12 Giant Steps Financial Freedom Seekers Take To Retire Early

Simon Quayson

2 years ago

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12 Giant Steps Financial Freedom Seekers Take To Retire Early

The few steps Financial Freedom requires for its achievement is like a sermon that has been preached atop may personal finance mountains for many eons. The roadmap contains many detours. Apparently, there is a fast approach, and a low path also; with something else in-between. But unfortunately, the get-rich-quick dark side has also received its fair share of aspirants by many generations of hopeful millionaires.

Here, I elaborate on 12 steps financial freedom can be attained by the eager reader seeking to reach early retirement. Whether you take the slow route, or the fast lane – it will all depend on you. Your mindset will decide your pace or steps financial freedom will be achieved.

Giant Step 1: GIVE

Giving is one of the most underrated steps financial freedom can be arrived at.

Give? Yes give! Give what, and to whom?

I’ve read countless material on achieving financial independence, and many of them are missing one important theme. The virtue of giving.

Giving, or charity is a way we could help ourselves cultivate focus and purpose in our own drive to prosperity, while helping others in the process. While psychologically, it gives you a sense of courage, duty and fulfillment. It is also a spiritual law that brings blessings untold.

For instance, as you give to the needy a portion of 10% your income regularly, in your community, church, etc; your own garden also gets watered while you cast your seed unto your neighbor’s. It is not meant to make logical sense, but the results speak for themselves. Try it for yourself, or ask people who are benefiting from unusual practice.

Giant Step 2: BUDGET

Budgeting comes next in the steps financial freedom can be reached.

Budgeting has been used as a prescription for managing household income for centuries. It is equally a paramount element in the finances of businesses and all institutions. This requires two (2) basic ideas. The recognition of and categorizing all your income streams. Secondly, the allocation of these to meet your living expenses.

The income column contains limited resources. But your expenses column has unlimited possibilities of spending (or wasting) those resources. The best way to tame this expense beast is to use a few categories – with discipline and set guideline. One of the steps financial freedom budgeting is done is by the use of the 50:30:20 budget rule.

It helps you allocate 50% of your after-tax income to your needs (food, shelter, health, etc). Then 30% goes to your wants (education, comfort, treats). The final 20% goes into savings (paying off debt, creating an emergency fund, and investing).

Giant Step 3: TRACK EXPENSES

Tracking your expenses is one of the many steps financial freedom is accomplished

The ability to track expenses is pivotal in the steps financial freedom is manifested. The end game is to live below your means – to give you room to build wealth. As we read about budgeting your money above, expenses that are not curtailed may easily outgrow your income.

When this happens, you’ll end up borrowing to meet the deficit. This results in debt that could grow to make the steps financial freedom was progressively planned for quite slippery.

You are fundamentally seeking to save and invest to gain interest on your money – or perhaps capital gains. But if you fall in debt, you pay interest to someone else. There are many people in debt today due to factors they can control. Such as the proactive practice of tracking personal expenses. This is an essential process in budgeting to manage your financial health and growth.

Giant Step 4: PAY OFF ALL YOUR DEBTS

Paying off all your personal loans are a part of the vital steps financial freedom requires for early retirement

If you’re in debt today, the best thing to do is to dig yourself out of that hole! Wait, that didn’t sound right, did it? It’s always better to climb out, because digging further wouldn’t do you any good. But unfortunately life is not always fair. You’re not always handed a step ladder when you need it the most. Sometimes all we have is a shovel in our hand. Meaning we have access to more loans while in debt.

But here’s the catch. Instead of using the shovel to continue to dig deeper into debt, use it to dig sideways and carve yourself a set of steps you can use to climb out.

If you live in America, it is much easier to get into debt, than to get out of one. Truth be told. It is not the system that keeps people in debt bondage; it is generally a faulty mindset. And this can be fixed with financial literacy. Understand your money first, before making any decisions about paying off the loans.

This is an essential step because; paying the loan minimums when they’re due will not fix the problem. It is the ability to not return into debt; and how debt payments are systematically prioritized. This is the skill and part of the steps financial freedom is attained by individuals, families, and organizations.

