Roadmap to Financial Freedom: 10 Key Steps

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