I’m thrilled to share a guest post with you today from Millionaire Mob . He runs an awesome site and focuses on financial freedom, investing and travel hacking. Today he will share with us how to create a financial freedom plan.
Achieving Financial Freedom is Easier Than You Think
This is a guest post by Millionaire Mob, a blog focused on investing in dividend growth stocks and travel hacking. We have helped thousands of people with bettering their financial future through passive income and dividend investing.
Financial freedom is the end game. Financial freedom is the end goal in everyone’s personal finance goals. If it is the last goal to achieve then it’s likely one that is the hardest to get to. I disagree. I think that achieving financial freedom is a lot easier than many think. Achieving financial freedom requires creating a plan and execution.
How Achieving Financial Freedom is Easier Than You Think
Achieving financial freedom is within your reach provided you follow a few important steps. Here are our favorite steps to achieving financial freedom. This will make the financial freedom process easy and fun.
- Determine Your ‘Number’ For Financial Freedom: How do you determine your number to be financially free? Well, this is pretty easy. Add up all you current living expenses, which should include the following:
- Rent or Mortgage Payments
- Food and Grocery Expenses
- Car Expenses
- Dining, Entertainment and Travel
- Utilities (cell phone, internet, cable, etc.)
- Debt Expenses
- Other Expenses (child, repairs, etc.)
Once you have added up all these living expenses, I suggest that you increase it by about 20% for a buffer. You never know if you will have other expenses that will come up. For example, if I have $2,200 in monthly expenses. I should have a target number of about $2,640 for financial freedom.
[Comment from Drew – I love this buffer recommendation. Like most aspects in life, you want to allow some margin for error. This holds true in your financial freedom plan.]
2. Develop an Executable, Repeatable Plan: If you are going to hit your number for financial freedom, you need to set realistic expectations and set a plan to achieve your goal. Your plan should be repeatable and have the ability to automate the process. Take your savings and ‘dump’ it into the following options (in priority):
- Fund a ‘rainy-day’ savings account with 6 months of your living expenses
- Retirement accounts (401(k), Roth IRA, IRA) should be maxed out to the best of your ability. At a minimum, take advantage of your employer match program. If not, you are simply leaving free money on the table.
- Dividend growth investing: I love this method of generating income and building a diversified investment portfolio. This is one of the only ways you can earn income and realize long-term capital appreciation in the stock market. We’ve built an amazing guide to building a dividend portfolio.
- Passive income streams: Use freelancing and other tools to earn side hustle income. Any income received from passive income should be reinvested into your dividend portfolio. Let your money work for you. I love freelancing as I’m able to work for ~$100/hour helping people with their businesses. I believe that anyone can freelance these days. Your current day job likely has several skills attached to it. Use those skills as a service to others. We have several different passive income ideas on Millionaire Mob to help you.
- Real estate investing for income: This will require you to save up some money for the downpayment, but through real estate investing you can generate some great income and capital appreciation over time. Make sure that you find rental properties that will earn income after your mortgage payment and other expenses for repairs.
- Index fund investing: You should continue to invest outside of retirement accounts. Low fee index funds are a great place to start. This is a low-risk, low fee way to build a large portfolio that you can potentially live off if you intend to retire early.
Personal finance is not ‘one-size-fits-all’. You can shift around these recommendations to best fit your needs. However, I recommend starting with the ‘rainy-day’ savings account and retirement accounts first. You will be very happy that you did.
3. Be Patient, Yet Hungry: Financial freedom will not happen overnight. Sure, some people can achieve financial freedom overnight with ease from slot machines, gambling, etc. This is not the game. I like to think of it as the 3P’s for financial freedom:
- Patience: This will take time. Go out and enjoy your life while your money is working for you. Don’t forget that.
- Planning: Planning. You need to know your number in advance. Also, you need to follow the plan to ensure proper success. Do not steer away from your plan. Keep your eyes forward.
- Progress: With planning comes tracking progress. Create tools that enable you to track your progress over time, so you ensure that your investment and passive income exceeds your expenses.
If you are patient, you will be able to live solely off of other forms of income. This will eliminate the need for income from your current day job. What would you do if you didn’t have to work anymore? Would you live on the beach? Open a small business? Think about the financial freedom benefits. It’s oh so sweet.
[Comments from Drew -This is a great question and great mindset. You gotta know your why. I love discussing this topic and believe you need to have a ‘why’ to buying back your time.]
Financial Freedom Next Steps
Financial freedom IS easier than you think. It just takes time, discipline and organization. Financial freedom is the end goal o personal finance. The final goal takes the most time. Once you have replaced all of your income with other passive income, it will be up to you if you want to retire early. My goal is to ‘half retire’ where I end up creating a project or company that is a lifestyle business. This could be a driving range… We will see.
What will you do to achieve financial freedom? Follow the 3P’s of achieving financial freedom and you will be on your way to independence before you know it. What financial freedom tips have you found useful?
Author Bio: Millionaire Mob is a blog focused on everything online income including: Travel Photography, Travel Rewards, Passive Income, Dividend Growth Investing and Personal Finance advice. I hope to provide the best advice to help you learn and grow along the way. Join the mob of financial freedom experts and… Escalate Your Life.