I always get comments asking me why I write about such diverse topics. Well, it’s because I believe there isn’t one path to financial freedom. You have to take a broad perspective and analyze the different stages your money is currently at and optimize each one independently.
I view money management and the preparing for financial independence as 3 separate steps of a single funnel. This approach probably stems from when I was helping to develop a sales funnel at my old company. The specifics may vary, but the overall principles are the same.
In essence, the goal of every sales funnel is to put more leads into the top of the funnel, develop the leads so more of them get through and then grow the leads so you can turn them into customers and create long term value from them. This exact same process can be applied to a number of tasks, including your money management.
Step 1: Earn Money
The first step of your financial freedom funnel is earning more money. The more money you earn, the more you can save and the faster you’ll be able to achieve financial freedom.
You’re probably saying easier said than done, and you’re absolutely right. If earning more money was simple, we’d all be doing it. However, there are a few ways you can grow your income outside of the traditional ways like getting a new job. Here’s a quick list of 5 different ways people grow their incomes outside of their regular 9-5 job.
- Start a blog
- Create a product
- Promote someone elses products
- Create a dropshipping website
- Freelance work
Obviously you don’t have to do all of these, but picking one you like and develop a side business around it can help increase your cashflow and monthly earnings. Take a look at my website: www.NASMStudyGuide.com. I’m no longer a personal trainer, but I used my knowledge to create a passive income stream that now brings in a couple hundred dollars a month with zero work.
A great podcast to listen to about this subject is ‘Entrepreneur on Fire’ by John Lee Dumas. It’s one of the top podcasts on iTunes and John releases a podcast every single day interviewing entrepreneurs about their story and how they achieved success. This is probably one of my favorite podcasts and I highly recommend you give it a listen. In fact, I listen to Entrepreneur on Fire every day while I’m at the gym. Truly is one of the most motivational podcasts out there.
Step 2: Save Money
As you begin to earn more money, the second step in the funnel is to learn how to save more. The more you can save, the more you can invest in your future and the quicker you will achieve financial freedom.
Saving money and personal finance isn’t an easy thing to manage. In fact, the US education system does an extremely poor job of teaching kids about personal finance. This leads to poor spending habits and the inability to save later in life.
Personally, I believe saving money is the key to success. You can always learn how to earn more money, but it’s pointless if you don’t learn how to save it. There are a number of different resources out there to help you get on the path to saving. Here are a few of my favorite blogs.
Also, a great podcast to listen to on personal finance is The Dave Ramsey Show. Dave is a great guy and his show will give you a great perspective on different types of financial situations and how to deal with them. Plus, its always great when some of his success stories call in and share their story on how they were able to turn things around and get back on track to achieving financial freedom.
Step 3: Grow Your Money
Once you’ve learned how to earn more money and consistently save some of it each month, the next step in the funnel is to learn how to get your money working for you and grow your net worth. This is where the real fun begins and there are a number of different ways to do this. You can start investing in the stock market, rental properties or even become an entrepreneur and start your own business. The possibilities are endless!
The best way to grow your money, and the one i recommend to all my readers, is to start investing! Sign up for a brokerage firm, begin putting away a little money each money and start building a portfolio. Easier said then done, but everyone has to start somewhere. There’s no point in sitting around and not having your money working for you.
If you haven’t yet, sign up for a brokerage firm today and start learning about investing. My top brokerage firms of choice are OptionsHouse and TradeKing, since they both have some of the lowest fee’s at only $4.95 per trade. Another great brokerage firm for beginners is Motif Investing. They have a really unique business model that helps you diversify your portfolio right off the bat. You can read my review of Motif Investing here.
Regardless of how you plan to grow your money, there is one important thing you need to realize. Money that gets to this part of your funnel is money that is to be used strictly for achieving financial independence. These are the funds that you will one day allow you to retire comfortably with no stress. You must protect this at all costs!
Personally, I like to follow these 3 simple principles when it comes to growing my money. I believe they fit my personality and allow me to see growth while keeping my peace of mind.
- Minimize risk – Protect my retirement funds at all costs. Risky investments with these funds are usually out of the question. Primarily the reason I invest in dividend stocks
- Long term horizon for growth – I don’t plan on touching this money for a while. Thus, I can sacrifice high growth for consistent growth.
- Passive is always better – I don’t want to constantly be working on or worried about growing my funds. I always prefer passive ways to grow my funds. Ex: dividend reinvestment, rental properties, etc.
How to Get Started
Achieving financial independence is no easy task, but it is achievable. The key is to stop thinking about it and get started immediately. Passive is great when it comes to income, but not to how you approach achieving financial independence. have an idea for a website? Go build it today! Want to get started with investing? Well, go sign up for a brokerage firm and get at it! Time is one thing you don’t want to waste. By starting now, you can learn the lessons, make your mistakes and be on the right path much quicker.