the process is set in motion. You simply need to automate your finances. You can set up automatic savings with your bank online and have a certain amount of cash go into your reserves each week. Use automated investment tools to grow your money over time.
For the vast majority of people, it makes sense to automatically send money to index funds or Exchange-Traded Funds (ETFs), which are baskets of stocks from the world’s most successful companies. The SPY ETF that tracks the stocks in the S&P 500 has made a solid return of about 8% per year on average. Over a long enough time scale, that return is more than enough to build wealth.
There are companies like Vanguard and Wealthfront that can help you make these investments online for a very moderate fee. When you put money into investments,your money works for you every single day. Automating your savings and investments helps you become financially responsible with very little effort. Most people put off saving money and investing for years on end, only to look up and see that they’re financially behind come retirement time. All it takes are a few simple strategies to set a positive path for your financial future in motion.
Work on reducing this huge impediment to wealth
Warren Buffet had this to say about expensive debt:
If I owed any money at 18%, the first thing I’d do with any money I had would be to pay it off.
Debt is often a huge financial burden because it continues to grow if you don’t do enough to pay it down quickly. So, what should you do when it comes to debt?
Which makes more sense? Paying down your debt or investing your extra income? Usually, it comes down to a math equation.
If you expect to earn more from your investments than you’d save by paying down your debt, it makes sense to invest. But we’re not automatons. We’re humans with emotions. And some strategies make more sense emotionally than others.
Create a plan that makes the most sense financially and emotionally so you can actually stick with it. When you do decide to pay down debt, automation can become key as well. You can set automatic payments to credit card companies.
If you can afford it, set them higher than the minimum payment so you can pay down the principal faster. Once you pay one card off, you can take the amount you were using on the payments and add it to an automatic payment for another card. See how this can quickly create a flywheel that eliminates your debt? Exactly.
So step one is to stop digging. Step two is to make sure you avoid buying items on credit that you wouldn’t be able to afford otherwise. Some argue that items like your house and car are exceptions to this, but ultimately, the decision is up to you.
Continue to scale your wealth
Once you get the basics covered, you can focus on developing more advanced strategies that will position you for true financial freedom. You’ll have extra money in the bank that’s growing on its own. You’ll have profitable skills that you can continue to develop in the future. At this point, you can focus on scaling, which is a fancy word for broadening your reach and making more money.
Ownership is the key to real wealth. Without it, you’ll always be stuck working for money and working for money alone. When you own something, especially something that scales, you can make much larger amounts of money that you can pour into investments. This is how the rich build their wealth.
The most obvious step to growing your wealth? Own a business. Eventually, you can translate your side hustle into a full-time gig. When it comes toowning a business, it’s important that the business makes money without your full involvement. Working for money to build cash flow is great, but taking things to the level of scale gives you both the money and the freedom you need to become wealthy.
You can build a business that scales in a few ways. Perhaps you grow to the point where you’re able to hire people. I saw an example online of someone who started a power washing business. They went door to door asking homeowners if they wanted power washing services. Once they saved up enough cash, they hired additional workers and paid them less than what they charged for the services. Business 101.
You can use media and code to sell your products for you. I’ve done this with books and online courses that people buy without having to talk to me. They discover my work online and eventually get added to a “funnel” that promotes my products. I have marketing tools like a blog and YouTube that can reach a wide number of people and leads them into those funnels. Again, this is something that takes time, but if you can do it, you’ll have a sales machine that works for you 24/7.
Last, you can use money. We’ve talked about building wealth through the ownership of stocks, but there are a bunch of different ways you can grow your capital. Consider buying real estate investment properties. Invest in the equity of existing businesses or buy existing businesses outright. At a certain level of income, you can even get into advanced areas like private equity, where you buy a piece of private companies in the hopes they go public. There are alternative investment opportunities like cryptocurrencies that are also on the rise.
Keep it simple, give it time, and get rich slowly
Don’t get bogged down in the specifics yet, just know that the rich get richer for a reason. Instead of solely working for their income, they make their money make money—and that makes them even more money. When you see a wealthy person with flashy items, it’s important to understand how they purchase them. They don’t buy these items with regular income. They buy these items with passive income that comes from their investments.
You can reach these levels, too, but it all starts with having a wealth mindset. Start thinking about how to get wealthier every single day. Financial literacy involves both learning about money and practicing how to behave with money. The key to success in any area of your life involves thinking about how today’s actions affect tomorrow’s outcomes.
To build wealth, you need to learn how to play the long game. One of the most difficult parts of building wealth is having the patience to both learn the skills to increase your cash flow and wait long enough for your investments to grow to life-changing levels. You don’t need to be a genius to build wealth. You don’t need superhuman willpower either. But you do need to be willing to wait.
The best time to start making extra money and using it to build wealth was years ago.
The second best time is now. You’d be surprised at just how much your wealth can grow in a matter of years, but you’ll never find out unless you get started. Start slow, learn gradually, and level up your wealth-building strategies in a way that doesn’t overwhelm you.