Friday, March 14, 2008

3 Steps to Financial Freedom


The title of this entry is "Financial Freedom", not "Rich Beyond Your Dream" Is there a difference? Yes there is!

Being rich means you have a lot of money, or material. Who is the richest in the U.S.? We can say Warren Buffet, but I don't want to be like him. He makes billions each year and all he has to show is a modest house and an airplane. Okay, a JET plane, but the point is that for all his billions, he doesn't know how to have fun. Richard Brandon, OTOH, is all about fun. He understand that money is a catalyst. A means to an end, not an end itself. I'd like to be more like Richard Brandon, except for all the management I'd have to do.

Clearly, then, being a CEO of Fortune 500 company isn't for me. But remember that the goal isn't to be rich. The goal is to be financially free.

What is financially free? It is to have no worry about money. It means that your income exceeds your expenses, WITHOUT YOU HAVING TO WORK. That sounds like something to look forward to in your later years, but you don't have to! You can do it now. Well, keep your day job for now. We'll get to that later.

Now I should tell you the 3 steps that you absolutely must do to be financially free:

1. Develop Personal Discipline: This is something that you must have in order to succeed. Without it, you are doomed to fail. The good news is, you can tailor your approach to suit your personality. Remember: "You are what you frequently do" Aristotles, so develop a winning habit, and you're half-way there!

2. Keep a journal: This is something I can help you. Lots of personal finance expert tells you to track expenses, which is great, but they don't really tell you how. In the end, most effort are either falls short, or a complicated mess that is soon abandoned. I was guilty of the latter, but now I have several levels of spending records for you to choose from.

Keeping a financial journal is of paramount importance, that without it, all hope is lost. With it, you can almost get away without budgeting.

3. Invest Wisely: This is where most people look at the jumble of investment option, and give up. It can be very, very complicated very, very quickly if you let it. Don't let it! Once you know what is important, you can narrow the list tremendously. In this, I should say that having a Wish List is extremely useful. What are the things you want to buy if you have a million dollars? Write it down! That is your million dollars wish list. That is what is important to you. Don't let any financial expert tell you you need a million dollar house in New York if your dream house is a dirt floor cabin in the middle of nowhere.

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