Becoming Financially Independent – Step One
Congratulations! You have made the single most important step in the entire process – searching out how to become financially independent. In my book, I explain how I made several money mistakes over and over before finally making the decision that enough is enough.
One of the ideas I often had, was “if only I won the lottery”, or “if only I made more money”, then I could someday free myself of a day to day job. Unfortunately the “If only” idea just doesn’t work without action. Of course, if there were a magic ball that would tell me the next weeks lotto numbers, it might make things easy. Just as getting a new job, or a raise might come with a higher salary.
The fact is, I’m here to tell you that it isn’t so. You don’t need to win the lottery, or get a raise to become financially independent. Yes, it would certainly help, but unless you know how to build a monthly surplus, and maintain it, there’s no way you can every achieve financial freedom.
So if getting a raise or winning the lottery isn’t the key, then what is? Reduce your monthly expenses, and start building a monthly surplus. Sound easy? It is! But habit is hard to change. Luckily, money is its own motivator. Having more money month after month frees your mind to think about more important things, rather than what needs to be paid.
Sounds great! But how? My favourite go too is a spreadsheet. Start with your last months salary/income from all sources at the top, then list all you last months expenses. Think mortgage/rent, utilities, taxes, food/restaurants, entertainment, clothing, travel, subscriptions, misc, etc. Don’t forget loan payments, i.e. car, credit cards, student loans, lines of credit etc. Your income, less all those expenses is your monthly surplus. Do this for the past 2 months, and then get a head start on this month. If you have money left over, congratulations! You’re in the top percentile. If you spent more than you earned, don’t fret. You’ve come to the right place.
Cutting the budget. This is going to be fun, this is going to be fun, this is going to be fun. Keep telling yourself that, and it will! On to step 2.