How To Level Up Financially and Get Your Time Back
Master the 4 phases of financial freedom.
If you are on your journey to financial freedom but unsure of the next step then this post may be helpful for you. First you must define what financial freedom means to you.
- What do you want to accomplish with your finances?
- Do you have a financial plan? & Do you follow your financial plan to the T?
If we simplify this, your journey to financial freedom can be achieved in 4 phases:
1. Mindset
At first you must get the right mindset to be successful. You have to believe it is possible and that you CAN do it.
I found the most effective way to train your mind is by reading books and consuming information online about the processes/habits of people who are successful with money.
In the mindset phase, and throughout all the other phases, it’s a great idea for you to surround yourself with high-quality people and make sure that your environment is conducive to your success.
Start building your network today with people who have a track record of being successful with finances. Also connect with people who are just starting their financial freedom journey and some who are where you are now. You can get ideas (for the next phase) from every person.
Your mindset requires daily sharpening. Commit to learning something new every day.
Here are some financial mindset books I recommend: Think and Grow Rich by Napoleon Hill, The Richest Man in Babylon by George Clason, and The Millionaire Fastlane by MJ DeMarco.
2. Accumulation
The next phase to focus on is accumulation which involves sharpening your ability to earn and stacking a massive amount of cash.
- Which vehicles do you want to use?
- How many vehicles do you know about?
- Do you know all the vehicles available which are capable of getting you to your goal?
You should make a list of all the possible income streams (vehicles) you are aware of and place a checkmark if you are currently taking advantage of that stream.
If you didn’t fill up the page with income streams then you need more ideas and information about what your possible income-creation opportunities are. If you filled up the page and have a page full of checkmarks, then maybe it’s time to work on your second page… or increase the IMPACT you are making with your current streams of income.
Figure out all the possible ways you can earn money (physically and online). Whatever you do… Grow in service and value to the world using a SYSTEM rather than just your time as your wealth variable because you only get 24 hours in a day.
Don’t forget there are several ways to earn:
In this phase you are also mastering your financial discipline because you cannot accumulate if you are giving it all away (through foolish spending and poor investing). Ensure that you are paying down debt (with the goal of becoming debt-free) because debt slows down the accumulation process. Also reduce your need to buy every shiny object you see.
Good defense (saving money and clipping coupons) is okay but focus more on great offense: becoming more valuable to the world with a system and exploding your income column!
Here’s an excerpt from The Richest Man in Babylon:
A fat purse quickly empties if there be no golden stream to refill it. Arkad (the richest man in the book) has an income that constantly keeps his purse full, no matter how liberally he spends.”
“Income, that is the thing,” ejaculated Bansir (protagonist/narrator). “I wish an income that will keep flowing into my purse whether I sit upon the wall or travel to far lands.
Don’t wish like Bansir!
Make your daily goal to be more valuable to the world and to pay attention to what people are paying for. Apply this knowledge and it will help you produce products and services for the market that people will actually buy therefore speeding up your accumulation.
Two great books for accumulation (and mindset) are Rich Dad Poor Dad by Robert Kiyosaki and The Millionaire Fastlane by MJ DeMarco.
3. Prioritization (Money System)
The next step is to prioritize your investments by understanding your investment goals and your time horizon.
Design a money system to take advantage of short-term and long-term opportunities as well as domestic and foreign, including a mixture of big and small companies. I first learned the idea of a money system from Unscripted by MJ DeMarco and here’s the difference between a business system and a money system:
A business system is an entity that provides value while being partially disconnected from your time.
A money system is a capital rental system — instead of having a business of products or services, you have a business of renting money.
You can improve your understanding of a money system by reading more financial books (about lending money successfully) and joining a community of entrepreneurs for discussion like on the Fastlane Forum or Reddit.
Your age and risk tolerance will determine what investments you hold in your money system. Below are some sample allocations for equities, not including the newest store of value: cryptocurrency.
The important thing to grasp here is out of all of your options, which do you want to choose?
Many successful millionaires (and wealthier) choose real estate as one of their investment vehicles but keep in mind you can buy REITs or other real estate related ETFs if you don’t have enough money to lend or buy a property yet.
This real estate allocation is to remind you that there are SEVERAL subniches of real estate to invest in too:
There are no shortcuts to financial freedom.
You will have to work hard no matter how much smart work you incorporate because no one is handing out unearned checks. While you are developing your money system, take a serious interest in taxes or marry a CPA (Certified Public Accountant). I’m joking but only a little bit.
Befriend a CPA and treat them like royalty so you don’t have to spend a great deal of time and money learning how to benefit legally from the tax code. All of these efforts will lead you right to the legacy stage.
4. Wealth Legacy
In this phase, you should develop your estate plan which entails things such as Life insurance and Creating Your Will. Here’s a great checklist to start with and please don’t wait until it’s too late to do this.
You don’t want to check out of here without having your estate planning done or the state will decide how your assets are split up.
The goal of succeeding in all 4 phases is living your life without worrying about money and no longer trading your precious time for money, unless you want to.
Great legacy planning ensures that the money you earn and the assets you acquire “remain in the family” and are passed down according to your requests.
I found a short article that helps bring more clarity to what can be possible, “10 Accounting tricks the 1% use to dodge the taxman,” but make sure you consult with your CPA friends for what is legal and possible at your level.
Also think about your plan to give back. Does it include starting a non-profit or maybe donating to a group of charities you are passionate about?
What do you truly want to do in life if you didn’t have to trade time for money and you knew the bills were paid with no debt?
This is the question to answer… and your plan will lead you to this destination. We must invest our working time into a system that will eventually deliver us free time.
You can master each of these phases and live an amazing life. Just get to it and learn along the way. Thanks for reading, please let me know what you think!