Giant Step 5: SAVE TO AN EMERGENCY FUND

Saving to emergency funds are steps financial freedom seekers take

What is an Emergency Fund?

An emergency fund is a crucial element for any financial independence roadmap. This is a rainy day safety net reserve that you could tap into in the case of emergencies. You start by putting away a small percentage of your income. Use about 10% of after-tax income, or a fixed sum like $100 (or multiples of that) each month.

Contributions

The contributions are part of the awesome steps financial freedom dreamers commit to. Cash is parked until it reaches a 6 month worth of living expense threshold. This can be invested in a high yield savings account, or a money market equivalent that could be accessed on short notice. For the latter, although the yields are higher, they present a big drawback when funds are needed immediately.

The best way around the problem is to use a credit card to fund your financial setback needs, then pay of the debt bill using the withdrawal from the money market position. This protects you from paying interest on that borrowing.

The three (3) main benefits of an emergency fund:

An emergency fund will allows you to make cash withdrawals each month for up to the threshold saved. For example, 6 months – in the event of loss of primary income.
An emergency fund can pay you a big lump sum in case of unplanned repairs or medical emergencies.
The fund can be used to protect your long-term financial freedom investment portfolio (Example: Equity investments) from premature withdrawals for personal use.

Remember to replenish the fund after its use. Re-start the same accumulation process and steps financial freedom seekers persist with. Finally, endeavor not to touch it for any other purpose, except for the self & family preservation motives you began with in the first place.

Giant Step 6: Build An Investment Portfolio

Building an investment portfolio is among the vital steps financial freedom dreams are made of

The central point of achieving financial freedom is to have an investment portfolio that will help you arrive at that destination. If you over look the steps financial freedom blogs such as this one teach, you might end up with your million dollars, but it could take a much longer time horizon to get there.

The best investment portfolios are equity based; or they have significant equity positions – alongside lower risk securities, such as money market instruments. Age is a factor. The younger you are, the more years you have ahead of you for equity corrections. But for the older age bracket, you want something that is more guaranteed.

Sage Tip: How to Learn About the Stock Market and Investing for Beginners

On the other hand, if you play a fair game of having a mix of assets, such as stocks, ETFs, and money market instruments, the portfolio could grow and compound annually and help you get there faster. Risk is certainly correlated to high rewards. But the steps financial freedom candidates take is to have higher yields for their investment portfolios – with adequate protection downside protection.

Observe the following tips to help you mange portfolio risk:

Diversify your portfolio with a few investments that are scattered across a couple of asset classes.
Get to know your investments through adequate investment research, financial due diligence, and also picking the right advisors and fund managers.
Invest in yourself through financial literacy that grows. Combine online learning with solid books, networking with the right people.

Giant Step 7: Create Multiple Streams of Income

Creating multiple streams of income are among the giant steps financial freedom plans are made of

The best way to accelerate your financial freedom fund’s growth is having multiple streams of income. The more money you can allocate toward investing – the better. This strategy shortens your retirement due-date in retrospect. The end result is a growth in monthly contributions that are collectively compounded together with your existing investments.

To build multiple streams of income, you’ll need to evaluate your options and see what steps financial freedom seekers like you taking to find methods and opportunities that fit their current lifestyle and schedule. For instance, if you’re a full-time income earner in a 9-5 job, you could build an online business – such as a blog, YouTube channel, affiliate marketing, domain flipping, or drop shipping.

You will maximize your evening hours and weekends with a detailed (yet imperfect) plan to get as much passive income coming through the door as possible.

Giant Step 8: Enjoy Yourself

Enjoying yourself is part of the essential steps financial freedom hunters share

This factor is very crucial. Remember to treat yourself to some of the good things in life, while you are on your way taking massive steps financial freedom journeys like this require. You could easily lose your mind in the hustle of accumulating wealth and miss out on the finer things in life.

Make time to enjoy your family and friends. Eat, play, and have a great time. Because those activities are unseen contributions that you’re making into emotional investments. They will pay off in joy, peace, and healthy mental gain over time. You will stay sane when others crumble under stock market shocks, and the stress of hustling for long hours. You don’t have to skip lattes either; you will go onward and upward on your journey to become a happy millionaire.

