THE BLOG
02/16/2017 04:20 pm ET

4 Life-Saving Steps Towards Financial Freedom

Financial freedom is the ability to live life on your terms, without worrying about how your basic needs and necessities will be met. For some, financial freedom involves a million dollars in the bank. For others, it's just a worry-free, minimalist lifestyle.

I personally consider financial freedom to be a place in life where I am free to pursue my passions and interests, without worrying about rent payments and credit card bills. Financial stress is toxic. It's the leading cause of stress in a relationship. And it takes a beating on your mental health.

I've refocused my life in order to become financially independent on my terms. I've made stupid money decisions in the past. But, I'm already seeing results from stepping back and taking the following four steps.

1. Start Living Your Wage


One of the areas where I totally messed up was in the spending side of my budget. When I tallied my total debts on a piece of paper, I realized that I was in way deeper than I thought.

"We buy things we don't need, to impress people we don't like."
-George Carlin

I falsely believed that I needed to "own" flashy status symbols, like a BMW and an expensive suit, in an effort to project an image to potential partners and customers in my business. I put "own" in quotes, because these expensive items were financed. I didn't own them, they owned me through payments.

The actual benefits of looking wildly successful is not worth the financial stress of keeping up with unnecessary payments each month. I've learned that an investment in personal character and work ethic is worth way more on the open market than a fancy car or big house.

2. Create a Meaningful Career Plan

Work is hard. It's even harder if you hate what you're doing. Passion is the fuel of the ultra-successful. If you can find a way to turn the things that you're passionate about, even if it's just parts of these things, into a career, you'll find yourself working harder and doing better work than the competition.

I've built companies that only offered me a financial reward. The projects where there is both a financial reward and an alignment with my passions have yielded far better results.

Even if you're a 9-5 office drone, you can set yourself on a career that is aligned with your passions. Figure out what it is that you enjoy doing in your free time. Assess why you love it so much. Then build an action plan to get from where you are to where you want to go in your career.

And, just as with the rest of the advice in this post, please don't forget to EXECUTE. Ideas without action remain dreams, and that's a tragic ending to an opportunity.

3. Understand the True Cost of Housing

Housing is expensive. As an entrepreneur, I've always tried to live the life of a starving college student. I rent rooms instead of an entire apartment. And, in the rare occasions where I have rented a home or my own apartment, I quickly get roommates onboard to help with expenses.

The ownership vs. renting debate is a long-standing battle in the world of financial nerdom. I choose to focus primarily on monthly cash-flow in my budget. That means my goal is to keep my total monthly living expenses each month as low as humanly possible.

But there's a lot to be said for investing in a home that generates long-term financial value. I had lunch last week with Ryan Donigan, the Director of Real Estate Sales at Utopia Management. He is heavily involved in real estate, and I wanted his opinion on home ownership for those looking to achieve financial freedom. He shared that:

"Home ownership is the cornerstone of long-term wealth building for many of his clients. In fact, a home is oftentimes their largest asset as they head into retirement. In a low-interest rate environment, home ownership is very appealing to families that are willing to stay in one place for at least 5-10 years. This allows for the cost of the mortgage to be negated by the increase in equity."

Buying vs. renting isn't a clear yes or no answer. For me, I would consider buying a home if:

I planned on staying in the same place for a decade or more.
I could comfortably qualify for an affordable, low-interest, fixed-rate mortgage with a term of 15 years.
I felt reasonably confident that the value of my home would go up significantly based on available market data-points.
I could find a roommate or two to help minimize the impact on my monthly cash-flow.

4. Ditch Social Media

Social media is a trap. Before I started focusing on my productivity and the amount of money I kept at the end of every month, I spent a lot of time on Facebook, Instagram and Pinterest. Study after study pointed to the fact that the things we share on social media are highly filtered versions of reality.

These filtered, exciting snapshots of our daily lives encourage the people that view them to live their life by comparison. It is brutally unfair to encourage a person to compare their overall life to the highlight reel of yours.

And this works both ways. As I scrolled through social media, I started thinking more and more about how I stacked up. In the end, I decided to limit my exposure to my newsfeeds. The mindset of a financially free person is incompatible with the pressures to "stack up".

Focus your life by drilling down on the things that impact your cash-flow. We spend so much time working to pay off things we don't need, that even a small change in your spending and saving habits can have a massive impact on the rest of your life.

Start small. Accept that you aren't perfect. Focus on improvement, instead of perfection. You'll find that the path to financial freedom isn't as scary or as difficult as it looks right now. Get started, get going. You can do it!

CONVERSATIONS