How To Create Your Financial Freedom Plan In 5 Easy Steps

financial freedom

Written by Agatha

August 1, 2021

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Gang, let’s use this half of the year wisely by being intentional about our financial freedom. It doesn’t matter how badly you’re doing with your money so far. In this short guide , we’re going to work together to create your personalized financial freedom plan. 

What does financial freedom mean?

The most widely accepted meaning of financial freedom is ‘having enough income to pay for all your expenses for the rest of your life without having to work or without depending on others.’ 

Sounds like a tall order, yes? It’s an intimidating concept for a lot of us and one that always seems unachievable even to me. 

It doesn’t help when you know that only 5% of the world’s population can attain this status and 95% of people outlive their retirement funds.

That shouldn’t discourage you. You have this blog as a resource to help you in this journey, specifically this article, to help you develop your fail-proof plan.

The most important aspect of your financial freedom journey is shutting down all the external voices and influences and deciding what financial freedom means to YOU.

Your environment plays a significant role in determining how you define financial freedom. If everybody around you defines it as owning a pickup truck, a plot of land and a house, you’ll end up adopting the same goals. Not that there’s anything wrong with these, but you do need to come up with your own plan to guide you when making financial decisions.

Ready? Let’s do this!

How to gain Financial Freedom 

Download your FREE copy of The Financial Freedom Worksheet to get started.

What does financial freedom mean to you?

A year ago, I wrote an article that answered this question. I gave 13 examples of what financial freedom means to me. These included:

  • Getting rid of morning alarms, forever!
  • Ability to pursue my many passions.
  • Having uninterrupted reading time. 
  • Not having to attend some meetings & choosing who to work with.
  • Travelling.

In a nutshell, financial freedom to me means FREEDOM. Freedom to do whatever I want, whenever I want. Having loads of free, uninterrupted time. 

And for a lot of people, financial freedom revolves around this same concept: having total control over your time and future.

This means that financial freedom means different things to different people. To some people, it may mean:

  • Converting a bus into a home to escape the trap of paying rent. This gives such people the freedom to quit their jobs and spend unlimited amounts of time with their families. 
  • Being able to afford two (or more) vacations per year.
  • Paying all your bills on time, all the time.
  • Homeschooling your kids.
  • Retiring at 30.
  • Quitting your job and working on a passion project.

The options are endless. This is why you must take the time to define financial freedom for yourself.

What does your financially free life look like? Download the financial freedom worksheet here so that we can work together.

Steps to financial freedom

 

1. Define what financial freedom means to you.

You’ve written this down in the worksheet, yes?

2. What do you need to achieve your financial freedom goals?

This is the part where you’ll need to come up with some numbers. 

If one of your goals is to build/buy a home, you need to know how much that home will cost. Do some research online, or ask people who are in that business to give you estimates of how much your specific dream will cost. 

2 questions will help you get clarity on this:

  • What is the timeline for these goals?

This is how long it will take to achieve the goals.

 

  • How much money do you need for this goal to become a reality?

For example: if you need $50,000 to buy a house in 3 years, then you’ll know that you need to set aside roughly $1,389 every month.

Ask yourself these two questions for all your goals. 

3. What is your current financial situation?

Having a financial freedom plan means knowing all your cold, hard numbers. No guesswork. 

In this step, check all your accounts and create a list of your assets (what you own) and your liabilities (what you owe). I have created one for you in the downloadable worksheet.

This step is usually emotionally overwhelming for a lot of people. If you experience similar feelings or even feel scared, it’s okay. Just like financial freedom means different things for different people, these numbers will also be different. 

This is a liberating step. It means you’re ready to take charge of your financial freedom journey. It will also give you clarity on which aspect of your journey you should prioritize.

Depending on what you come up with, you’ll realize that you need to do a few things such as save an emergency fund or start working towards debt freedom. These are usually the first 2 steps towards attaining financial freedom for everyone.

Related Read: How to calculate your net worth

 

4. Where will you get the money to help you achieve your dreams?

At the bottom line, you need money. You will need to figure out where the money to fund your freedom will come from.

Often, that usually involves two things:

  • Reducing your expenditure in one or more budget categories

Now that you know what financial freedom means to you, you can gradually reduce your spending in areas that don’t contribute to your freedom. For example, you can reduce the amount of money you spend eating out so that you can put it towards building your emergency fund.

There are many ways to reduce your spending such as moving to a cheaper apartment, reducing your impulse purchase, cancelling some subscriptions.

Tracking your spending is the best financial hack that will give you the data you need to make an informed decision on which areas you should cut back on.

  • Make more money

There’s a threshold of how much you can cut back on when it comes to your spending. But there’s no limit to how much money you can make especially in this digital era.

To accelerate your financial freedom journey, you should find ways of making more money. You could do this by selling stuff you don’t need, starting a side hustle, or getting a higher paying job. 

On the worksheet, write down all the ideas you can implement to cut back on your expenses and make more money. You need to choose what works best for you.

5. Write down your plan

What will you start with? What part of your plan is critical at this point? To avoid feeling overwhelmed, you’ll need to work on one goal at a time.

Congratulations! It’s that easy to get started.

Financial freedom network

If you’re looking to join a financial freedom movement, a group of like-minded people who openly talk about money and help each other attain financial freedom, join The Wealth Tribe’s Telegram Group!

Your definition of financial freedom will change over time, just like you will. What will matter to you in your 20s might turn out to be absolutely worthless in your 30s or 40s. This means that you should do the above exercise as often as you can so that you’re always directing your resources towards what matters most to you at whichever stage of your life you’re in.

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2 Comments

  1. Collins Kariuki

    Hello Agatha. Thank you so much for creating this blog. It’s just what I need as a guy in my 20s. Thanks.

    Reply
    • Agatha

      Hi Collins, you’re welcome. I’m rooting for you!

      Reply

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