Easiest Way to Financial Freedom
Are you tired of living paycheck to paycheck, feeling like you're stuck on a hamster wheel with no end in sight?
Do you dream of a life where you have the freedom to do what you love without being a slave to your job? If so, you're in the right place.
This guide will provide you with a clear, step-by-step roadmap to achieving financial freedom, inspired by the insights of self-made millionaire Mark Tilbury.
Define Your "Freedom Figure"
The first step on your journey to financial freedom is to determine exactly how much money you need to live your dream life without ever having to worry about money again. This is your "freedom figure."
To calculate this, you'll need to envision your ideal lifestyle and estimate its annual cost. Consider the following categories:
The Rule of 25: Once you have an estimated annual cost for your dream life, multiply your annual expenses by 25. This is the amount of money you need to have invested to generate enough passive income to cover your expenses indefinitely.
Example: If your ideal lifestyle costs $80,000 a year, your freedom figure would be $2 million.
"Hack" Your Way to a Higher Savings Rate
Now that you have your freedom figure, it's time to start working towards it. This doesn't mean you have to live a life of extreme frugality. Instead, you can employ some smart "hacks" to save money without sacrificing your quality of life.
Car Hacking
Instead of buying a new car and taking on a hefty loan, consider buying a quality used car that has already experienced the bulk of its depreciation. You can often sell it for a similar price after a few years.
Brand Hacking
Opt for generic or store-brand products over their big-name counterparts. You'll be surprised at how much you can save without noticing a difference in quality.
House Hacking
If you're a homeowner, consider renting out a spare room or purchasing a duplex and living in one unit while renting out the other. This can significantly reduce or even eliminate your housing costs.
Tax Hacking
Take advantage of legal tax deductions and tax-advantaged savings accounts like ISAs (in the UK) or Roth IRAs (in the US) to keep more of your hard-earned money.
💡 Need help tracking your expenses and savings? Check out our free budgeting template to get started.
Build Your Credit with a Credit Card
Contrary to popular belief, credit cards are not evil. When used responsibly, they are a powerful tool for building a strong credit score. A good credit score can save you thousands of dollars in the long run by qualifying you for lower interest rates on mortgages and other loans.
The key is to pay off your balance in full every month and keep your credit utilization low.
Create Multiple Income Streams
Relying on a single source of income is a risky strategy in today's world. To truly accelerate your journey to financial freedom, you need to create additional income streams. This could be a side hustle that builds on your existing skills, such as freelancing, e-commerce, or affiliate marketing.
Don't fall for the excuse of being "too busy." With over 50 hours of free time each week outside of a standard 9-5 job and sleep, there's ample opportunity to build something for yourself.
Make Your Money Work for You
The wealthy understand that the true purpose of money is expansion—using it to make more money. Once you have your extra income streams flowing, don't fall into the trap of lifestyle inflation. Instead, invest your money into assets that will grow over time and generate passive income.
The stock market is an excellent place to start, and a simple S&P 500 index fund has historically provided strong returns. Other options to consider include real estate and a small, speculative allocation to cryptocurrencies like Bitcoin and Ethereum.
