If any year illustrated people’s absolute need for financial freedom, it was 2020. Rather than being pinned down by paycheck-to-paycheck existence, what if you could pay your bills early? What if you had substantial equity in your home? What if you could survive for months without a paycheck?
What if you were really that free? Let’s talk about what it would take to get there.
Outline Your Goals
You wanted this to be a snap, didn’t you? Did you want someone to outline your goals for you? Tell you what your goals for 2021 should be? Well, unfortunately, that’s pretty impossible. Everyone’s goals are different and depend on your life stage, interests and more.
However, everyone can learn from a few top tips from Benzinga’s top money experts.
Step 1: Daydream a little.
Sit around and daydream for a half an hour or more and write down absolutely everything that comes to your mind. What do you want your money to do for you? Do you want to make it an absolute goal to never overdraw your checking account? Go to Florida for the whole winter (now that everyone works remotely, what’s stopping you)?
At the very least, write down the biggest, baddest financial goals you’ve ever had. Make it a show-stopping bucket list!
Step 2: Think about what it would take for you to go months without needing a paycheck.
Did you gasp and think, “Impossible?”
If you did respond that way, why was that your response?
It’s totally possible to live off your savings because people do this every day. Some people even take a mid-career break!
All it takes is a plan and a little chutzpah.
- You had sufficient liquid savings that you can live for months without a paycheck if you have to?
- You wouldn’t need to tap long-term savings, such as a retirement plan?
- Bankruptcy wouldn’t even be even a remote consideration since you’d hardly any debt?
- You could work without concerning yourself with the threat of layoff, being fired and you’d never feel trapped by your job?
Wouldn’t being financially stable feel so good? How would you go about making it happen?
Step 3: Know you’re in control of your money.
Keep this mantra in your head always: You’re in control of your finances, not the other way around. Your money doesn’t control you. This means that in terms of money, you have choices and you also have an abundance mentality. Since money creates options for you in life, you have more than the average person.
This is what being financially stable is all about — understanding the role of money in your life. It gives you the ability to be able to do what you want, when you want in your life, all on your own terms.
Step 4: Put together an endgame strategy.
Financial freedom starts — and ends — with a plan. Put together a comprehensive plan for how you’ll achieve financial freedom.
This doesn’t mean that your plan will be completely perfect. Instead, you’ll know that your finances are in balance and you’ll feel great about the way you’re going.
If you work for an employer: A lot of people contribute no more than the percentage that they need in order to get the maximum employer match on their retirement contributions.
You’ll do something different. You’ll recognize the importance of aggressive retirement investing a key component of becoming financially stable. Here’s what you’ll do instead of everyone else: You’ll make the absolute maximum retirement contribution that you’re allowed, — into double-digit percentages.
You’re different from everyone else, so you need to make saving for retirement an aggressive part of your life.
Step 5: Make sure everyone’s on board.
All of this exciting stuff is moot if not everyone in your family’s ready to embrace financial freedom. For example, if your wife’s content to spend till she hits the upper limit on your credit card every month, that’s not going to help you reach your goals.
It’s important to make sure you and your spouse or partner talk about money all the time. You’re headed for financial trouble — not financial freedom — if you don’t talk about your finances. When you articulate specific financial goals together, you’re more likely to become successful. Your partner can help you save money and plan. He or she can help you get on the same page and move toward financial freedom together.
Step 6: Be willing to rejigger the plan if needed.
So, let’s say you put some grandiose plans on paper and then… Money doesn’t flow in like you want it to. Maybe your business doesn’t go the direction you want it to go. Maybe your freelancing career goes bust.
Promise yourself you’ll do something about it. Don’t let whatever’s plaguing you fester. The most successful people possess grit — a dogged determination to never give up. You just keep moving forward and try new tactics as you need to.
Step 7: Opt for a career you love without worrying about the money.
In your heart of hearts, do you love your job and your career trajectory?
- Where do you want to be in 10 years? Will you get there where you are now?
- Will your income grow at a pace you’re comfortable with — enough to attain financial freedom?
- Are you using your gifts and skills right now? Can you make more money doing something else that aligns more with your skills?
Your choice of career can have a big impact on your long-term financial plan, so take it seriously! If you’re not seeing future potential or if your current gig isn’t a good fit for your skills, a major goal for this year can be to change careers. Do something about it if it’s not a fit.
Step 8: Pay cash for everything.
One of the most romantic ideas of financial freedom is the ability to pay cash for toys, like boats, motorcycles, RVs, ATVs and more.
Financial freedom means you don’t have to monkey around with payments, interest rates and more. You pay cash for an item and it’s yours — end of story.
Financial freedom ensures you can do that. This is a great goal for 2021.
Step 9: Give more.
When you have financial freedom, you can give more to people who need it. You can get college paid for for your child. You can give money spontaneously to a family in need. You can give your church in a big way.
The more you give away, the more you’ll be blessed. It’s an opportunity to be a part of meeting the needs of others and you’ll hear from people who give charitably that all the time, it comes back to them in more ways than one. What a great way to be part of a bigger purpose. That’s why we’re here, right? To help each other?
Make a Plan to Attack Your Goals
So, what’s the plan? Make an actual plan to hit your financial freedom goals.
Step 10: Have a number in mind.
How much do you want to make this year? How much do you want to save this year? What do you want to do this year to have peace about your finances — in a big, round number format?
Whether you want to earn six figures or save $1,000 per month in retirement, you want to start with the end in mind. A vague back of your head can be made more concrete with an actual goal in mind. Write it down.
Step 11: Write down how you’ll get there.
Want to become part of the Financial Independence Retire Early (FIRE) movement? Make sure the number you had in mind reflects what you really want, then make a plan to get there. Will it take earning $8,500 per month? More? Write down what you’ll do, incrementally, to get there. You may need to take baby steps to get there, and in that case,
Step 12: Research everything you can.
Really successful people read everything they can about making money, leveraging their assets and more. Read till your head is full of good ideas, then read some more. Read up about real estate investing if that’s in your financial freedom toolkit. Learn about cryptocurrencies, forex — whatever it is — so you not only know enough about your subject, you can also teach it to others.
Implement Your Goals for 2021
Did these steps give you any ideas? Sometimes we just need goal ideas we can or should tackle related to financial freedom.
The more financial freedom you have, the more opportunities you create for yourself.
So, hurray for a brand new year! Use it as a fresh start to get after your goals.