Today's video is all about
step four in my five by two
financial freedom framework.
And this is the juiciest
section of all.
We're going to talk about the
how of becoming financially
free,
how you will actually get
there.
We're going to talk about the
two steps in order to do that.
You'll know exactly how to go
through each step to put you
closer to financial freedom.
And then I am going to share
my example and what worked
best for me in order to become
financially free.
I am Tiffany Thomas with
wealthy tiffany.com
and I achieved financial
freedom and became a
millionaire.
If you're looking to do one or
both of those things,
make sure and hit that like
button and hit the subscribe
button.
And we're going to dive right
in.
And today's video we are
focusing on step number four,
which is all about the how.
We are going to talk about how
you're going to get to
financial freedom by
decreasing your expenses and
increasing your income.
And then also by making your
money work for you.
So the first part we are going
to discuss is decreasing our
expenses because this is going
to be the easiest part.
The first thing you are going
to need to know is what your
expenses already are.
And I discussed this in step
two of my framework.
So I go into more detail in
another video,
I'll leave a link above and
below.
You can check that one out
later,
but I do mention that I use
personal capital,
which is a free app where you
can see your entire financial
picture in one place.
So if you are interested in
that,
I will leave my referral link
below.
You can click on that link to
set up a free personal capital
account.
And then I also use Google
sheets to update my spending
plan or my budget.
So I can see what all of my
expenses are.
And hopefully you are
following these steps in
order.
So you already know what your
expenses are.
You're going to want to look
at each single expense and
decide where you can reduce
that expense or even eliminate
that expense completely.
And you'll want to keep in
mind that you'll want to be
frugal,
because if you can buy
something,
it doesn't mean that you
should actually buy something.
So here are some ways to
decrease your expenses.
You are going to start with
your fixed expenses first,
those that don't change month
to month.
So this could be your rent or
your car payment or your phone
payment,
things like that.
You want to go through each of
these expenses and see how you
can reduce them or completely
get rid of them.
For example,
if you have car insurance or
home insurance,
call your current provider and
see if they have a lower rate
and call other providers and
get different quotes from
them.
Since these are fixed
expenses,
if you can lower them,
that is going to lower your
expense every single month.
And housing is the largest
expense for most people.
So think about if you are
willing to reduce your housing
costs.
And this is a really serious
consideration because I know
it's not easy to move.
I moved recently and it takes
a lot of time and work.
But in the end I was grateful
that I moved.
So really think about if you
want to achieve financial
freedom sooner,
are you willing to decrease
your largest expense?
And then also I know that
people use mint mobile and
they're paying around $15 for
their phone bill,
which is pretty low.
So look into something like
that.
And another expense that most
people have is internet.
So call your internet
provider,
ask if they have certain deals
going on right now and let
them know that you will be
switching if they don't lower
your internet pricing,
because there is probably
another provider that will
give you a lower price if
you're willing to switch to
them.
So even call other providers
and see how low you can get
your internet price,
then let's take a look at your
variable expenses.
And this one is more focusing
on being conscious about what
you are spending your money
on.
You really want to spend money
on your priorities.
I'm not saying to completely
stop spending money,
but spend on things that are
important to you.
And that way you can cut back
on the rest and put that money
toward your financial freedom
fund.
And by doing this by aligning
your spending with your
priorities,
your goals,
what you value,
your happiness will increase.
So it's not about deprivation.
It's about prioritization.
Because I know for me,
when I have spent money on
silly things that I didn't
really care about,
I often think afterward,
ah,
I wish I wouldn't have spent
my money on that because I
could have spent it on
something else that would have
brought me joy or happiness,
or I could have invested that
money to make even more money.
So when you are about to spend
money,
when you're about to go on
Amazon and make that purchase
stop and ask yourself,
is this going to bring me
lasting joy?
Or is it going to put me
closer to financial freedom?
Or is it going to take me
further away from financial
freedom?
And if it's taking you further
away and it's not something
that is going to bring you
lasting happiness or joy,
then don't make the purchase.
We're so used to living in
that instant gratification and
being a consumer that
sometimes it is hard to take a
step back and not make that
purchase.
But once we do that,
we are going to be so happy
that we did,
because we won't be getting
rid of that item later,
giving it to someone else or
donating it and thinking,
man,
if only I could have that
money back right now.
