You know that being financially free means that your income no longer depends on the time you spend working. You realize your projects, your dreams because you no longer have the pressure of money coming in.
Implicitly, this also means that you can… Retire whenever you want ! No need to wait until you are 65 (or older). Moreover, when Quebecers become financially free, they do not use the term financial freedom, but they declare themselves “ young retirees ”. This notion surely speaks to many more people so why not!
In short, let us now consider the question is the following:
“Where do you start to become financially free? »
Let’s make one thing clear first:
If you’re expecting an answer like “it’s simple, easy and quick”, then you can turn around or rather find another website that will give you a quick fix (for your wallet, not for yours ;).
Because the basics of financial freedom are easy to understand, but not necessarily easy to put in place!
THE COCKTAIL OF FINANCIAL FREEDOM
Here are the ingredients needed:
- 1 dash of willpower
- 1 dose of change
- 1 good dose of determination
- 1 dose of rigor
- Double dose of objectives
- Sprinkle everything with a lot of patience.
And above all, make sure it’s the cocktail you want.
ABOVE ALL, HAVE THE RIGHT STATE OF MIND!
If you have visited this blog, you have surely noticed a category “Having the right state of mind”. If it may seem strange at first glance, with my beginner’s experience, I discovered that the 2 areas, “money” and “personal development” are intimately linked .
Moreover, by talking about it around you, you will notice that the reactions are as diverse as the number of people to whom you talk about it. You are touching sensitive points that go much further than talking “just about money”! Maybe you had a funny reaction at first, when you saw the subject of this blog.
THINK DIFFERENTLY
Because yes, wanting to become financially free is a state of mind. A state of mind, let’s face it, unusual. Not only that, money in USA remains a very taboo subject, like that of politics. It is better to avoid the subject if you want to avoid scandals… But in addition, state loud and clear that you want to stop working, retire at 40-50, so there, hello damage.
That’s why I talk about a state of mind, you have to learn to think differently .
Yes, it is learned. So, if you are not yet convinced, totally in agreement or still waiting to see what it can give but you are ready to embark on the adventure, get ready to make some small changes, especially in your day-to-day. These changes will have a positive impact in the long term.
Indeed, Rome was not built in a day, financial freedom is a long process. But it has a significant strong point. Which ? It is ACCESSIBLE to EVERYONE!
TAKE SMALL STEPS
So are you ready to replace some habits with others that will allow you to be serene in the long term?
If you think you don’t have time because you are already “overbooked”, tell yourself that you will have to change some habits. You do not know how ? For example, you can replace your Netflix series with a book on personal finance for example 🙂
I can already see your face. You will tell me “but then I no longer live! if I don’t even have time to relax….
The most appropriate answer I could give you is that of Albert Einstein, which you will find below. The only question is: do you really want to change or do you prefer to stay in the easy way? But think about doing it little by little. An old habit replaced by a new one, every 30 days for example.
The choice is yours 🙂
But if you are there, you are surely almost convinced and, together, let’s discover what are the bases to become financially free.
BASE #1: UNDERSTAND YOUR RELATIONSHIP WITH MONEY
If you read me regularly, you already know this because I repeat it quite often: before you want to save, get out of debt, earn more money, you must first understand why we are in this current situation, a situation that we hardly like.
ANALYZE YOUR BELIEFS AND THOUGHTS ABOUT MONEY
Experts have shown that the way you spend begins in childhood. Everything you may have heard has created what are called beliefs . They are what dictate your current conduct.
To illustrate this, I invite you to read this article on beliefs and money which will be much more relevant than anything I could tell you.
The first exercise is to determine your relationship with money.
EXERCISE: WRITE DOWN EVERYTHING YOU HEARD ABOUT MONEY WHEN YOU WERE A KID.
One of the first exercises to analyze your relationship to money is to go back to your childhood and write down everything you’ve heard about money, wealth, and rich people . (Source: Secrets of a Millionaire Mind by T. Harv Ecker).
These are phrases, concepts enunciated by your parents, extended family, and even neighbors. There are the classics ” Money is the cause of all evil ” and the variants: ” With the stock market, you can only lose “, ” finance is very complicated, it is reserved for expert ”.
Thus, as for smokers wishing to quit smoking, their priority is to determine why they started to smoke in order to actually quit smoking.
