Financial freedom, financial independence, becoming independently wealthy, and being rich beyond belief. All of these terms essentially mean the same thing. Being able to live the life you want without needing to work.
Imagine that – never having to work another day in your life, not being dependent on your employer, your spouse’s paycheck. What would it feel like to not need any more money to come into your life and still be able to do the things you want living on the money and investments you already have.
If that sounds like music to your ears, you are in the right place!
I’m unpacking 5 key steps to becoming financially independent and diving into how to implement them in your everyday life. You can download a copy with extra information and the ability to check each item off at www.tracybingaman.com/money
01. Value Financial Independence
The first thing that is necessary to chart a course to financial independence and stick to it… is that you have to value financial independence more than short-term gains and looking like you have money now.
Financial independence is living the quality of life you desire without having to work. In short: having enough money to live on in the way that you want for the rest of your life without having to clock in or out, earn another dollar by exchanging your hours for paychecks.
In order to become wealthy (or financially independent) you have to value that goal more than looking like, acting like, driving like or dressing like you have money.
Know Your Values
Valuing financial independence more than appearances will trickle down into the way that you save, pay off debt, create a plan for investing and even the way that you spend your time, money and energy! The mindset of valuing the independence can have a profound impact on your life.
I talk a LOT about Core Values and identifying yours. If being independent – read: not dependent on a paycheck or other people – is a value of yours and you start living into that value, it will change the way that you shop, how you spend your money, your mindfulness around finances and the fervor with which you save and invest for the future. Download Your Core Value Curator here.
Seriously – saving isn’t enough and we will talk about investing a little later but simply saving money, even in a high yield savings account (which you absolutely should have, by the way), isn’t enough to outstrip inflation and help you to become independent in a financial sense.
Comparison Steals Your Joy
You know that old adage of “keeping up with the Joneses”? Well these days it’s not just the Joneses with the big house and the fancy cars at the end of the cul de sac that you have the opportunity to compare yourself to. The downside of social media is that you can see people from all over the world sharing their highs. The internet is a highlight reel of vacations and new cars, trips, and clothing. We live in a world where consumption has become the norm. All of this comparison is at the tips of your fingers, inside your phone, accessible with a swipe of your finger.
If you are scratching your head wondering how all of these people can lead these incredible lives, you aren’t alone. Aren’t they working? Don’t they have to take their kid to karate today? Do they not generate dirty dishes or make any laundry? Or is it just that they never wear the same outfit twice that generates the fact that they don’t have any clothing to wash.
Here’s the thing about comparison – it is simply a distraction from the real goal. Charting a course for financial independence means valuing it more than the adorable boots on sale at Nordstrom during the anniversary sale. YES, you can buy the boots IF those boots are in your budget and you are also planning to and actively working to execute a plan to get out of debt, save some freaking money, and invest wisely for the future.
02. Understand How Money Works
From the law of attraction to cashflow, having a solid understanding of money and how it works is your number one job on this quest for wealth and independence.
Next up – you need to understand how money works. Understanding cash flow, how to bring more money it into your life through work, intentionality and manifestation, how to use the money that you already have flowing into your life to create more, how to eliminate debt and liabilities from your life, and how to spend in a way that feels good and is in alignment with your values.
Breaking It Down
Cash Flow – The money flowing into your life from your income and investments and your expenses. Simply put cash flow is the money flowing into and out of your life. What you want is a positive cash flow – that is that more money is coming in than is going out. That would mean that the total amount of your income is larger than your expenses. This leaves you in the black or net positive in your life that extra or surplus can be used to invest in your future.
Debt Reduction – if you have debt, even if it’s at zero percent interest, even if you can afford the payments and even if it’s “just” your mortgage – you need a plan for debt reduction. The sooner that you stop sending money out the door in the form of monthly payments the sooner you can start to really make traction with investing for the future. Choose the debt snowball, the debt avalanche, choose based on the debt that you hate the most, but do make a plan to get that debt out of your life and have a plan to save up and pay for things in the future.
The Law of Attraction – The law of attraction is a philosophy suggesting that positive thoughts bring positive results into a person’s life, while negative thoughts bring negative outcomes. Your thoughts are a form of energy and that positive energy attracts success in all areas of life, including health, finances, and relationships. So your energy is this specific wavelength that you’re vibrating at and that is attracting positivity, success, happiness, love, and even money into your life.
Know Your Values
Intentionality with Money – If you don’t have a plan for your money… you will accidentally spend it all if you are a spender. Or you’ll save it all if you are naturally bent that way and not take the time to enjoy it… or you will be paralyzed not knowing what to do.