Realize there is a trade off.
Once you spend that money,
it is gone.
You can't spend that on
something else.
And I like this quote by Mr.
Money mustache.
He says,
your priorities goals and
habits will determine your
wealth much more than
understanding the financial
lingo or complicated investing
strategies.
And I think that is so true.
Once we understand our
spending habits,
what we really value that is
going to make such a big
difference in our spending and
our expenses.
And we don't have to know all
of the complicated investing
strategies because we're
already saving money by
spending on things that are
important to us and cutting
back on the rest.
And another thing in regards
to decreasing our expenses is
you pretty much know what your
temptations are.
You know what you're going to
be tempted to spend your money
on.
So try to get rid of those
temptations upfront.
Just as an example,
I used to go shopping all the
time with my girlfriends.
We would go to Ross.
So it wasn't somewhere super
expensive,
but nonetheless going shopping
and we would all buy
something.
And that was just our fun
little trip.
And while it was fun,
I really didn't need to be
spending that money on
clothing.
So instead of going to Ross
with my girlfriends,
I can say,
Hey,
why don't you girls come over
and watch a movie at my place?
And that's something that is
still fun,
but we are not spending any
money or it could just be,
Hey,
let's hang out at my place and
I'll make us dessert.
Something really simple,
but doesn't cost hardly any
money and also simplify your
life,
so you can focus on more
important decisions.
If you are constantly buying
things and then you have to
maintain all of those things,
your life just becomes more
complicated and you don't have
time for the more important
things in life.
So just take a step back and
think,
all right,
how can I simplify my life?
Do I have too many things in
my home?
Do I have too many
extracurricular activities?
What are some ways that I can
just simplify things?
And focusing in more on
decreasing those expenses,
do you really need three
different shampoos and 50
different pairs of shoes?
Probably not.
And did you buy something that
you thought would improve your
life,
but now you have to buy three
other things to go with it?
Just focus on keeping things
really simple.
So comment below and tell me,
what is one of your
priorities?
What is something you will
definitely spend money on?
And now let's move to
increasing our income.
Think about the lowest hanging
fruit.
What is the quickest way you
can increase your income right
now?
Is it to simply ask for a
raise?
Maybe you haven't done that in
quite a while,
or is it simply to sell a few
items in your home,
especially if you are
simplifying your life and
getting rid of items in your
home,
just think of the easiest way
possible that you could
quickly increase your income.
And also think about what you
are spending your time on and
make sure that you're valuing
your time.
And you could even outsource
menial tasks.
For example,
if you run your own business
and you can make $300 in an
hour,
then hire out someone to clean
your house and pay them a lot
less than $300 an hour.
And that will help increase
your income because you were
spending time on something
that is actually going to make
you more money rather than
spending your time on
something that isn't going to
make you money and that you
probably don't enjoy doing
anyway.
And then of course there are
side hustles that you could
get,
or you could even get a
part-time job or create
something that will give you
passive income.
For me,
I like investing in real
estate and I know that takes a
lot of money up front,
but the passive income over
the years is amazing.
And then I want you to think
about the 80 20 rule.
And this just means when you
are putting in 20% of your
efforts,
in a certain thing,
you are getting 80% of your
results.
So really be aware of where
you are spending your time and
your money and make sure that
it is giving you the best
results possible.
For example,
and I share this a lot in my
presentations,
and sometimes people get a
little upset with me,
but stop spending hours,
clipping coupons,
to save $5 a month and start
spending hours learning to
invest your money so you can
create a thousand dollars a
month.
And yes,
I do use coupons sometimes,
but I'm not spending hours
going through coupons,
whatever comes in the mail.
And I quickly see,
oh,
I'm actually going to buy this
product.
Then I'll rip out the coupon
and use it.
But I'm not spending hours
asking for everyone's coupons
or going through an entire
newspaper,
looking for coupons.
I would rather focus my time
and efforts on something that
is going to increase my income
significantly rather than save
me five or $10.
So comment below and tell me
one way you have been able to
increase your income.
And then let's move to the
second part of this,
which is to make your money
work for you,
so you are not working for the
money all of the time.
And there are numerous ways to
do this.
I'm just going to share three
different examples.
The first one is to invest in
the stock market.
You can invest in funds or
individual stocks or bonds.
The second way is to invest in
real estate.
You could do buy and hold
properties.
