8 Pillars of Financial Freedom

The below 8 steps are the 8 pillars within my strategy to reach financial freedom. The are not sequential and they can be completed in parallel. but they are what I believe to be the 8 most important steps in reaching my financial goals.

1. Get rid of unnecessary debt

In my house Debt is a dirty word. We don’t have credit cards as we see them as money we don’t have. And other than our mortgage we don’t have any loans at all. It wasn’t always this way but I have learned the hard way that short-term, high-interest debt will reduce your disposable income. Trust me, 5 years down the road and you are still paying monthly for that Laptop that you no longer have is not a good idea.

Work on reducing Debt as quickly as possible. Start with the high interest loans first and slowly get rid of all unnecessary debt. This will also free up some income later for your savings and investments.

Check out this post by the simple dollar on 11 ways to help you reduce your debt quicker

2. Build an emergency fund

In my opinion, building an emergency fund is important. It acts as a security blanket and will give you piece of mind whenever the unexpected turns up. We aim to have at least 6 months of our bills in our savings account, but you can build this up slowly over time. Even $1000 is better than nothing.
Dave Ramsey will tell you how to build an emergency fund here

3. Track your expenses

Trust me, this may seem like the biggest pain in the arse in the whole world. And sometimes it can be. But If you don’t know where you are right now than how are meant to know where you are going! Keeping track will force you to take control of your finances and may even point you in the direction of where all your money is going!

4. Automate your Savings

As an automation engineer, you can imagine that I love the sound of this one. But it is not as fancy as it sounds. Saving consistently every month is important. It can also be hard and sometime tempting not to save as much in favour of a nice shiny new gadget. One way to beat this temptation is to automate savings from your bank on the day you get paid. That way the money will be transferred straight away and when you check your account you know you can only spend what is left.

Here is an Article from https://cashmoneylife.com/automate-your-savings/

5. Maximise Pension Fund

I have mixed views on this one but my employer pays double the amount I pay into my pension fund. It would not make much sense in not taking advantage of this. It is literally like getting free money and it also works to reduce my TAX liability at the end of each year. If you find an employer that is willing to match your pension contributions than jump all over it!

6. Decrease Expenses

Okay so you have got rid of all your debt, and have built up a nice emergency fund and have money left over to invest. Well now you can take advantage of all the time you spend tracking your expenses to have even more money working for you. In my experience, Everybody at some stage spends money of stuff that they don’t really need or worse still, they don’t ever use. Trim off the expenses you don’t need and put that money to good work for you instead.

7. Earn Passive Income

I’ll be honest, the more I think about it the more i am starting to hate the word side hustles. But I do see the value in earning passive income which is why I enjoy dividend investing. For a short amount of my time each month, I can get paid by companies for years and years on end. In my mind it is one of the few true passive incomes.

As Warren Buffet said –

If you don’t find a way to make money while you sleep, you will work until you die

Warren Buffet

8. Pick your Target Number

Pick a number and make it a big number! Write it down and than save, invest and earn as much as you can until you reach that number. This is how I came up with my number

• Determine how much income you need for a year
• Calculate How many years you will be retired
• Multiply the above two numbers together
• Double it

That’s it, no fuss but a simple way to come up with your retirement figure

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