12 Small Secrets for Huge Financial Freedom Gains
You probably haven’t heard before…
On your financial freedom journey, it’s critically important to think outside of the box. Financial creativity is hugely underrated. I wrote an entire book filled with 101 money hacks so you better believe I’m always looking for a new tip, strategy, or secret when it comes to managing money in the quest for financial freedom.
Today is no different. Here are 12 more I’ve never written about.
#1. Look at your money positively!
This one isn’t exclusively for those in debt or lower-income earners. Even those that make a lot of money often feel guilt or shame around it. The reality is money is something we often desperately desire, fear, or feel bad about one way or another.
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Money is not a means to an end or something you have to deal with. Money is a necessity like food and water. It’s a tool to help you get done what you want to accomplish or get to where you want to go. Money equals opportunity. It’s access. It’s energy. It’s less stress.
Eventually, money can equal freedom from fear or worry if you have the right attitude and conversations about it. Otherwise, you’ll subconsciously sabotage your chance of making it or keeping it.
#2. Have a spending dopamine detox.
This is a fancy way of saying have a no-spend week. Alternatively, see how long you can go on an allowance (if zero dollars for 7 days seems too constrictive). I’m not talking about your rent or mortgage or bills obviously. I’m talking gas, eating out, non-essential spending, fun money, and even groceries. How low can you go?
Get creative meal-wise with what you have in the pantry vs. rushing straight to the store to stock up. Walk or ride your bike to get around. Avoid unnecessary shopping and even sale emails you get daily. Say no to a happy hour or pivot it to home. Start a streak or set a low allowance this week or this month to practice frugality and saying no. Gamify your savings and reward yourself by sending money you said no to spending to savings to pay yourself first.
#3. Get your housing under 20% of your income and your transportation under 10%.
The average American spends 37% of their income on housing. People spend an average of 19% of their income on transportation. That’s 56%(!) of people’s budget gone on 2 expenses. Aim to get those two combined to just 25% as a goal. It’ll require creativity to get there but that’s the theme today.
Obviously, you can’t do this asap (unless you totally ditch your car as I did 4 years ago) but find out how much you spend on these two important categories and reflect on how you could reduce one or the other dramatically in the next year.
#4. Develop multiple streams of passive income.
Why multiple streams? Because you are financially free when your passive income exceeds your annual expenses, regardless of your age or situation. Plus, there are dozens of passive income stream opportunities for you to explore. Explore several and give them a real shot!
Take many “shots on goal” to increase your opportunities to score. You can’t score a goal if you don’t take a shot — it’s the same with soccer, hockey, or basketball. LeBron James never hesitates to take a shot. He misses many of them — 4th most misses all time — but he just became the second-highest scorer because he continued to shoot. Plus, practice makes perfect.
When I first learned about passive income it was a game-changer. When I started earning from more than one stream it was incredibly satisfying, addicting, and helpful in the pursuit of my big financial goals. I challenge you to do the same.
How I earned $8K from 8 passive income streams in 6 months
That was a whirlwind. An awesome whirlwind.
#5. Focus on moving from the middle class to the investor class.
Your goal should be to go from someone who makes money from labor, trading your time for money, to someone who makes money from money. This helps illustrate the importance of developing multiple streams of passive income. To make money with money you can
Invest in the stock market
Invest in real estate.
Invest in a business.
Or even invest in yourself. Take a course. Learn.
Then execute with passion so you can work smarter, not harder in life.
#6. Mind the gap.
I’m talking about the difference between what you earn and what you make — increase that gap. Instead of budgeting and tracking meticulously to do this, I set a plan to save have of my income. I wrote a whole book about saving half you can find on Amazon.
How to Save and Invest Half, Retire Twice As Fast
Announcing my new book Save Half, Retire Fast — available now!
At the beginning of the year, I decide what I need to save and invest to get there. Then I automate that plan as much as I can. That way, money doesn’t hit my account to tempt me. And the money in my account is mine to spend. It’s relatively simple and mostly hands-off once you set it up.
