1. If you want financial freedom, get motivated and committed.
- This is important, but no one is going to do it for you.
- You will be happier with more financial freedom.
- Start with a simple plan and gradually build on it.
2. Know your numbers (and use apps to help).
- Keep track of your after tax monthly income.
- Budget your essential costs – rent, food, phone, car, etc.
- Monitor your cash and assets plus/minus any monthly changes.
3. Income planning
- Aim for a job that you like and that pays enough.
- Build your career – you are in charge.
- Create extra income by investing and maybe adding an ‘income hobby’, as a trainer, tutor, cooking coach, reselling collectibles, party DJ, handyman jobs… keep it fun.
Get motivated and committed
4. Cost planning
- Avoid buying junk and services you don’t really need.
- Buy smart.
- Cut costs so you can save 10-20% of each paycheck.
5. Cash Planning
- Aim to have cash reserves of 3, 6 or 12 months of basic costs.
- Begin investing now. Starting small is fine, but add to your investments with every paycheck.
- Create realistic goals you can achieve and increase your goals as you progress.
6. Measure your progress every month.
- Track your progress.
- Be ready to adjust your goals and plans if needed.
- Use apps to help and stay organized.
7. Most types of debt are dangerous – get rid of it.
- Always pay your credit card bills on time; fees and interest will burn your cash
- Borrow carefully for education and long-term assets like your home.
- Do your homework. If you need to use debt, find the lowest rates possible.
8. Charity is good, if you can afford it.
- If you can, aim to give a small amount to a few charities that matter to you.
- Start small. Begin with as little as 1% of each paycheck, or get connected and volunteer.
- Consider tax deductible charities, and use the deductions every year.
9. Consider getting a financial advisor once you have enough assets.
- Advisors can be valuable but their services aren’t free, which means investors sometimes need over $100,000 in assets.
- It may be best to manage your own money until you can afford a good advisor.
- Make sure to consider and compare different advisors when you are ready.
10. Freedom formula. It's a simple formula
Annual Income from Your Investments > Annual Costs = Freedom