3 Steps to Financial Freedom

By: Dennis Harting

Financial freedom is something that many people desire. With advancements in technology, it has never been easier for someone to realize their financial dreams. Nevertheless, the majority never come close to reaching this destination. In fact, studies have shown that most are financially desolate by the age of 65. This is incredible since people over $1 million in earnings throughout their working life.

The keys to attaining financial independence are not difficult. They were uncovered centuries ago. People in all different cultures have used them to create massive amounts of wealth. Here are three simple steps that you can begin to take immediately to begin your road to financial freedom.

1.Work for knowledge and not for money

Everyone has bills to pay. Regardless of what your goals are, the world does not stop moving waiting for you to get caught up on your skills. However, too often people take positions solely based upon the money that they will receive. "What is the compensation" is one of the first questions asked on an interview. This is a mindset that will lead to one living a life of scarcity and lack.

People who are truly interested in succeeding financially look at different positions from the perspective of the knowledge that will be acquired. If you approach every job as a learning situation, your skills will increase over time. Working in different areas of business provides a well rounded foundation if you ever do set out on your own. In the long run, the experience is much more valuable than the income.

The same holds true for your present position. If you are currently employed and not looking to make a move at this moment, then use the same mindset. What can you learn from those that you presently work with? Everyday we are exposed to lessons about management, team building, and leadership. Keep a journal of what you observe in others. You will see what works and what does not. A lot can be learned simply by being observant. This is a really helpful suggestion is you cannot stand your present position. View it as a short-term educational program. The best part is that they pay you to learn.

2.Start a part-time business

There are a lot of people who work two jobs. The economic conditions of this era often require that for people to make ends meet. Unfortunately, all this is doing is locking someone into a life of hard work and struggle. When one chooses to exchange time for money, i.e. working for an hourly wage, they run into the situation where they run out of time. One cannot add more hours to his or her week. If you work 60 hours this week, the odds are that you will have to do the same a month from now. It is an endless cycle.

If you are going to put in extra time above your normal work week, why not spend that time doing something that will enhance your circumstances? The easiest way to do this is to start a business. Most choose to begin this venture part-time in their home. It can be an offspring of a hobby that you presently enjoy. Regardless of what you decide to do, the benefits to you are numerous.

It is a proven technique that a tremendous way to build wealth is through the owning of a business. When one opens a business, they begin to operate under a different set of tax laws than the W-2 employee. Whereas the employee pays their taxes first, a business owner pays taxes last. This is because of the use of deductions. Things that are done in the normal course of business are eligible to be written off. Also, if one uses a corporation there are a host of other benefits available. (***It is recommended that you seek out competent professional legal and accounting advice before establishing any business). The savings in tax alone can put 15%-30% of the expenses back in your pocket.

In addition to the tax benefits, one can earn income of a home-based business. When one works for another, they may receive a $.50 or $1.00 per hour raise. Yet when a business grows, the revenues can increase infinitely. There is no cap on the growth rate you can enjoy. If your profit margins are steady, you will net more as the revenues grow.

3.Make money work for you

Relying solely on your efforts will not lead to financial abundance in most instances. This is similar to the trading time for money concept. There is only so much that you can do. To move forward financially, it is necessary to put money to work. In effect, each dollar becomes a 'financial foot soldier'. The money will go out and reproduce itself. Tapping into the effects of compound interest is a basic tenet of wealth building.

Of course, the most common excuse is that 'I cannot afford to invest'. The reality is that one cannot afford to not invest. Omitting this part of your financial strategy will certainly lead to having to work to sustain yourself in later years. A proven strategy is to reduce the expenses so that they are lower than the income brought home. With this difference, invest in vehicles that will grow over the course of time. The best way to do this is to have the money automatically deducted from your check. Have a percentage rolled into a different savings account. This way you will not even see the money. People who do this find that after two weeks they do not miss the money out of the paycheck.

The final part of this suggestion is to acquire some financial aptitude. Do not become a puppet for the ones offering advice. Learn some of the basic terminology and investment vehicles available. Star athletes have shown what can happen when one relies too much on the advice of others without a basic knowledge of what is going on. Many have squandered millions of dollars only to end up broke at the end of their playing careers. Get into the habit of reading financial and investment publications to expand your knowledge base.

Finance
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