Using money in alignment with your values – This is how you walk through life making progress towards your financial goals WITHOUT feeling like you are scraping, sacrificing, and living on beans and rice. If you are prioritizing funding those categories that you value you will not feel deprived based on what you are spending money on.
Investing – Investing in yourself in the form of training, experience and education and investing in your future by financially generating long term investments in tax sheltered accounts – like your work-fostered retirement plans, HSA and a high yield savings account are key ways to make your money grow. The power in building financial independence comes from compound interest.
Understanding how money works and having a plan for your money now and in the future is a key ingredient in the recipe for financial freedom. It’s your job to create plans for investing for the future, saving for short-term goals, eliminating debt and liabilities and a budget that helps you to spend freely and in doing these things, you’ll feel great about where your money is going.
03. Teamwork (Makes the Dream Work!)
Having a team of your partner, financial advisor and accountants on your team helping to advise you on money, budgeting and investments can help on your quest for financial independence.
Teamwork, as it applies to generating financial freedom in your life and future sounds like getting your partner on board with your dream. If you are married and walking through this life in partnership, getting your partner on board with the dream starts with why.
Have a Dream Date
A really fun way to do this is to have a dream date. After bedtime or on a date night outside the house with zero kids in tow sit down and dream together. This gives you and your spouse an opportunity to dream together. Discuss what you want your life to look like. Work together to paint a vivid picture of what life looks like when you become “independently wealthy” and at the point where you don’t need to work any more.
Will you travel? Buy or build a second home? Volunteer at or start a non-profit? Spend time with your children? Get specific about what life will look like when you reach financial independence – this will get you AND your partner excited about taking the steps to make that financial independence a reality.
The other key team members on your team are a financial advisor that you trust who loves to educate and wants you to understand where your money is going. It’s also best to have an accountant who helps you with taxes, and a lawyer who helps you to set up your will, powers of attorney and make sure that if something happens to you or your partner, everyone is taken care of and it’s a smooth a process as coming.
04. Automate Your Money
Taking out the margin for human error by automating your money can help you to create financial freedom in the future without having to change your behavior!
If you’ve never read the Automatic Millionaire by David Bach it’s a must-read for the person who is busy (just like I know that you are) and who doesn’t want their financial future to be in jeopardy if they don’t sit down and make a manual transfer into their investment account every month because… who the heck has time for that anyway?
The key pieces of advice in the book are to pay yourself first and to make it automatic. Automatic payments in the form of regular drafts allow you to invest every month in a disciplined way without being disciplined yourself.
Set it & Forget it
By setting up automatic drafts that fund everything from your retirement accounts to non-retirement investments to kids’ college funds to the account that holds the cash for your ongoing home renovation you are taking the behavior out of it. Automating your savings, investments and debt-payoff strategies takes the guesswork out of it, makes it harder to skip and increases your consistency with building wealth month-after-month.
Yes, you are ultimately responsible for your families financial future but to some degree Bach is recommending that you set it and forget it.
Set up your utility payments to automatically draft. Automate your savings to transfer to your savings account after you get paid (pay yourself first). And don’t forget to automate your investments. Set yourself a reminder to check in every quarter to make sure that things are going to the places they need to go, are on par with your budget, and make adjustments as you need to. The less friction the better!
05. Spend Your Time, Money & Energy Wisely
Budgeting your time, money and energy in a way that aligns with your values is a crucial step on your way to financial independence.
I have saved the best for last so if you are multitasking and only kind of, sort of half listening, come on back – the last key element to creating a life of freedom and financial independence is to spend your time, money and energy wisely.
It’s imperative that you are intentional about spending your time, money and energy to intentionally create wealth, happiness and the life of your dreams.
Let’s be honest here; you have a limited amount of time, money and energy. There are so many demands on your schedule, so many opportunities to spend money on things that don’t matter to you and so many chances to waste your energy on others.
Use Your Resources Wisely
Use these limited resources on purpose for a purpose: creating a life of financial independence. Be careful and intentional about what you spend your time, money and energy investing into.
Keep that goal, that dream life where you are financially independent in front of mind. Print out pictures and stick them to your fridge, your mirror, and on the dashboard of your car. Set the photo that helps you to imagine your future of financial independence as your phone background.
Continually adjust course with a destination of financial independence in your life GPS.
Also – don’t lose sight of the why – the reason that you want to be free in the first place. How can you find ways to live into that why today? How can you integrate that into your life on this quest for financial freedom?