Welcome back from a fun 4th of July holiday weekend! We're glad to be back at it this week, talking about our favorite topic...financial freedom.
Now I'm no architect, but designing and building a solid foundation is probably one of the most important steps in building a house. Without a solid foundation, the rest of the house, no matter how strong, will not stand the test of time. Its the same in your finances. A solid foundation is critical to your financial success, and essential to living a financially free lifestyle. Everyone wants to be financially free, but most simply don’t know where to start. We often hear the question, “What’s the process to move in the direction of living financially free?” In the next few weeks, we’re going to step through how to get yourself to a financially free life, one milestone at a time. We'll look at those simple, safe and proven "building practices" that when applied to your finances, will ensure that your foundation is secure:
1. Define your current position
2. Begin operating by a written budget
3. Get current on anything that's behind
4. Save $1000 for an emergency fund
5. Get out of debt
6. Save 3-6 months of living expenses (this replaces your $1000 emergency fund)
7. Begin saving and investing
These steps are good no matter what your financial status - whether you make a lot of money or just a little. Unfortunately, many people with really great incomes make the mistake of trying to skip over steps, thinking they are "beyond that", when in reality, they're in effect circumventing safe building practices! For example, just because you have more money left at the end of the month instead of more month left at the end of your money doesn't mean that you should skip the budgeting step and go straight to the investment step. On the contrary...to whom much is given, much is required! But I know plenty of people who do just that...they'll put 15% away into mutual funds or retirement accounts, but then they'll finance a car or continue to make slightly more than minimum payments on their credit card debt. This doesn't make any sense at all! I understand the argument of compounding interest, but would you ever go take out a loan to invest the money? No - that's ludicrous! Ok, I digress. But the point is that regardless of where you are financially, the steps to financial freedom are the same. So no matter where you are, if you're feeling the crunch of financial pressure and have been wondering if there's a better way to live, there is. Come with us as we walk this road together.
Be sure to join us on Wednesday for the Road to Financial Freedom Part 2 - DEFINING YOUR CURRENT SITUATION.
