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10 Steps to Financial Freedom – Part 1


We all want financial freedom.  You know what I mean…the ability to live off of the income generated from your own resources.  No, not from your job, but from your own investments, savings, and smart choices.  I’ve given some great ideas over the last couple years to becoming financially free, but I don’t think I’ve put it all in one list.  Also, I wanted to make sure I wasn’t forgetting anything, so I did a little research…

I came across Practical Wisdom’s YouTube video:  10 Steps To Financial Freedom – How To Be Good With Money.  They covered 10 steps that I’ve spoken about, quite a bit, so I’m using their list and some of their insights to help you along.  Here are the first 5 of those 10 steps with some 5and2Guy help (we’ll cover the last five next Money Monday)…

1.  Set Life Goals

The 5and2Guy is all about setting goals.  I truly believe you can’t hit a target if you don’t know what the target is.  Sit down and create a list of life goals.  Ask yourself what you really want, but you have to be realistic.  Don’t say I want to make a million dollars by January 1st, especially if you don’t have anything working now to get you there.  Once you have some goals, set timelines on your goals.  This will help you stay focused and work towards them daily.  Also, you MUST read your goals daily.  This will keep your eyes on the prize!!!

Read my post:  “Goooaaalll!!!” No, I’m Not Talking About Soccer!!! for help setting goals.

2.  Create a Budget

You need to know how much money is coming in, how much is going out, and what you’re spending it on.  Create a budget that puts guidelines around the money you spend.  Commit to these guidelines and don’t cheat.  If you want more money to spend, then learn to make more money.

For help with a budget, read my post:  Budgeting In 3 Easy Steps.

3.  Emergency Fund

Everyone needs an Emergency Fund.  This is the “in case crap happens” fund that can help you avoid more debt and save your butt should something terrible happen.  You should have 3-6 months of money in there to cover your necessary life expenses like mortgage, food, etc…. If you don’t have an Emergency Fund, start today by working to put at least $1,000 in this fund as soon as possible.

Read more about Emergency Funds in my post:  Pay Yourself First: Savings Bucket.

4.   Plan to Pay Off Debt

It’s hard to get ahead in life if you’re consumed by debt.  No, I’m not talking about debt that actually helps you make money or is a growing investment.  I’m talking about car loans, student loans, credit cards, and things like that.  It’s okay to have debt if the debt is associated with an asset that appreciates in value.  It’s the one’s that having you paying interest and kills your savings that we need to eliminate.

Read these two posts on ways to eliminate debt:  It’s A Snowball Fight!!! and It’s An Avalanche!!!.

5.  Retirement Fund

If you don’t have a 401K, then get one, and contribute to the max.  Most employers will match your contributions up to a certain percentage, so at the minimum, contribute at least that much.  It’s important to put money away for your retirement.  You can leverage an IRA for retirement as well.

Read my post:  5 Money Topics All Couples Should Discuss for some more information on planning for retirement.

The Takeaway

These are the first 5 steps that you can look to implement in order to work towards financial freedom.  Next Money Monday, I’ll share with you the last 5 steps to complete this topic.

***As I have mentioned many times…I am NOT a financial advisor.  The information here is provided for some general financial education and for entertainment purposes.  Follow up with a certified financial advisor to learn more and receive financial guidance.

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