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Is Financial Freedom Your Goal?

Reshaping your finances

I used to think that to achieve financial freedom was just for people over 60 about to retire.

A couple of years ago I was completely done with the feeling of being broke and not being able to pay all my bills. I was working in the same career but in a lower paying role and had no idea how much I was spending each month. I made the decision to take control of finances by completing a SWOT of my life or what is also known as a Strength, Weakness, Opportunity and Threat analysis. By doing this I was able to break down what was working well and what I could improve. I also had started reading around the F.I.R.E movement and realised I had to address my threats to stop haemorrhaging cash and take some new opportunities in my career. My threat was not managing any of my outgoings and my opportunity was to secure a new role with a higher salary that would get me closer to achieving financial freedom.

“I was completely done with the feeling of being broke”

I realised that I was doing a number of things right and these were my strengths. I had a passion for educating young people and instilling knowledge while helping them progress into the next chapter of their lives. I had my passion, now I needed a new job. At the same time I was looking for a job with a higher salary, I completed an audit of finances to see what I needed to clean up. Let’s just say my financial situation was dire and I needed to consolidate my debts into one place. Once these were sorted and a new job was secured, I started with my plan. My plan was to buy real estate as I knew nothing about the stock market, shares or any other investment strategy even by reading into the F.I.R.E movement at the time. How I was able to buy those properties is another story in itself but I thought I would leave you with five simple steps for those looking to start the process.

Step 1: Select a Career To Meet Your Goals

It is important to realise that you cannot meet goals that you have without passion or a job that will help you get there. I was lucky that I was already qualified in my specific area of education (You can read more about my story here) and had a passion for it. I just had to select a goal in line with my income.

The first step is to either set up a plan to get a career, whether that is to get another qualification or apply for a higher paying job.

Goal setting is probably one of the most important phases in the whole process when trying to achieve financial freedom. This is what you want to achieve from all your sacrifice and effort, is it to be financially free and retire? Is it to get out of debt? Is it to have multiple assets by a certain age? Do you want to have more time with your family? Everyone has different goals they wish to achieve so this will vary from person to person. Once you have the overall main goal, you need to break or brainstorm that goal into an achievable but also challenging goal. This will allow for you to really run the numbers and give you a structure or process when you have got that promotion or successfully secured a higher paying role. You might have taken a second job if a higher paying role is not possible in the current climate.

“The size of your dreams must always exceed your current capacity to achieve them. If your dreams do not scare you, they are not big enough”
Ellen Johnson Sirleaf

Step 2: Learn How To Manage and Clean Up Your Finances

Managing money is a skill that I never had. I used to spend on my cards without even looking at the numbers on the till, a sin that has haunted me for years. I could not have been any worse with my finances, not until I got my first credit card. I am lucky that I had an epiphany one day when I really decided to look at my bank statement and see the useless transactions. I decided to educate myself on my income, outgoings and what was necessary to live. I was 26 years old at the time, I had made it through secondary and tertiary education and could not manage money.

How could this happen? Managing finances to be financially free is not taught in schools and if you had parents who took you through how to manage your money, well you were the lucky ones. If that is you, educate yourself on how to manage your money before you do anything else. Read finance books, go through your bank statements and use a spreadsheet and detail your outgoings and income. You will be in for a shock!

Create a plan to clean up your outstanding credit card debt, car loans or student loans or any other loans you may have. Why? Because while you are owing money, the paychecks you are earning are going to someone else and not you. If you want to reach your goals, you need to have your full income available.

Paying off your debts lays a solid foundation to your finances and allows you to use the full power of your disposable income. Make sure you have an emergency fund for those unexpected payments or if an emergency arises and you need to take time off! I would suggest at least 2 months worth of outgoings including rent or mortgage payments.

Step 3: Educate Yourself

You can complete this step at the same time as steps 1 and 2 but to be explicitly clear, you need to clean up your finances to be able to implement a strategy or plan.

So the question is now, what strategy will you use and how will you implement it?

There are so many strategies out there! You could use the stock market, shares and dividends, real estate, retirement savings strategy, a F.I.R.E plan or many others that you have knowledge on. It is important that you make sure you have read up on any of these strategies and you can diversify your portfolio.

Why? Everyone has different interests and each strategy requires different amounts of work and knowledge. I started with real estate but plan to diversify into dividend shares in the future to cement by ability to achieve financial freedom.

How? I would consider that you start to read quality finance books and use free information available on the internet and YouTube. There are a lot of good real estate and finance ‘gurus’ on YouTube who will show you how to get started. However, please make sure you are reading widely as there are a lot of fake ‘gurus’ out there. You need to become enough of an expert that you feel confident in carrying out your strategy!

Another thing that really helped me was using a Bank that give me instant updates. You can read more about why I love Revolut here.

Step 4: Review Your Plan and Be Active

Making the right investment decisions and executing a plan is important, but you need to stay up to date with your current investment performance. This is crucial when you have a goal to meet. Leaving your investments on autopilot is not a strategy nor a good thing. You wouldn’t get tenants into a rental property and not do an inspection, it is the same with any type of investment.

You should also evaluate where you are on a 6 month basis in terms of meeting your goals in your desired timeframe because we all know things change quite quickly in the world.

Step 5: Always Keep Your End Goal in View

My end goal was to have more time and earn passive income through real estate which would then allow me to work part time. Keeping your end goal in the rear view mirror helps when you get those days that the sacrifice seems too much. I have certainly needed to look in the metaphorically rear view mirror many times because it revitalised me and kept me accountable.

My one final tip is to go for another higher paying role or a promotion during the journey, this may allow you to take little trips or give you time off to allow you to get some rest and recharge. This one tip allowed me to see my family while working overseas. As well as learning how to use miles and points to save on flights.

However, let’s not forget that not everyone wants to be financially free, some want to have more time, some want assets, long term holdings or to travel more. I think it is best to also not lose sight of what is important in this life.

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