In today’s post I will go over the basic steps to financial freedom. This process is universal and applies whether you stay in the military or not. I am sure some of you have heard this “X steps to financial freedom” speech before, but bear with me. Even though it is basic and mostly common sense, one must understand the concept before moving forward. Crawl, walk, run right?
First though, what is financial freedom? It likely means something different to each of us, but in broader terms I look at financial freedom as being able to do what you want without worrying about money. In my particular case I see financial freedom as me being able to work at a job that I truly love, no matter how low the pay, having a Corvette, and being able to travel the world with my wife. I have a bit of a dream to someday be either a Certified Financial Planner or reaching even further an automotive journalist. I have a strong interest in finance and teaching that explains the CFP dream, while the automotive journalist just sounds like an awesome job. I would love to get paid to travel all over and drive the latest and greatest cars! Will that happen for me? I am not sure; a lot of puzzle pieces would have to fall into place to make either happen, but I sincerely hope money won’t be a limiting factor. I encourage you (and your spouse if applicable) to consider what financial freedom means to you. If it helps write it out somewhere so you can refer to it from time to time.
Getting back on topic the simplified steps to financial freedom are:
- Educate yourself; start with the basics and go from there. Organize your finances in a way that makes sense and you can maintain.
- Make a budget to know where your money is going and set goals for where you want your money to go.
- Spend less than you earn, make some extra money, or both.
- Create and set aside an emergency fund.
- Pay off debts.
- Invest the extra money.
- Enjoy your life!
Seems fairly simple doesn’t it? It’s one of those things that is easier said than done, but it can be done. I can tell you the first 5 steps are tough and require a good amount of discipline and dedication. The faster you can reach step 6 the better because time is a huge advantage when it comes to investing. One thing I will emphasize is that financial freedom depends more on how much you save and invest, not how much you make. You can make over $100,000 a year, but if you spend it all you’re not getting any where.
The next few articles on the site will cover steps 1-5, and then investing will be its own series of on-going articles. Amy and I have completed steps 1-4 and are working on steps 5, 6 and 7 every month. We currently feel financially secure, and we are both confident that financial freedom is in our future. You can follow suit, and I encourage you to do so!
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