Once these beliefs are accepted, you need to work on them to replace them with positive beliefs. This phase will allow you to bring the money you want into your life. So take the time you need to accept and replace them before moving on to the rest of this article.
BASE #2: ANALYZE YOUR EXPENSES AND ALIGN THEM WITH YOUR INCOME
Are you living beyond your means? Find out with this exercise!
Indeed, the 1st condition to get rich is to: live below these means . If this scares you and you say to yourself: but I stop living then! No, you don’t stop living, you learn to live differently. I warned you it was a different state of mind 😉
EXERCISE: Keep the record of your ALL YOUR EXPENSES
The objective is to make an inventory of your expenses to know what you really buy, on a daily basis, what you can afford and, above all, what is useful to you!
Indeed, asking about your expenses, analyzing them is not a natural reflex. It is rarely something we are taught to do and do with enthusiasm. Once our salary is in our account, we spend it naturally, without realizing what we are buying.
So, like going to see a nutritionist to review your diet, one of the first things they’ll ask you is to keep a diary to record everything you eat. ABSOLUTELY EVERYTHING to take stock of the situation.
Here’s how:
- List all your expenses for the last 3 months ,
- Add up your income and subtract your expenses from your income.
- Leave a column next to indicate the type of expenses that will be seen later.
For my part, I prefer to write everything on paper because it’s more visual. My subconscious prints it better.
But if you are in 2.0 mode, do it in the tool of your choice: Excel or Google Sheet (Excel equivalent free and accessible everywhere). These tools facilitate classification and sorting. There are also apps.
MY OWN EXPERIENCE – OR HOW I STOPPED OVERSPENDING
I myself did this exercise when I set up my financial strategy . Admittedly, it took me a few hours, but it was totally worth it. On the one hand, I realized the savings I could make , especially on the telephony and energy part. On the other hand, it had the effect of an electric shock. It’s crazy how much you can spend in a vacuum!
I’m not talking about restaurants, take-out or delivery, outings with friends or lovers.
No, I’m talking about my whims (yes, I have a lot) that made me spend lavishly. For example, I bought books by the hundreds. From Bescherels that I have never opened to Yoga books, where I stopped at the first page…
Or devices on sale that I was sure I would use one day: kitchen utensils, vacuum cleaner that does the housework on its own but doesn’t work, designer shelves that are still in their boxes, beautiful cocktail glasses that I don’t use for fear of breaking them.
This step opened my eyes and I now ask myself more questions about what I will buy.
RESULT: YOUR EXPENSES ARE GREATER THAN YOUR INCOME
Your priority = eliminate your debts
How? ‘Or’ What ? By learning to spend differently and surrounding yourself with experts
It doesn’t matter the reasons that led you to get into debt, it doesn’t matter the amount of your debts. In order to get out of this vicious circle, your priority will be to put an end to your debts to start again on a more serene basis.
Keep in mind that consumer credit will make you poorer than richer.
The only loans that should be authorized are those intended to buy your main residence or to make your first real estate investment.
RESULT: YOUR EXPENSES ARE LESS THAN OR EQUAL TO YOUR INCOME…
It is a very good starting point. Now you are wondering how to save more or how to make your money grow.
In this case, remember the following rule:
You can only invest when this rule is respected: The sums invested do not jeopardize your financial health. If you lose your invested sums, this will have no impact on your situation.
In order to set up an investment strategy according to your objectives, I invite you to read my article on the 3 steps to follow to make your money grow .
BASE #3: LEARN TO SPEND DIFFERENTLY
GOOD MINDSET #1: PRIORITIZE SPENDING
Defining your priorities means asking yourself what is necessary and essential on a daily basis. These include in particular:
- food
- transport, means of transport
- Housing
In the 1st exercise where you listed all your expenses, now add whether it is a necessary or useful expense. Calculate the share of necessary expenses among all expenses.
You have surely realized that, put together, “small” expenses represent a significant amount, such as 3 coffees a day accompanied by a pain au chocolat for example.
Setting priorities means making sure that the expenses you incur are useful. I see you from here telling you that in this case, you will have no more pleasure. The priority, especially if you live beyond your means, is not to please yourself, but to put your accounts in order. It is these efforts made now that will allow you to be more serene in the long term.
