Stages to financial freedom

Wow what an amazing year 2012 was, My business grew by just over 70% and I'm getting closer to my goal of being financially free. Financial freedom is a varied term though in that it means different things to different people, for me it means never having to work again if I didn't want to! So that every month all my bills and living costs would be covered by multiple streams of income and residual income at that.

I have several stepping stone goals to reach this one big goal

Firstly I need about £950 (before tax) per month, now that would cover all my contribution to the household ie utilities, food, rent etc and at this point (and I'm already on the way to this goal with my Utility Warehouse business)  I could be financially free, if I never went out again or did anything else! That would be pretty boring though, so that leads me onto stage 2.

Stage 2 I need around about £1800 (before tax) a month coming in on a residual income basis, to cover other bills like fuel, mobile phone, going out for a meal once per month, car insurance and so on, Then I'd be pretty happy with that, I'd pretty much never have to worry about bills again. Of course I'd still have a linear income at this point by that I mean I'd have an income where I get paid for the hours I work.

Stage 3 is around £3250 (before tax) I think this is a nice figure for me to be able to have and do what I want when I want, also if I wanted I could drop the linear income sources, although I probably won't as I'll take the income from that and invest in to a residual income such as shares.

Final stage of financial freedom would be around £6500+ (before tax), Now I say plus, because why limit yourself, but on this sort of income for me it means not only will I never have to work again (if I didn't want to) but then neither would my wife (well you need someone to share the time with). This would mean being able to have what we want when we want it, going on holiday at the drop of a hat, go to any restaurant we want and not have to look at the right hand side (the cost) you get the picture.

So why do I have these four figures? 

The £6500+ figure is nice and I will get that within the next ten years but it's much better to have those smaller goals on the way to tick off, otherwise it's be a bit like having a 20 ft ladder with only 2 rungs! Of course I have other goals in between and there aren't only four rungs on my ladder, I've just written this to give you an idea, so what are your goals to your greater goals, get it written down and have it clear in your head, it is very motivational.

If you want to share your stepping stones, feel free, I'd love to know.

To your success

Paul

Build your wealth bit by bit, it'll make it easier.

The journey of a 1000 miles starts with a single step - Chinese proverb

Nearly everyone has heard this proverb and if you hadn't then you have now! Along with others like how do you eat an elephant - one bite at a time.... building wealth is often massive for a lot of people (again asking the question what does wealth mean for you?) and so become overwhelmed by the thought of it, but the key is to just start, just start. start getting into the 'Mindset for Wealth' whether that means start saving 1% of your income in a savings account or other investment vehicle.


Failure to start.
When we get overwhelmed  by something, if we think it's too much we become like a rabbit in the headlights and do nothing, the key is to pick something and then do it. 'Failure to plan = plan to fail' is another saying but then there is another saying 'Ignorance on fire is better than knowledge on ice' now both are very valid sayings and I've seen people on both ends of the scale people that spend all their time planning and not doing and those that jump straight in and then mess something up when their should be a bit of planning. The key is to be balanced and recognise where you are now on that scale.


When you start grow your wealth the quickest way is not to put masses of money into a mindset of growing that wealth and start bit by bit whether that is putting £1, £10, £100 in to an investment or 1%, 5% or 10% of your monthly income into it. By doing this small activity on a regular basis you'll see your wealth slowly at first in which it'll seem hardly worth doing but eventually it'll hit what's called a 'Tipping point' where it will grow rapidly.


To you success
Paul




ps If you want to know more about applying the theories in this post to any part of your life to get a big change then I'd recommend the following 3 books.


Slight edge - Jeff Olson