How Do You Get Financially Free?

How do you recommend I get started on creating a plan to become financially free?  This is a question I often get because I’m on a financial freedom journey myself and have a plan and framework for how to get there.

Financial freedom starts with just that: A plan. And the plan for financial freedom starts with a monetary goal. 

How much money will freedom require? You need to know that number to set the goal and you can easily calculate this number. And then you must learn how to invest. No savings account will give you the rate of return you get with a very safe investment in the stock market. Read more about this fact in the article: Why Is Investing Better Than Saving?

I invest because I want to be financially free. You think it's scary to start investing? I think it's scary not to invest because though I love my job at the LEGO Group, I don't want to work until I'm 70 years old. This is the current retirement age here and I plan on checking out earlier. 

From my perspective there are two roads you can take when you plan to become financially free: 

• reduce expenses or 
• focus on reaching an audacious goal.

How much money do you need to be financially free? My clients are often pleasantly surprised it will take less time than they expected to get financially independent. I have a tool inspired by learnings from Tony Robbins, Bob Proctor and probably others, which will give you your freedom number and in the article below I’ll describe how you can calculate the number yourself without my assistance. 

What you need to prepare is to download your 2021 expenses. Your online bank system likely has a feature where you can download a spreadsheet or pdf file of all your expenses. 

Next step - you want to make three budgets: 

1) Financial Security

You can calculate this number with precision – all you got to do is to find out what your mortgage payment/ rent is, your water, heat, electricity for the year, how much you pay for food (make an average estimate by checking a couple of months and find a good average). What do you pay for transportation per year? Find out the basic levels of insurance and add in any critical medicine you need.

Create an overview of all these expenses in excel and find the annual minimum expenses for you to get by in life. I have a tool that will calculate this number for you. If you’re interested, book my session “Financial Independence Plan” or book a 3-session coaching bundle where we cover several areas including investing basics. 

Once you’ve calculated these expenses you know the annual income that’s enough to meet your basic needs for a total of one year. Multiply this number with the number of years you plan on being financially free – for example if the average age is 78 years old and you plan on retiring at 50, then you multiply the annual total expenses by 28. This is your goal number.

2) Financial Independence

Financial Independence is your second potential financial freedom goal and that’s what most people mean when they speak of financial freedom. When you’re financially independent you’re independent of any income from work and have the money you need to continue your current lifestyle. That’s what financial independence means. With financial independence you aim for the income you have today – but without working. It’s easy to calculate because it's all the expenses you had last year, and you just need to find that total number and then multiply with the number of years you plan on being financially free. 

When you’re financially independent you no longer have to work. 

3) Absolute Financial Freedom

The last budget is your dream budget. Think about all the things you would like in your life. Would you like to travel first class, do you want sublime health and treatments that will eradicate any of your health issues, eat fresh, organic food prepared by a chef, do you want to have the funds to build a school for homeless children – pay your parents’ mortgage? This will take some research because you want to try to be as close to the actual cost as possible. This is life on your terms.

In the financial freedom session I offer and in the 3-session on-to-one coaching bundle I can help you set your freedom goal using a tool that will automatically calculate that financial independence number that you should go after. I love tools because they make it super easy to quickly calculate budgets. What I did (because I’m ”lazy”), is I took what Tony Robbins and Bob Proctor taught me, and I put it into a spreadsheet and created the formulas so the freedom plans will automatically populate. 

You get 5 different financial freedom plans, so you have choices to set your goal from. It’s not only the calculations but also an investment plan that will show you how much it will take to get there. And this is where my clients are pleasantly surprised because with low-risk investment it’s actually possible to get there. So, reach out if this is for you - I want to cheer for you to be on the journey to financial freedom.