So, determine your savings rate and create your plan to mind the gap more. If you’re at a 5% savings rate (like most of America), aim to reach 15% in the next year. And increase it each year a little bit at a time.
#7. Get sleep & exercise.
You probably didn’t see this one coming and might not be sure of how it impacts your finances but here’s the thing — you make poor decisions when you get poor sleep. And exercise is great for your health and mind in the same way. The only downside is you’ll probably live longer, thus you’ll need more money to retire so it’ll last longer…
Sarcasm intended! That’s would be a fantastic problem to have!
#8. Negotiate everything.
Far more things are negotiable than people think! Even what projects you work on at work or how much time off you get.
The price at the food stands at a farmer’s market.
The price of an item with slight damage or request to buy the floor model.
Your insurance rates or coverage.
Your credit card interest rate. Seriously call and ask them to lower it — it has worked for me!
Just never be a jerk about it, okay?
#9. Evaluate purchases on a cost-per-use basis.
I do this often. When it comes to shopping for clothes, this might mean buying quality items instead of fast fashion that won’t last long. I even think about cost-per-use when it comes to the grocery store. It can be tempting to grab the bigger value pack (looking at you Costco) but it doesn’t always make sense, especially if you end up wasting anything extra that can possibly spoil.
You can apply this to tech, kitchen gadgets, and even records or board games. Sure, it can be fun to take a risk on a board game you’ve never played before but I’d rather go with the one with replay value that has great reviews that mention it being a “go-to” on game night.
#10. Use your emergency money.
For those that actually do sock away a few hundred or few thousand towards an emergency fund, they often latch onto the idea that they can’t touch it, no matter what. They’d feel too much guilt if they use it. They’re used to seeing a certain number in that account.
But, when an emergency arises like needing a new water heater or having to grab a last-minute flight for a family emergency (that was me once), don’t charge these unexpected expenses on a credit card and rack up debt. You’d be creating a second problem by putting yourself in a financial hole! You saved that money for a reason — to help yourself when you’re in need. So do yourself a favor and use it so you don’t make a bad situation worse.
#11. Make micropayments towards your credit cards, and do so often.
For some reason, some people have a false belief that you can only make one credit card payment a month. I typically make 4 or 5 smaller payments in a month. This is an especially useful strategy if you’re digging yourself out of debt but I still use it to help keep my credit card balances all to zero and it helps me stay on top of my charges since I log in a couple of times a week to check-in. But there are also several less than obvious benefits to doing this.
First, it can help lower your interest payment. Most issuers calculate interest based on your average daily balance during the month. You’ll lower your average balance by making smaller payments during the month. Plus, it can help raise your credit score. By making more smaller payments throughout the month, you will be avoiding late payments and using slightly less of your available credit, both of which are key factors in increasing your credit score.
#12. Hire a financial coach instead of a financial planner.
According to the Consumer Financial Bureau: “A financial coach is a trained professional who collaborates with and guides their clients to reach their financial goals. The process is personalized and non-judgmental. Financial coaches provide support, encouragement, accountability, and tools to help people make informed decisions.”
I like to think of a financial coach as a thought partner, cheerleader, and confidant you trust — with no hidden agenda.
Marketing and the media overcomplicate personal finance, making it seem essential to seek out a financial planner. But, the reality is, managing your money doesn’t need to be complicated. Most people simply need to focus on spending less than they earn, getting out of debt, creating goals, and investing consistently. That’s where a financial coach can come into play.
Humans are creatures of habit so focus on building good habits. Hopefully, a handful of tips on this list stood out to you to help you build better habits. If so, let me know! What do you learn or what can you do better than I discussed today. I always love hearing from you. I especially love hearing about your wins so feel free to share a tip you utilize or a recent financial win.
CONTRIBUTED BY Frankie Calkins
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