In pursuing financial freedom, typically at least 10% of a person’s income is wasted on things that would never be missed if they were never purchased. The question then is, “How could that 10% best be redirected to help you gain your financial freedom”?

Gaining Financial Freedom – Step 1

The first step on the road out to financial freedom starts with discovering your true purpose; finding the thing you would be glad to hop out of bed in the morning to get working on, or to stay up late for to get one more thing done.

Gaining Financial Freedom – Step 2

The next step is finding out exactly how much income you need to meet your Income Planning Target on a weekly basis. That’s the missing ingredient: How much did you spend, exactly, on each type of expense over the past year? Include the expenditures you put on credit cards by expense type. Add in what you need to handle emergencies, expand your business and the cash set asides for long-term wealth building. Divide that by 52 weeks and you have the weekly Income Planning Target.

Gaining Financial Freedom – Step 3

The third step is looking through those expenditures and carving out the waste: that 10% – 20% that you’d never miss if you didn’t buy those items. It can be one type of expense (ex: meals & entertainment), or a combination of expenses. Work it out so you have that 10% – 20% separated out.

Gaining Financial Freedom – Step 4

Putting the financial freedom puzzle together

The fourth step that will set your feet firmly on the road out is stashing away a minimum of 10% into a bucket of cash for your financial freedom. Into a savings account goes the 10% that you carved out that was being wasted. Plus, any extra money that comes in over and above your weekly budget gets spirited away into the savings account.

There was a business owner who received an unexpected $2,000 tax refund. He was very excited as he announced to his wife and two teenaged kids that they had gotten an unexpected extra $2,000. Immediately all four members of the family started to mentally spend that money: the wife on $2,000 of new furniture, the husband on a $2,000 fishing boat, the teenage daughter on $2,000 worth of clothes, and the teenaged son on a $2,000 trip and new snow skis.

It wasn’t long before the individual family members had mentally made plans to spend $8,000. To appease everyone, they agreed to part of each individual’s plan. They ended up spending $4,000 which added $2,000 to their credit card debt.

They could have been way ahead by putting the $2,000 unexpected income into their savings account toward their financial freedom and continuing to operate as before. A family would have to produce about $23,000 in income to put away $2,000 in savings after taxes.

While financing your freedom takes self discipline, the rewards are worth the effort. As the 10 percent bits get set aside, week after week, year after year, invested to earn more money, there comes a point where the growth of the account becomes so rapid it will blow you away. Don’t ever regret you didn’t start on this road out years earlier. Just start today and never look back.

Read more business money management tips on gaining your financial freedom here: 7 Steps to Gaining Financial Freedom

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