If you’re still not convinced then let me ask you this question: “You’ve had a good time so far. What have these pleasures brought you over a long period of time? If you’re here today, it’s good that you’re missing something, or all of its pleasures as well as they may be, have ultimately made you poorer, you’re no longer sticking your head out of the water. So what do you have to lose by putting aside these pleasures, which in the long term do not bring you much except to be more unhappy.
GOOD STATE OF MIND #2: AVOID OVERCONSUMPTION
As we said, becoming financially free is a state of mind, you have to think differently and especially in the long term.
Unfortunately, in this society of (over)consumption, it is difficult to resist the temptation. You are made to believe that you need everything, otherwise you will miss your life.
So inevitably as soon as your pay arrives, you spend on all the items you can, thus continuing the infernal circle.
Because it is also the conditioning of society that prevents you from accumulating wealth.
TIP #1: REPAIR INSTEAD OF BUYING A NEW ONE
We are tempted to throw everything away if it’s “broken”, even if everything still works. It’s the ease of the world of overconsumption. However, this is not always the right solution.
Admittedly, an object that works but is broken is not very glamorous and will be the subject of discussion. But this is an opportunity to get the message across: stop the overconsumption society, let’s think about the planet and the future of our children 😉 For my part, I have a phone with a broken screen, but as it still works , I don’t see the point of changing it! (So it’s sure, it makes people talk).
So you can always repair or use repair sites.
TIP #2: BUY USED
The most frugal millionaires will tell you: except for clothes, you should buy everything second-hand!
If you don’t want to go to these extremes, you can already buy second-hand what you only need once a year. You will make great savings. We buy used cars a lot. So why not second-hand tools, a second-hand TV, second-hand appliances?
TIP #3: RESELL STUFF THAT NO LONGER SERVES
Before you buy, consider making a list of what you have in your home. Keep this list handy. Thus, this will allow you to avoid buying a 4th set of A3 batteries, for example, when you already have some but you don’t know where they are.
Among this list, you will surely find objects that you have never (or rarely) used. Take the opportunity to resell them and recover some money. Taken end to end, this can represent a certain nest egg.
Before taking off for Canada, we sold for around$1,000 worth of items that were duplicates or that we didn’t use. Admittedly, it took us a little time, but the game was worth the effort and then you make people happy because it will serve them well.
TIP : during these sales, we tested Le Bon Coin and the Facebook Marketplace. We have found that people are more reliable on Le Bon coin but that the Marketplace is much more convenient. There are no limits and everyone has instant access. On the other hand, in order not to waste your time responding to messages throughout the day, it is important to set rules such as: devote 5 to 10 minutes maximum every 2 hours, do not respond to requests without interest, respond by anticipating all the questions to avoid multiple endless exchanges.
For those interested in decluttering, there is also a very popular movement called “ minimalism ”.
GOOD MINDSET #3: SAVE THEN INVEST
Once you can save, put this money aside, on a booklet A or LDD for example. These funds will constitute your savings.
Then you can invest once you have built up your security fund.
BASE #4: SET UP A BUDGET AND LEARN HOW TO MANAGE IT
Setting up a budget, and following it, is the foundation for achieving healthy long-term finances.
Because it’s not something we are taught in school, setting up a budget is not easy for everyone.
I mainly use Excel because the apps I tested did not necessarily meet my needs.
A good budget is done in a way:
- annual
- monthly
If you don’t know where to start to create your budget, feel free to download my free guide that will walk you through setting up your budget step by step. To obtain it, fill in your first name and your email in the bar on the right or at the bottom of this article.
BASE #5: INCREASE YOUR INCOME: KNOW THE PILLARS OF FINANCIAL FREEDOM
The last basis for becoming financially free is to be able to increase your income in a sustainable way and by a sufficient amount that will ensure financial independence.
KNOW THE 4 PILLARS OF FINANCIAL FREEDOM
The creator of “Quitter La Rat Race”, there are 4 pillars that allow you to become financially free. We will surely have the opportunity to address this subject “Leaving the Rat Race” so I’m just telling you for the moment that Cedric Annicette has been financially free for several years, in particular thanks to his investments in real estate.
Here are the 4 existing pillars. You may find more, but all can be grouped into the categories below.
- Immovable
- Financial markets
- Online business = via the Internet
- physical business
All are forms of entrepreneurship.
