financial freedomEarly on in my teens I decided to make sure that long term my personal finances would not be a deciding factor on whether or not I enjoy my life.

One of my clients used to say those who say ‘money doesn’t buy happiness’ have never really experienced not having any! Whilst having money alone is not the key to happiness, it does buy you a level of comfort, provides choice, freedom and when used wisely and amassed ethically can indeed increase your levels of happiness through experiences, opportunities, reduced stress and liabilities.

Over time I have collected advice and pointers from financially successful people, and from financially independent people who live with little worry and stress. I have also taken note from financial disasters and make conscious decisions to avoid the same fate.

I committed myself to studying those who had the success I yearned for, and implemented the same principles and disciplines. Of course I have faulted along the way or done things my way despite advice from others, like buying a Ferrari at 26… Im not a total bean counter and have had a lot of fun along my journey to financial freedom which I’m well on the way to achieving. I hope this post will help you in your journey towards your own financial goals, and ultimately financial freedom.

Here are my 11 top tips for working towards financial freedom

    1. Have short and long term financial goals. Once you have your goals written down, attach strong emotional reasons for reaching those goals. Combine the goals with faith in your ability to achieve said goals. Goal setting is important for a success-orientated person. Without them you are just playing around. Short term goals allow for smaller wins in shorter time frames, building your confidence and discipline in order to achieve longer term goals. Having long term goals and staying focused on them keeps you accountable to foregoing what you want now for what you really want in the future.
    2.  What you do with what you get is more important than what you get. More money isn’t going to solve any problems unless your financial plan gets better. Some people may say if I had more money I’d have a better plan,  but i’d suggest if they had a better plan, they’d have more money! If you can’t manage a small fortune, you will never amass a large one. Having a solid financial plan in place is critical regardless of income.
    3. Work to learn before working to earn. Instead of asking what am I earning working here? Ask yourself what am I becoming here? Become really good at something. Learn as much about all the other subjects, but try to become the expert at at least one thing. It takes 10000 hours to become a master of something, stay the course, add value to your “human capital” and reap the rewards of further learning. Knowledge is power, if you want to double your income, triple your rate of learning.
    4. Choose the right partner. And no I don’t mean marry rich- although that could help! I believe that not much else apart from upbringing and circle of influence will affect your life’s trajectory anything like dating/marrying the right person. I’m not a relationship expert but having the right partner has been instrumental in my success, happiness and wellbeing. More than half of marriages end in divorce, as a financial tip it would be prudent to marry the right person for long term sustainable reasons, otherwise you could end up losing half or more of what you have spent your life working for.
    5. Your health is directly related to your wealth. Some people don’t do well because they don’t feel well. Treat your body like a temple. Don’t smoke, and drink only moderately. This will save you a lot of money and your mind will stay more focused. Take good care of your temple through a nutritious balanced diet and exercise. Regular exercise will reduce your risk of lifestyle diseases such as obesity and diabetes and many other ailments. The longer you live the more you will be able to earn and enjoy the fruits of your labour in later years. Feeling good about your body will allow you to exude self confidence which will help in all aspects of your life too. I can’t speak more highly about how important your health is. I know when I’m sick the most important focus is on getting better, everything pales in comparison to your health, including wealth.
    6. Early to bed, early to rise. I have poor friends and I have wealthy friends. Without exception, the wealthy friends are early risers. The sooner you start to do this, the better. Be up before the sun. We all have 24 hours in the day, time is our most valuable non renewable asset. Watch this awesome 2 minute clip that highlights the importance of how we spend our time.
    7. Live below your means. Credit is the easiest way to get into debt, and credit card debt can be crippling. Before saving any money or investing, ensure all high interest credit card debt is paid off and keep it that way. If you use a credit card pay it off each month. Having the discipline to only buy things in cash, and not spending more than you earn are critical disciplines in making sure you are moving towards financial freedom. Use credit cards as a tool for convenience or for the rewards they earn, don’t be a tool for the banks when using one. To ensure you have the right credit card for you, compare whats on the market with
    8. Start off as early as possible. The best day to start investing for your future was yesterday, the next best day is today. ‘You will only be young once’ is an excuse a lot of people use to avoid thinking about their future, to rationalise spending and justify a lack of planning and discipline. Whilst it is important to live your life and make the most of each day; time is your biggest ally whilst young in getting on the fast track to financial freedom. A good financial plan started early such as recommended in The Richest Man in Babylon living off 70% of your income putting aside 10% for investment, 10% to savings and 10% for a rainy day or charity as an example will not only make it much easier to carry that discipline through to your higher earning years, it will allow you to maximise the power of leverage over time and compounding interest – the sooner you start the better!
    9. Know the difference between an asset and a liability. Your home is never an asset. As Robert Kiyosaki put it simply in Rich Dad Poor Dad, an asset puts money into your pocket, a liability takes money out of it. Buying a home to live in, will never earn you money, it takes money out of your pocket and the interest on the mortgage you pay is not tax deductible. Over the long term you may be able see growth by way of capital gains, but you will only realise any gains when you sell, which will attract tax and generally the sale of your home will be followed up with a new larger property (unless downsizing),  and will include the associated closing costs, stamp duty and potentially larger mortgage repayments. I’m all for home ownership as a goal, for the lifestyle benefit, and the enforced savings but make sure you have a clear head going in, it is a huge financial commitment not a short term spending proposition. A mortgage of 30years is a commitment that until paid off, will permanently commit you to higher spending into the future.  I aim to pay off my entire mortgage within the interest only period of 5 years, having started from scratch with no inheritance or assistance from family and I’m on track to achieving this goal. Once your mortgage has been given the flick and you have the title to your home, you can start pumping all those repayments you were used to paying off on a liability into assets that put money into your pocket each month instead of into the profits of the bank.
    10. Don’t be in a hurry to leave home or purchase a property to live in. If your young and still at home, this is the best chance you have to save as much as possible, even if you are paying board. One of my wisest decisions was to save hard whilst still living at home. With my savings used as a deposit for a business loan, I purchased a Personal Training business before buying a home to live in. The asset (business) once up and running allowed me to buy my own home (liability) and have the ability to pay down the debt as fast as possible.
    11. Don’t focus on making money all the time. Focus on executing well and money will generally follow as a natural consequence of proper actions. Enjoy the journey, and run your own race. It’s hard to make a fortune over night, but its remarkably easy over a long period of time.

So there you have it 11 tips for financial freedom, I could have listed more and initially aimed at just 10. I’m certain if you applied just some of these steps you would be well on your way to securing your financial freedom, apply all of them and it is a sure thing!

All the best in achieving your own financial freedom.