Giant Step 9: Achieve Balance in Life

Achieving balance in life include steps financial freedom investments alone cannot attain

As far as balance is concerned, enjoying yourself while still keeping your wits about yourself is the way to go. Besides the many essential steps financial freedom books out here recommend, very few point to the need for balance.

As important as investment portfolios are needed to grow wealth, emotional accounts also cover the non financial dimension. You deserve to achieve a 360 degree success. Prosperity that is far more valuable than digits and commas on a screen.

Consider developing plans that cover the following areas of your life:

Family: Whether starting one, nurturing the current, or making amends on broken relationships.
Health: Staying healthy and watching your diet with a daily fitness plan is essential.
Spirituality: Some might call it religion. It is the discovery of self through prayer to God.
Social: Beyond social media, we can have face time with real people we love and care about on a regular basis.
Insurance: Cover yourself and your family with adequate health and life insurance.

Giant Step 10: Help Others by Bringing Them Along

Helping others by bringing them along through steps financial freedom mentoring is made of

In order to complete all the steps financial freedom seekers go through, we need to help one another. We can do this by bringing others along with us. The journey does not need to be traveled in solitary. In fact, if you have a partner who has similar aspirations, they could eventually be good accountability partners. Their opinions and inputs could strengthen your million dollar resolve even deeper sometimes.

Individual investment accounts are recommended as far as investments are concerned. But joint projects – such as online income ambitions will grow faster with a collaborator. Gym memberships seldom go to waste if is a sidekick cheering you on.

Also, you are definitely capable of mentoring. This is using your own experience and lessons learnt to keep a mentee on their tippy toes. You can educate your kids (if you’re a parent) and arm them with the right foundational financial literacy mindset.

Giant Step 11: The Missing Piece: Enrich Your Mindset

Enriching your mindset is part of the steps financial freedom seeking individuals take

This is the missing piece and among the final steps financial freedom gurus want you to take. On the roadmap to financial independence, your money mindset is your most precious driver. This is the programming that you have received your whole life up until this point. Your mind contains the blue print for success or failure. We have to edit it frequently with a hack that unlearns the unprofitable stuff, and doubles down on the good stuff that works.

Know Your Risk Tolerance

What is the first thing that comes to mind when you hear about STOCKS? Or starting a business perhaps? If you said RISKY, this could possibly have been passed on by your dear parents. Not wishing us any harm, parents often like to protect us from all kinds of fears and danger as toddlers. The dark margin of “over protection” must be checked if we want to raise kids that can win with money and life.

But if you get wide-eyed when you stumble upon conversations about money, investments, or entrepreneurship, you actually have a good foundation you could build on. You are probably the type that takes big steps financial freedom seekers take in the face of risk or uncertainty.

Once your mindset has Desire, then cultivate Action and then Persistence. And finally, grow your Gratitude vibes – and the journey to making your millions will be easier than you ever thought it could be.

Sage Tips:

Giant Step 12: The Financial Freedom Plan

The Financial Freedom plan is an indispensable component of the steps financial freedom ambitions need to succeed

We’ve come to the end of the road that began in earnest with Giving. From the perspective of conventional wisdom, laying out a plan should have been the first step. As important as a plan is or was, we were better off establishing habits or tenets to showcase the importance of each.

Set Life Goals

Begin setting life goals that are 360 degrees in nature that include the kind of life, career, and retirement you want for yourself and your family. Include health, fitness, and happiness. Yes, set a goal for joy. How to get as much joy as possible in this life.

Finally, while generalizing, we can focus on setting our financial freedom money goals. This includes the factor of early retirement at some point in your life. Your plan need not be perfect. In fact, the simpler, the better. You have all the weeks and months ahead to do adjustments and optimizations.

Final Thoughts

The journey to financial freedom and self discovery began long ago when you said yes to this path. You made it a point to find online resources like this one to up your game. Building a mindset of wealth and prosperity is as important as setting up an investment portfolio with assets you understand and love.

For further reading, check out my handbook: Iron Habits of Financial Freedom. I started writing this little prosperity manual before my daughter was born. Now she quotes parts of the book to me during the morning bathroom routines. I hope you catch a few memorable wealth tips yourself while reading it.