Get Financially Free - Part 2!
So, now that we know what being financially free REALLY means, along with the formulas that can be used to work out how much money per month you need to live on AND then build a passive income that covers your monthly expenditures (phew!), it's now time to look at the first three steps to financial freedom!
So, the first step to financial freedom is really simple. Some people have become 50% closer to financial freedom when learning this within 24-hours. Let's take a look...
1. Simplify your expenditures
If you currently need £5,000 per month to survive but you can simplify this to £2,500 then you're 50% closer to your goal of financial freedom. This is known as ‘delayed gratification’ because you can always increase this figure later, but the priority here is to replace your needed income with passive income. Being financially free does not mean having a flashy lifestyle, it means having the time to focus on what you are called to do.
Samuel Leeds told this to a friend back in 2009 and he laughed at him. He said that Samuel was being naive to assume that most people could shrink their expenditures, and he himself was an example of somebody who was already living on an income that was as low as it could possibly be. He explained how it was different for Samuel, because at the time, I was not married. Maybe you can relate to this guy and think he is right? If so, think again. Just a few months later he moved out of the country and had to close his English bank account down. Something happened during this process that Samuel will remember forever. When closing his bank account for good, he was absolutely horrified when seeing all the direct debits that were leaving his account every single month and he had no idea what they even were for. After investigating he found out that for years he had been paying for unwanted magazine subscriptions, a forgotten about gym membership, insurance for out-of-date stuff and Samuel's personal favourite, a dating agency subscription despite now being married!
ASK YOURSELF... What unnecessary things are you paying for? How low could you shrink your expenditures while you build up your passive income?
2. Manage your money
Samuel heard an incredible money management strategy by T Harv Eker at a conference called Millionaire Mind Intensive. When hearing this, he said to himself,
“I am so going to start doing that.”
Did he do it? NO!
The conference was so good that he went back the following year. He heard the same section on money management and knew that this was genius and it would revolutionise his finances. He said to himself,
“Right, this time I am actually going to do it and I can't wait.”
He got home, and did he do it? NO!
You can probably guess, he went back again the following year for the third time. He heard this money management principle a final time, but this time he said to himself,
“Yeah, I already know that!”
It was only when Harv said, “If you are not doing something, then you do not know it!”
Finally, Samuel put this simple process into action and within twelve months he was financially free. It is very simple but extremely effective. Please don't read this without applying it. Also, please don’t say, “I know that” if you are not actually doing it.
3. Pay yourself a wage
The first thing you need to do is pay yourself a wage. If you already have a wage, that is great. If you are self-employed and each month your income varies, sort this out immediately. Samuel speaks to so many people who say that their profits are far too varied to pay themselves a wage, but it is actually really easy.
Here is how you do it:
a) Take a look at your income over the last year and from this work out your average monthly income.
b) Take 10% off this average monthly figure, giving you a conservative monthly income.
c) Set up a standing order from your business account to your personal account, on the 1st of each month for this conservative monthly amount.
d) If you cannot afford to live on this monthly amount, earn more!
e) If you earn much over this figure one month, keep it in the pot, because you are sure to have some bad months too.
f) If the pot grows really big, reassess your set monthly income and consider increasing it.
Have you found this helpful? Well, we will be finishing the 'Get Financially Free' series with Part 3 next week, where you learn why having SIX BANK ACCOUNTS, taking part in FURTHER STUDY, and doing simple exercises can really help you achieve financial freedom! So Prepare yourself and take notes... it's not going to be one to miss!