For an entrepreneur, the maximum goal is to finally reach the stage in your life where you reach financial freedom. As for businesses, it would be to reach the point where it runs with its own engine and it is sustainable over time.
But this path towards reaching this goal is a very difficult and full of obstacles one, and requires you to have a deep and strong inner preparation. In this article we will explore 5 steps to get in track in this path to financial freedom, proposed by Joshua Fields Millburn and Ryan Nicodemus, from The Minimallists.com. As the mastermind beneath “Secrets of a Millionaire Mind”, Harv Eker says “If you want to change the fruits, you will first have to change the roots. If you want to change the visible, you must first change the invisible.”, so the change starts inside yourself.
- Keep a Budget
The reality is that most of us tend to forget how we spent our money. And without a control of your expenses, you will never be close to reach that desired freedom. As Joshua and Ryan emphasizes, the first step to toward financial freedom is establishing a written monthly budget. And to do so, they propose some guidelines: Categories Categorize every expense (food, housing, utilities, insurance, car, gas, etc) into one of these categories: Need.Want.Like. Naturally your incomes must cover first the Need, and you can be flexible with your “Want” and “Like”. At this point we would like to differ a bit with the guys of The Minimalists, and add a fourth category called Save. The more resources you could destine to this fourth category, the greater fortune you will be building. But to do this, naturally, you will need to start sacrificing Wants and Likes.
Boundaries By giving every dollar a destination as soon as you get your paycheck, you will know exactly what you can and cannot afford.
Safety They are absolutely right by pointing this out. Despite everybody know it’s obvious to have money destined for Incidentals, the truth is that only few do have an account with savings just for this. Misfortunes might happen, so you should be prepared “just in case”. So we agree that an idea is to create a Safety Net savings account with $500 – $1000 for emergencies. Nobody wants to pass through an emergency, but we should all be prepared.
- Pay Yourself (invest in yourself)
In here we want to differ a bit from what Joshua and Ryan mention. They define this step as using a simple online-investment tool called Betterment. We consider it is a pretty useful tool, but we want to focus more on what is going in your mind and what could be changed to start building your financial freedom.It might sound a bit contradictory to what other entrepreneurial blogs say, but is a Universal truth that your bank account will grow at the same measure that you do. And to do so you need to invest in yourself. Walt Grassl, professional speaker and radio show host states you can do this in different ways: some of them involving time but not necessarily money, like for example investing in your mind by going to the library and getting a book to educate yourself in any area you want to improve. You can attend training events, seminars, conferences that require a monetary and time investment. Also, you can invest in your health by investing 30 minutes a day to go for a walk or doing yoga.
The thing is that when you enrich yourself, you can feel yourself grow and you will feel better about yourself. And this is the first step to build your inner multi-millionaire mindset.Besides, when you invest in yourself it also increases your value to your employer as your skill set grows, meaning that you become a more valuable asset for the company you work for, resulting in increases in job titles and compensation.
That from the career point of view. As an entrepreneur, when you invest in yourself, by going to the academy or learning by yourself, your understanding of your corporate business environment improves and with this, you will be able to run your own business in a better position. This will substantially increase your chances for financial success.
- Debt Free (or Controlled Debt)
We agree when they state that there is no such thing as “good debt.” As having debts will always be a reason to not feel free and could be a little frustration every end of the month as you will have to see some of the money you worked hard to obtain fly from your hands. Nevertheless we know that maybe, to get some of the things you already have, you had to use your credit card or a leasing or you had to resort to a loan. The ideal scenario would be that you are absolutely debt free.But to reach this scenario, you mandatory need to have total control of your debts.A good idea to do this is to set up a plan. First, you need to sit on the table, open your books and organize your bills. After doing this you will gain consciousness of where you are right now. Then you have to go to our step 1 and Keep a budget. After you organize your budget you will know how much money you are spending on debts and how much you count on.Then, it comes the difficult part, you have to shift your lifestyle a bit in order to avoid fall into more debts.Then as the time passes by, you will see yourself with almost all your debts paid and some of them almost paid. You will start feeling powerful, more confident but hey! Do not forget to be consistent and focused on your goal (to reach financial freedom). Because is during this step, when you are almost getting rid of all your debts, that people start falling into more and more debts as they feel with more money. Keep your debts controlled and know exactly when you expect them to be totally paid and you will take over control.
- Minimize. This is our favorite. Joshua and Ryan openly confess that their key component in their own journey toward financial freedom was their minimalism. They focused on eliminating debt, chancing their habits, and making better decisions with fewer resources. Small decisions like having clear the financial difference of having an expensive car and paying it monthly or having a great car, not necessary expensive or luxurious, but being yours with no monthly payment.
We want to make clear that we are not suggesting the idea of living on deprivation. We want you to think about it and decide which of your belongings, attitudes, ideas and habits are not really positive for you, and get rid of them.When you get rid of everything that prevent you from being financially free, is the key moment when you psychologically start building your future fortune.
- Contribute. “The shortest path toward freedom is: appreciating what you already have. One of the best ways to find gratitude for the gifts you’ve already been given is to change your perspective” Those are a couple of strong and heart-touching statements by Joshua and Ryan. They suggest that in order to contribute and express gratitude to what the universe has given to you, you should donate your most precious asset: your time.You can donate your time by doing anything you consider it will contribute to your society.Multi-millionaires, despite what most of the people think, are active contributors to their societies. You do not need to do nothing grandiose. Just by helping people, you will realize that your financial problems are nothing compared to the problems in the world that surrounds you. As they powerfully state, by realizing how small your financial woes are, you will feel empowered to take massive action to solve your relatively miniature problems.
Financial freedom is not easy, but all it takes is to be fully committed with your own goal and stick to a plan by consistently acting in its direction. Put these five steps into practice and tell us how your life starts changing. Do not feel restrained by your income level.
This is not about how much you earn or how immersed in debts you are, is about the decisions you start making with the resources you have.