These 4 pillars bring together what is called passive business .
Unlike a salaried job, these types of businesses, once well developed, will bring you money without you spending too much time on it. You are not paid for the time you work on a project.
This is why they are the key to financial freedom.
Before embarking on a passive business , it is important to train beforehand.
TRAIN FIRST
You already know the basics, tips and tricks and everything about taxation.
Otherwise, you will have to learn to be able to put them into practice.
From choosing a strategy to learning, these pillars deserve more attention, so the rest in a future episode.
BE PATIENT AND WORK… PRODUCTIVELY
Becoming financially free won’t happen overnight, so be patient, whether it’s eliminating debt or waiting for your investments to pay off.
To become financially free, you will also probably hear these tips, which tend to make my hair stand on end:
You have to work hard or worse You have to work a lot
Because, in USA, we confuse “working a lot of hours” and being productive. We also think that by working hard, we will necessarily bring positive results. (More sales, more customers, etc.).
1. WHY “WORKING A LOT” IS NOT A LAW OF SUCCESS
By “many” I mean “many hours”. In USA, we often believe that the more hours we work, the more we deserve a raise, a bonus, a premium. It is the law of presenteeism that counts.
Attention, I am not saying that to succeed in a project, you only need 35 hours. But I have found that in business, we will be more likely to give credibility to a person who works 80 hours a week, 45 weeks a year, than to a person who manages to complete his projects in half the time. .
The proof, haven’t you already heard this insidious little remark: “Did you take your afternoon off? when it’s 6 p.m. and you’re leaving work?
AN EXAMPLE TO ILLUSTRATE: WORKING HOURS IN CANADA
For those who doubt, I invite you to come… to Canada!
There are many examples of US people, accustomed to the US system, who arrive here, on Canadian soil, and having not been warned, continue to work many hours.
But these are quickly called to order. Indeed, in Canada, working more than the imposed hours, generally 9am-5pm, is frowned upon. Why ? Because that means either you:
- are not productive,
- don’t know how to organize your work!
In both cases, it is not something very appreciated by employers.
CQFD: working a lot (of hours) does not necessarily mean that you are efficient.
2. WHY WORKING HARD MAY NOT BRING YOU THE RESULTS YOU EXPECTED
As for the advice to work hard to become financially free, I do not endorse it either. Why ?
The typical example to illustrate this is the case of an entrepreneur who works very hard on the development of a product, puts it on sale and… it is a bitter failure. Because, even if he worked very hard, he neglected one point: to ask himself if the market “needed” his product.
So you can work as hard as possible, you are not necessarily sure that you will succeed, whatever field you are in.
I also found confirmation of my theory when I just started reading the book “ The Lean Startup ” by Eric Ries. As an introduction, successful and failed entrepreneur Eric Ries begins with this sentence:
The Lean Startup – Eric Ries
But what should be done then?
THE SOLUTION: BE EFFICIENT
There are in English these 2 terms “effective” and “efficient” which I like very much. In US, this could give “effective” and “performing”. Thus, the only way to succeed is to work efficiently and effectively. It also sounds “productively”.
What does this mean exactly?
That you focus on your project, without dispersion or distraction, while optimizing your time. There are appropriate methods and tools for this which, even if they are known, are not necessarily used!
In fact, to become financially free, you will probably also have to change the way you work .
It is therefore indeed a new state of mind on all levels that is to be adopted to become financially free.
WHAT YOU MUST REMEMBER
If this article is very long, it is because I have gathered all the basics that allow you to become financially free. It’s a concentrate of everything you can find on the Internet , as well as exercises so that you can go directly from theory to practice to be in early retirement .
I hope these have helped you or will help you in the future.
We must also not forget that financial freedom is not achieved by chance . It is your responsibility to become financially free. Once this decision has been made, you must give yourself the means to become one by applying rigor and discipline. Here are the steps to follow:
- Know and understand your relationship to money .
- Adapt /Change one’s way of thinking .
- Freeing yourself from debt becomes the priority.
- Set up an annual and monthly budget… and monitor it effectively.
- Discover the pillars to become financially free.
Moreover, my luck in this process is that I master everything related to budgets, personal finances and the tools that allow them to be managed , from my job on the one hand and on the other hand because.
