Imagine the feeling of being debt free. Not waiting for the next pay cheque to come in.
Imagine that weight off your shoulders, the worries, sleepless nights!
That can be a reality you know! If you just work hard at it and start NOW.
Like the Chinese Proverb ‘The best time to plant a tree was 20 years ago. The second best time is NOW!’
Financial freedom is usually only associated with wealthy people! It’s almost like you have to be rich to have the knowledge on how to take control of your finances or to stay financial free.
And not something that can be achieved by the ”ordinary’ person.
Other times, Financial freedom is often described as being super rich you lounge on sunbeds all day long drinking cocktails in the sun!
Well. No. neither these two misconceptions are true.
Financial freedom is not only for the rich and famous they just want you to believe that!
The everyday Joe and Jane can reach financial freedom with a little bit of work
And No. Financial freedom does not mean being permanently on holiday! – although that would be nice 🙂
It simply means living free from debt and not being a slave to money. Living to work and not working to live kind of thing.
Any money made from your work can be put away toward savings (retirement, children inheritance etc.)
If you’ve achieved this, then you, my friend, are wealthier than 80% of the world population and deserve a pat on the back.
If you’re not quite there yet, then stick around, you’re going to need to read on for tips on how you can start.
Acknowledge and Accept the Situation You Are In
If you have read several of my posts you will see that the first and most important thing towards change for me, is Acknowledging and accepting a certain situation! This helps you move forward.
Have you ever heard this phrase ‘I don’t know what I did, but whatever it is, I won’t do it again!’
You can’t change something without acknowledging or accepting that it needs to change.
That goes for many, many things in life.
If you are blinded and comfortable with the situation you are in, you will never find a reason to change it. The drive to change will not be there simply because you don’t know what you’re changing.
Assess your Current Financial Situation
Once you have acknowledged and accepted the situation that you again it’s now time for you to make a thorough assessment of the current financial situation.
For you to make a successful and Sara financial assessment you need to carry out of these things:
- Write down all your financial income sources. This includes any part-time or casual jobs that you have. Any grants, benefit payouts you get from the government or other governing bodies. Next, to them, write down the frequency you receive each payment
- Next, write down all the financial expenses and outgoings from each account that you have. You Can Divide these into variable and non-variable outgoings. Non-variable outgoings include things like rent mortgages, council tax, Car insurance, and car tax. The variable upcoming include your mobile phone bills, your Broadband, gas, electricity bill, loan and credit card bills. You may also include any one-time expenses you’ve had to pay out for such as the washing machine repairs or car servicing.
- Now you need to identify and separate your essential expenses from your non-essential expenses. Your essential expenses include Mortgage/rent, gas and electric bills, Tax, food, transport, clothes. And your non-essentials include coffee from your favourite cafe, luxury chocolates, designer shoes, handbags etc.
- Add up all your expenses and take your total sum away from your income. Any remaining amount is the amount that you have at the end of each month after all your expenses have gone out.
If you find that you are in deficit – after you have done your calculations, then drastic changes need to be made.
Are you breaking even? Then drastic changes need to be made.
If you have money left over, then this is good news because you have a good platform to start working with.
The above steps need to be taken seriously and done with attention to detail! You’re not going to get very far if you loosely analyze your finances! Trust me, I’ve done that way too many times to count!
Start making changes by checking how much you’re spending on your non-essential bills. Whether variable or non – variable. Are all these expenses necessary? Could you cut costs somewhere?
What about your essential bills? Are you paying for fiber-optic broadband when there’ only two of you in the house? Are you paying for extra mobile internet when you’re always at home connected to your wi-fi?
Is your current electric and gas provider the cheapest?
Have a look at all this. You will be surprised at how much money is being thrown away unnecessarily.
- Be honest with yourself and your current situation. Do not underestimate or overestimate any outgoing or incoming. Do not set any goals that are not attainable. This will not help in the long run as this is just a set up for failure. Be transparent as possible with your financial situation.
Acting on your Financial Situation using the ‘Desire Triangle’
Writing down your income and expenses allows you to see exactly how much of your income is being spent on what. This, in turn, gives you the opportunity to identify where money can be saved.
Seeing those numbers written down, especially if you’re in deficit at the month end, will bring about the desire to make changes.
A Desire is a strong wish to do or have something.
Have you ever wondered why they call it a ‘Burning desire?’ well here’s my Illustration.
How many of you have ever heard of the fire triangle? If you haven’t don’t worry, I’ve placed one here. Taken straight from Wikipedia.
The fire triangle implies, as you can see, states that for a fire to ignite, ALL three elements must be present.
I’ve used the fire triangle to illustrate my ‘Burning Desire’ Triangle:
CURRENT SITUATION – Heat: Heat represents the current financial circumstance that you’re in. The financial furnace that you are living in. It’s uncomfortable. It’s Hot. You feel like you’re suffocating! It’s an unpleasant situation!
But being in that situation alone, will not result in success or freedom.
RESOURCES – Fuel: These are the resources available to literally ‘fuel’ your action plan and bring it to life. These can be your financial resources or a change of life style to help you make the steps you want to financial freedom.
FINANCIAL GOAL – Oxygen: This is your destination! Your goal! Where you see yourself as being ‘financially free.’ Your place where you will be able to breathe! This desire should be what drives you to make changes and take your first step to financial freedom.
And yes, it’s exactly that! Letting your lungs expand!
In this situation, your oxygen is your result. Your dream destination. Your Freedom. What you want to achieve from making those changes! Where you see yourself financially when you close your eyes. Where you can finally smile, inhale and let your lungs take in the fresh air.
All three elements must be present and ‘bounce’ off each other to cause the ignition of desire. And that desire is what is going to cause you to make changes. If no changes are made, then the desire will simply burn out. Quicker than it started!
Knowing the Exact Purpose for Your Actions
To take control of your situation and gain financial freedom, you need to understand why you are making those changes. And Where you want those changes to take you.
You cannot embark on a journey when you do not have a destination. Knowing the reasons why you are making those changes won’t be your destination. What is your chemical that you are aiming to achieve?
Knowing your destination and your end goal will give you a clear Direction of where to go. Your burning desire will have no effect if you do not know what you want your end goal to be.
Implement Successful Strategy.
Before making any move, have a plan in place. What strategies will you implement to help you succeed in your mission?
Have a clear idea of the route you will take to reach your desired destination.
Set attainable goals to help you track progression. These can be making changes such as lowering your bills by shopping around for cheaper gas and electricity providers or you could simply give up 1 car if your household with two cars.
Your strategies need to be well planned In detail and should be flexible enough to be reviewed and revised when necessary. You can a copy of the
I’ve said it before and I’ll say again. Life Happens! Simple as that.
Consider any changes or disruptions that may come your way. Such as, losing your job, an unexpected financial emergency the need for relocation. Be flexible enough to work around those changes and make them work for you rather than against you.
It is imperative to not be narrow-minded but to consider life variables. The best way to reduce the impact of these variables is to come up with a second strategy that will combat does unexpected details in your plans.
Most times, these variables involved money and expenses. Be wise. Set up an emergency fund separate from your savings (if you have those in place).
The last thing you want is for you to be distracted and disconnected from your plans to the point where you become disheartened and discouraged to continue and maintain control over your financial situation.
Financial freedom is a wonderful thing. And it’s something that everyone, with hard work, can achieve. Wouldn’t be nice if we were all got that point of being Debt free!
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