I think that everybody has certain goals in life. For some people it is traveling the world, for others it is financial freedom. In this article I want to take a look on potential steps towards financial freedom and how I think it is possible to achieve those steps one by one. We will start off with the first baby steps until we arrive in the abundance stage. Before we start, it is important to note that these steps will not be quick steps as it require very long time to reach the top but to have a plan to work towards would never harm in my opinion.
First Steps
We start off with baby steps, as everybody should do. Not only is it easier to keep track of the accomplishments but it is also more motivating to see progress. The first steps are always the hardest and unfortunately, this stage is where a lot of people are giving up. This stage is where everybody starts, and this is living from pay check to pay check. Often young people are starting off their career like that. They are getting their first job and paying off their student loans. Once they paid off, they continue to take on debt, for example for a house, and are back in the rat race again. With continuously raising inflation this is really not the way to go but how to escape this? There is always an opportunity to put some money aside and start to invest into the S&P 500 or even in some crypto projects. Not only that but starting to become financially literate should always be the first step.
Stability
Once the first steps are done, we can move on to the next stage which is stability. This stage is fairly easy to reach as it requires financial literacy and job that you like to do. You are getting a stable income and are smart enough to put some money aside for potential investments. The returns of these investments are getting reinvested which is making your money work. Furthermore, you are smart enough to put some money into an emergency fund that covers 3-6 months of your monthly expenses which protects you against selling off your investments in hard times. With this, people are getting their first taste of investing and realize that they need to have more cash flow to achieve the next stage. This is why a lot of people are searching and trying out different side hustles that would generate an extra amount of money. This would then be reinvested into the side hustle or into the other investments. With this strategy, it is a matter of grind and motivation to reach the next level.
Freedom
Once the engine starts going it is a matter of time and patience to arrive at the stage of freedom. The beautiful thing about this stage is that everybody has his own threshold. Because people have different have different lifestyles there is a rule of thumb how much money you should accumulate before you are truly free and that is that you should need to have 25 times the amount of your yearly expenses. This means that if you need 100k USD every year to live, you should have 2.5 million saved up. Now this is an extreme high number but achievable if executed smart. Once people are at this stage it is all about maximizing your efficiency and joy of life. People are starting to get paid for their abilities and not for their time anymore. Additionally, you could choose when and where you want to work which makes this stage even mor enjoyable.
Abundance
The previous stage really sounds like heaven and is probably the dream of the most people, but there is one more stage in this hierarchy: Abundance. This is truly F U money. In this stage people are really not caring anymore about price tags and expenses. In this stage the cashflow is always higher than the expense and it really looks like a big party. I think that nobody would mind living in this stage of financial freedom. Saying that, it is very hard to achieve this stage which is why most people are truly focusing on the third stage of this lather.
Published by ga38jem on
LeoFinance
On 16th April 2022