Welcome to the first day of your seven part mini-course
on financial freedom. Over the next seven days, we’ll be
laying out a simple plan for acquiring financial freedom,
one which can get you on track immediately by the application
of practical steps which can fit easily into your everyday
life.
I’ve always believed that financial advice should be
simple and practical enough to fit with the context of
one’s life, otherwise, it’s not very useful or valuable.
So over the next seven days, my objective will be to
provide you with some straightforward tools which will
empower you to take control of your financial life and
to enjoy greater freedom and flexibility with your money.
Let’s get right into the first step: Identifying your
income sources.
Your first step to reaching any destination is
having clarity about where you are right now. This is just as
true when it comes to creating financial freedom as it is in
taking a trip to another country.
One of the primary reasons most of us never achieve
financial success is because we’re not managing our finances
on purpose. Instead, we pay our expenses and leave the rest
of our money in our account with no specific plan or purpose.
As you’ve probably already discovered, leaving money in your
account with no specific plan or purpose causes it to disappear,
leaving you wondering where it went. Of course, when this
happens the natural assumption for most people is that they
“need to make more money” so that they can finally start saving
or investing in order to increase their wealth and financial
security.
In my work helping people improve their financial life,
I’ve found that most people have more money than they realize,
even if they think that they’re living paycheck to paycheck. The
problem is that they’re not watching where every dollar is
going and when they find that it’s all gone, they just assume
that they aren’t making enough.
So the first thing we’re going to do is get a crystal
clear picture of exactly how much money you have coming in
so that we can develop a plan for giving every single dollar
a specific purpose. As we get to the step of giving each
dollar a specific purpose, we’re going to use the principles
of “Powerspending” to make sure that you’re’ spending in
ways that add value to your life and help you create a
sound financial future. (In case you’ve never heard of
Powerspending, don’t worry. We’ll be getting more into that later).
Now, what we’re going to do is develop a plan for keeping track of all the money
that’s coming in and where it’s coming from. This means that
every time you get any money coming in, you’re going to write
down how much came in and where it came from. At first, it
might look like you only have one source of income.
However, as you keep track over months or even a year,
you’ll start to discover two things:
First, you have more income streams that you’re aware of.
Second, keeping track of your income streams is a good way tostart brainstorming new ways to bring in additional income.
In regard to this second point, there’s something which is
VERY important to remember about the current economy that we
live in: A lot of people are scared because they believe that
we’re in an economic recession which will eventually pass.
However, what we’re going through right now is more of a
transition than it is a recession. The economy that we live
in now is the economy of the information age, and there are
a few new rules now when it comes to building financial
freedom.
The first of these is that financial security is no longer
linked to job security and this is not going to change anytime
soon…but that’s not bad. As you’ll be learning in this course,
the most sound and practical means of building financial
security is to:
#1: Have a solid net worth#2: Have income coming to you through multiple streams
Most of us are already familiar with how a solid net worth
can bring us financial freedom. You hear people all the time
talking about how they would be better off if they had a
million dollars. However, many people who win the lottery burn
through it very fast, when they could be using that money to
set up multiple streams of income and temper their spending
so that they always had money coming in.
Also, taking the example of job security for a moment,
what’s stable about having ALL of your income coming from
one source? If anything ever happens which cause you to lose
that income stream you’re completely dried up until you can
find something else. However, the great thing about having
multiple income streams is that if one of them dries up, you
have others to sustain you long enough for you to start
building more.
So now that you have an idea of where we’re going long
term, here is the first habit which you’re going to work on:
keeping track of your income sources. What I recommend is
making a chart or spreadsheet with these basic categories
below so that you can start keeping track of what’s coming
in, where it’s coming from and how much. Also, I recommend
that you estimate the length of time you expect the income
steam to continue:
- Your W2 income
- Your spouse’s W2 income
- Earned interest from investments
- Earned income from rental properties
- Earned income from online ventures
- Earned income from selling things you’re no longer using
Now, this is just a simple list to get you started, you can
add categories as you keep track of your income sources. What
I recommend at this point is that you start brainstorming about
one new income stream, no matter how small, that you can create
within the next year.
This is a lot easier than it sounds, it simply takes a change
of mindset, a focus on building multiple income streams instead
of simply trading hours for dollars.
Most important, remember that keeping track of where your
money is coming from and how much you have coming in is an
ongoing habit, and the best time to get started is right now.
In tomorrow’s email, we’ll be working on the second step to
building financial freedom: getting a clear picture of where
your money is going when it’s being spent. So be looking out
for tomorrow’s email.
