Financial Freedom – Such a beautiful pair of words that conjure up images of sipping cool drinks in the shade of a palm tree on a white sandy beach as the rest of the world goes about its business.
Maybe it is this image of Financial Freedom that makes it seem so un-obtainable for us regular guys who are working day-in-day-out to make a living to feed and clothe our families.
However, if we remember what I wrote in Financial Freedom Defined, then it is simple to realise that financial freedom is achievable for anyone who is prepared to start thinking smart about their financial affairs and make a go of achieving this dream. And I’m going to show you how to start!
So where do we go first and what do we do to kick start this state of financial bliss.
Well first of all we need to take stock of where we are financially. What are our financial obligations? Where is our money coming from? What do we have to do to get this money? What are our expenses? How much debt do we have?
Basically this is called Making a Budget. We need to make a list of our expenses and another list of our income.
While we are at it, why not work out our net worth at the same time. This figure tells us how much wealth we have in assets.
Once we have done a budget we need to look at 2 things:
- How can we reduce our expenses?
By reducing expenses, we don’t need to have so much income. Reducing expenses means getting rid of liabilities – Boats, big cars, etc. However, we generally need some liabilities such as a house to live in. You may want to think about downsizing these or thinking up some clever ideas to reduce their expense.
- Increase our Income
Most of us are probably trying to increase our income all the time by aiming for a pay rise. Unfortunately, this is not the best way to go about achieving financial freedom. An increase in your pay usually carries with it and increase in the time that you have to devote to earning this pay (that’s why employers pay you more!).
What we need to do here is undergo a Paradigm Shift. What this means is that we have to learn another method for creating income – and this method of income generation is called Passive Income.
Passive Income is the provider of financial freedom. Passive income is money generated by doing nothing! And this is the goal we should set to achieve our financial freedom.
Creating streams of passive income is not necessarily about working hard (allthough it may seem like it when you first try to start it), its about working smart. You need to think of and implement ways to make yourself money so that these passive income systems will continue to make you money when you are not working on them. This frees up your time to work on other passive income systems that will make you more money. Eventually you can quit your job and make all your income passively.
However, to achieve this we should set some goals:
I will think of 5 different ways to make passive income. For example stock market investing, internet marketing, putting money into high interest savings to create Automatic Wealth. I will make $100 of passive income withing 2 months I will aim to double this level of passive income every 2 months
Write these goals down and think about them.
Do they sound hard? I don’t think so. However, I have achieved them already, so I would say that 😉
The hardest part is starting. And you can start by writing down the goals and solving the first goal – please don’t try to tell me that part is hard.