One of my biggest goals is financial independence. That’s why I want to share 3 simple steps to start creating more financial freedom that led me to feel less fearful about becoming an entrepreneur.
Every January I have a real focus on this. I’m sure I’m not the only one who ends the holiday season feeling guilty & that you need to reign it in. Probably more so this year with the talk of the rising cost of living!
Well at the start of this year I delivered a 3 part training on how to get more mastery over your money to build financial independence. And I’m publicly sharing the first in the series.
I know it’s one of the biggest blockers to us following our dreams, ditching the 9-5 and having the flexibility many of us want. We’re always caught between the social acceptable sensible choice and the prospect of making our dreams a reality.
Financial Independence, the Dream
I was talking to my friend Becky at the park, I’m so excited they’re expecting their third baby. Like most mums her dream is to drop the day job and focus time on the kids. She explained how they simply needed to stop spending and ‘stop trying to keep up with other people’. Which really resonated and I hope it does with you too.
So as May is money month it felt like a good time to share our favourite money habits that have seen us go from taking the squeeze everyone month, and sleepless nights to feeling like we are well on our way to financial abundance.
And in case you are wondering who is this person to share these, well I’m not 100% perfect or a money guru. I’m simply on my way to financial freedom and listen a lot to these guys who really know how money works: Warren Buffet, Rob Moore, David Bach and more. Here are three strategies I learnt from them.
3 Simple Steps to start creating more financial independence and freedom
1. Separate your money
Ever get paid and wonder where your money has gone? The biggest mistake we all make is having income paid into our checking account.
Every penny spent and bill paid depletes your income and you feel like there is never anything left.
One of the simplest things we did to learn how to experience money agian, to develop a care for it was to have a speerate account for all income and a budgeted amount transferred to the billing or spend account.
Most banks let you alias the account names so you can keep track.
We then also created a ‘peace of mind’ account (for a rainy day) and another account for dream items like saving for a holiday.
These are so easy to set up and make massive shifts in your mindset towards money and feeling in control. It’s the equivalent of holding physical money and feel value to it.
Checkout the episode on mastering your money.
The next step is what will make the difference we’ll see in the longer term:
2. Pay Yourself First
The number one rule of Warren Buffet, Pay Yourself First. When you have one account where bills take priority and there is never any money left. We lost track of any money. It came in, it went out and there was never enough for investing.
So now we take our income account and we have an automative payment to each of our investment accounts. Including the kids. And because we are so reluctant to pay more into that black whole that is the ‘billing account’ we are always increasing the investment whenever we have a little surplus.
3. Know where it goes
The first two steps take a little set up, I must admit a few focussed evenings and we were there.
The third transformational step comes from David Bach and will make you love and respect your money. While being honest with yourself.
Let’s be honest we all imagine we are more careful with money than we truly are. So this will stop us hiding.
Carry with you a little notebook for at least 30 days and write down every-time you spend money. It doesn’t matter if it’s cash, credit or debit card. Write every one down.
This is where you discover where your money really goes and develop more care for it.
Mine was giving in to the kids for every toy, magazine or sweet treat. I could never say no when my heart wants so bad to give them everything.
I learnt the best way to curb these was to allow them their own pocket money and to try and encourage similar habits. And avoid tempting places in favour of walks on the beach and visits to the park.
I hope that these help you gain more control of your finances and start to build more independence. Let me know your biggest challenges in this area, I’m sure together we can find a way forward.