Start your Financial Freedom Journey (with these five basic Principles)
When last did you do a deep dive into your finances? Hopefully, you didn’t get a headache before you were done.
A lot of creatives have the ultimate aim of financial freedom: being able to work not because they need the money, but because they love the work they do. Sounds amazing. And many of us are looking for that new job, gig, or whatever that will make us earn enough to classify ourselves as financially free.
But before you go on the endless trail of searching for that huge wad of cash to feel satisfied, it’s important you understand certain aspects of financial freedom so you don’t get disappointed when a raise comes and you still end up broke afterwards.
Financial success doesn’t come by wishing to be rich in the future, and hoping that your story dramatically changes for good. Ultimately, it starts from the mind.
And although a bigger paycheck could be awesome, it doesn’t always guarantee you won’t run into money problems. What matters the satisfaction you get from whatever financial situation you are in, taking practical steps to get your finances where you want them to be.
First, you need to understand the link between your emotions and the decisions you’re likely to make. I highly recommend reading the book The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel. Our behavior regarding money starts from how we think of money, so the first thing we must do is get the right mindset about money.
For right now, I’ve outlined a few lessons I’ve learned so far on my journey towards financial freedom. They may seem basic, but keeping to them as your building blocks could go a long way in helping you grow financially.
1. Start the trio habit — Increase earnings, save more, invest more.
If there’s anything I know about money habits, it’s that the above three need to all be in place to achieve financial freedom in record time.
Earning more without saving or investing means you’re much likely to increase your spending, and you will still be living from paycheck to paycheck.
Saving more without increasing your earning capacity or investing means that you have less money to spend, reducing your standard of living. Savings without investment also means your money’s value will reduce over time, because of inflation.
Investing more without increased earning or savings puts you at more risk, because what happens if you lose all the money you’ve invested? (no investment has 0% risk)
So, the most pressing question is, “How do I increase my earning potential?”
2. Increase your value, so you can earn more
Increasing your earnings capability takes two simple but quite daunting tasks. First, improve on your skill and knowledge, which ultimately increases your value. Second, find people who are willing to pay you the higher price you’re now asking for.
Whether you’re a freelancer or a 9–5 employee, this will always work. As an employee, at some point you may realize that no single company can pay you your worth anymore. So you could decide to spread your time among more to get more pay, which is fine. Just make sure you keep improving yourself, and that you can think and perform better than the majority of people in your industry.
Good pay doesn’t come easy, and I really learned that in 2021. I applied to a job of my dreams, and I had to go through (and I’m still going through) a series of tests and interviews that were tasking. No company pays big bucks for nothing. Make sure, at every point in time, you deserve what you’re earning.
3. Grow your money-multiplying skill
You must learn whatever you can to double the money you already have. For instance, learning about stock investing (the nitty-gritty, not just surface level stuff) is something that will help you increase what you already have. And the only work you need is taking some time out to learn what you need to know. After that, your money double itself with less effort over time.
Remember — The more money you have, the more money you could make.
If I have $10k to invest in real estate with an annual return of 12%, I’ll gain $1,200 interest. But if I had $100k capital, I would end up with $12,000 with no extra effort. Start with what you have though, better little returns than nothing at all.
4. Have an Abundance mindset
I used to hate hearing this one — most people starting off on the journey of financial freedom usually do. I thought: “if money is so abundant, why do I need to struggle to get it?” The thing is, it doesn’t have to be a struggle, at least not for too long. Even in bad economies, there are still billionaires, and corporations will still exist, and some even flourish. So no, money isn’t always scarce. You’re just not doing what you should to get it, in the right way and at the right time.
I didn’t mean to sound arrogant, but it’s the plain truth. And it’s not about the law of attraction (I’m not a believer, thank you) but by being practical and doing what is necessary to get money. An abundance mindset could mean spending a huge chunk of your savings to learn a new skill that is guaranteed to fetch you much more than you already earn.
Stop the hoarders’ mentality. Cash in the bank could go dry, but money spent on a business, personal improvement, knowledge or skill will continue to bring in more. Always be willing to invest in anything that will bring positive returns. The money is meant to flow, not sit in your bank account and be eaten by inflation.
5. Avoid lifestyle creep
Simply put: Don’t spend more when you earn more money. Whether as a salary, or as a windfall. If you’re expenses go up as your income, you’re not richer — you just have more expenses.
Telling someone not to increase their spending as their income increases is easier said than done. In October 2021, I had a windfall of cash from an unexpected job, and that day alone, I encountered three different things that would have made me spend all that money if I wasn’t mindful. A discount sale for new exercise wear (I love those leggings), a few beautiful dresses that popped up on my IG feed, and a pair of airpods I’ve always wanted.
Lifestyle creep will always be a temptation as long as our income goes up. The key is to use the delay mechanism for all purchases. If you see something you want to buy out of the blue, wait a few days or a week and ask yourself if it’s still urgent and important. It’s normal to want fancy things when we get more money, but don’t end up wondering where your extra cash vanished to when you eventually need it for a rainy day.
I’d love to know your experience about how your financial freedom journey has been so fay. Let me know in the comments.
Thanks for reading!
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