We’ve been told our main goal in life is to study hard, get a good job and hope to retire someday. Car payments, mortgages and credit card bills are just a way of life. We should never expect to be free of them.
But that’s not true at all. Financial Freedom isn’t just for a chosen few.
Given the right plan, anyone reach Financial Freedom. The path is actually quite simple.
So, how can you achieve Financial Freedom and live the life you desire? Freedom is achievable by following the Four Money Principles to get control of your life, plan for the future and eliminate money stress.
Principle One: Pay Yourself First
If you’re like 96% of the population, your paycheck disappears the moment it arrives. The money is spent as soon as it hits your bank account while you’re left wondering what happened. No matter what your income level is, you spend exactly, or often more than, what you make.
This leads to a very important point: It’s not what you earn, but what you get to keep that matters. No matter what salary the 96% earns, they rarely keep any of it. And that’s a shame.
How can you ensure you’re putting away money for your future? How can you ensure financial security in the years to come?
You need to Pay Yourself First.
The wealthiest 4% already do this. They pay their future selves before any other bills, every single paycheck. You’ve worked hard to earn your money. You deserve to have something to show for it. Right now, you might be thinking you don’t even have enough income to save for your future.
You need to take a hard look at where your money is being spent, and start Living Within Your Means.
Principle Two: Live On What Remains
When a Financially Fit Bootcamp member works through their Money Planner, they’re usually surprised at how much money they waste each month. Once you see where you can cut back without sacrificing too much quality of life, you can take control of where your money is going.
Living On What Remains–after you Pay Yourself First–isn’t a matter of living your life without any fun. You shouldn’t be picturing a life of no meals out with friends and never going on holiday. But this is a point where you need to take a hard look at your needs versus your wants. I hear people use those terms interchangeably, and they don’t seem to know the difference.
Controlling your life begins with controlling your spending–to set aside some wants to ensure your needs are met, both now and in the future. If you practice the principles of Paying Yourself First and Living Within Your Means, you’re already light years ahead of the 96% who are still stuck wondering where their money has gone. Once you’ve mastered these two principles, the next step is ensuring you and your family are protected from emergencies. It’s time to Protect Yourself.
Principle Three: Protect Yourself
Despite our best-laid plans, life throws curveballs when we least expect it. What would you do if you lost your job tomorrow? How long could your family survive without any income?
The principle of Protect Yourself means creating an Emergency Buffer and having appropriate insurances in place for your specific situation. An Emergency Buffer is a savings account with at least three months’ worth of living expenses for you and your family. This amount will keep you afloat in the event of a job loss or major medical crisis.
The next step is the proper insurance your family needs in case of a catastrophe. By now, I hope you see that living paycheck to paycheck is a recipe for disaster. Should the unthinkable happen, you need to focus on your family and deal with the crisis at hand. Money should be the last thing on your mind.
Remember, your goal is Financial Freedom and your Emergency Buffer is an important part of that plan.
Principle Four: Making Your Money Work For You
Let’s take a look at the final piece of the puzzle–Making Your Money Work For You.
The 4% already know that to be Financially Free, they need to send their money out to work for them by making quality investments and reinvesting the earnings. When you’re truly Financially Free, you have enough cash flow from your investments to cover your monthly expenses. At that point, work is optional. You have the passive income to pursue the life you truly desire.
Many people wonder what types of investments they should make. My advice in this area is to do your homework. Don’t put all of your investing eggs in one basket and only invest in quality investments. Often, I hear people lament that they didn’t start investing sooner. But it’s never too late to start! You’re never too old to enjoy the benefits that come from Making Your Money Work for You.
Putting It All Together
Now that we’ve examined the Four Money Principles in detail, I hope you understand Financial Freedom is within your grasp. You don’t have to live your life constantly stressed about money, living paycheck to paycheck with nothing saved for the future. You can reject the behaviors of the 96% that leave them stresses, miserable and broke.
Choose to live like the 4%. Make the decision to Pay Yourself First and Live Within Your Means so that you can Protect Yourself and Make Your Money Work for You. By following these Four Principles, you can eliminate money stress and live the life you’ve always imagined.
Take the first step to Financial Freedom by signing up for Mindshift.money. Read stories of success, get expert tips and connect with others who are committed to living the Four Money Principles. We can’t wait to see you there!
Have you been following the Four Money Principles? Which was hardest for you to implement? Which was easiest?
image credit: Bigstock/graja
Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.
There are 2 comments
no matter what great advice this may be to live with these principles … i do not have that kind of money. !)i do have an RRSP which i have dipped into for life emergency use yearly which doesn’t leave much of a balance. 2)i live from overdraft to overdraft…i do put $50 a month into a tax free savings account and i usually need to use that from time to time-so maybe it’s like a piggy bank (mind set). i don’t know nor usually have the money to invest in making more money. 3) i have a lot of debt with owing on Line of Credit and home mortgage. I am 60 years of age and have never been taught how to use my money wisely…now I am ready to turn this around. Is this even possible is it too late in life. I need help. Karen Lowe email@example.com Thanks for any advice.
Hey there Karen,
Thank you for reaching out and having the courage to share some of your money story.
I wanted to take this opportunity to answer your question in the same way that Tony Pennells answered mine. For the record I am 59 and asked the same question not so long ago.
Tony’s answer was, “No, it is not too late, there are two best times to plant a tree, one of those was 20 years ago and the next best time is today,”
I believe that concept Karen and I am aware that you have also made the decision to join the Financially Fit Bootcamp community and I want to congratulate you first for taking that action and making the choice to take the control back from money and put it where it is better served – with you!
Here’s the thing Karen, no matter what your age is, it is never too late to make change and create a healthy relationship with managing your Money.
Through your choice it will not only have a huge impact and lasting effect on your confidence, your self worth, your value and your life, but by doing this, you have also broken the limitation and lack vows of your whole family and you will remove the stress around money for yourself and them, forever!
That is priceless and YOU are the catalyst of that change, so stop and celebrate that in yourself right where you are.
There is no stopping you creating endless change in your life no matter what you age. In my mind you are only half way through your life, granted if would of been great to start this years ago but nothing stopping you picking up speed now.
So, I hope that this has given you a little more clarity and confidence to push forward Karen.
I wanted to add here, that I am a Financially Fit Bootcamp Coach with Mindshift.money and if you do feel like you would still benefit from a little more help please PM me on Facebook, or via email at firstname.lastname@example.org and I would love to offer you a complimentary strategy session where I could support you to fast track from where you are:)