You can do fix and flips or
even commercial real estate,
or the third option could be
to create your own business.
And this actually saves a lot
in taxes and it can create
passive income for you if you
set it up that way.
So in today's video,
I'm going to focus in more on
the stock market,
because that is one of the
easiest and quickest ways to
make your money work for you.
You can definitely set up
retirement accounts.
This could be a 401k at your
work with your employer,
and definitely invest the
match that they are giving you
in that 401k.
You can also set up a Roth IRA
or a traditional IRA and
invest money in that.
And you can invest up to
$6,000
inside of your Roth IRA or
your traditional IRA.
And if you have more questions
about a Roth or traditional,
I have another video for you.
I'll leave a link above and
below.
Or you could set up a
brokerage account.
This is a taxable account.
So when you do take your
investments out,
you will pay taxes on that,
but you can pay a lower tax
rate.
And I explain all of the
details about a brokerage
account in another video.
So I will leave a link to that
one above and below.
And if you do qualify for an
HSA, a
health savings account,
you can set one of those up as
well.
I personally like using lively
me dot com.
It is completely free and you
can also invest your money in
the stock market inside of
your HSA.
And if you want more details
about that,
I have another video for you.
I'll leave a link above and
below.
So there are a few different
ways you can invest in the
stock market.
And then as far as what you
should put inside of your
retirement accounts or your
brokerage account or your HSA,
let's talk about that for a
minute.
To keep it really,
really simple,
if you're looking to grow your
wealth to achieve financial
freedom,
then you want to be investing
as much as possible in stocks
or in stock funds.
I like using a total stock
market fund,
and I give the reasons why in
another video.
So I'll leave a link to that
below in the description.
If you are getting close to
retiring or becoming
financially free,
then you can invest in a bond
fund and you'll definitely
want to keep your fees as low
as possible.
And another thing you want to
make sure that you automate
your investing,
if you can automate it,
take yourself out,
you are going to invest a lot
more.
So if you can set up auto
transfers to your brokerage
account or your Roth IRA and
have it go directly into the
fund that you want to be
investing in,
and if that's not a
possibility,
then schedule a certain time
each month that you go in and
make that investment yourself,
but try to automate as much as
possible.
So at least set up an auto
transfer to your investment
account every month or every
two weeks,
and then make sure and remind
yourself to place that order.
And also we want to start
today because that way we can
achieve financial freedom,
even sooner,
we can take advantage of
compound interest.
And let me show you an example
of this.
All of that green part of the
chart is compound interest.
We had $5,000
to invest and we added $200
per month.
And we did that for a period
of 30 years.
So we were putting in $72,000
over that 30 year period.
So remember that amount 72,000
is what we put in.
And then we made over $474,000
from compound interest.
And I put this at a rate of
return of 10%,
which is pretty average for
the US stock market.
So that gives us a total
balance of $551,285.
So about 84% of our investment
came from compound interest.
So hopefully you can see how
important it is to get started
investing as much as possible
as soon as possible.
Comment below and tell me if
you have already started
investing your money,
just put yeses in the comments
below,
because I want to know.
And then,
like I said,
at the beginning of the video,
I wanted to share my example
on what has worked for me
regarding these two steps.
And the first thing that I
want to talk about really
quickly is that I actually set
goals.
I set a goal to become
financially free,
actually at age 40.
And I became financially free
at age 38.
So even two years earlier.
So setting goals for me is a
huge part of what helped me to
become financially free.
And I had smaller goals along
the way I wanted to invest in
real estate.
So I decided to set a goal to
buy a certain property by a
certain time.
And by setting that goal,
it really helped me focus in
on decreasing my expenses that
I could put it toward a down
payment and increasing my
income.
And like I mentioned before,
I used to spend a lot of money
on clothing and on shoes as
well.
But once I started setting
these goals,
I decreased that spending.
It wasn't something that was
really important to me.
And I was able to increase my
income through real estate.
And one of the ways that I did
this is by buying another
property,
getting roommates.
And then I also finished my
basement in that property,
moved into the basement so
that I could rent out the
master bedroom and increase my
cashflow that way.
And of course,
having rental properties.
And I also increased my income
by starting my own business by
sharing financial content with
you.
And I also invested in the
stock market.
I have individual stocks that
I've invested in,
and then I also invest in the
total stock market fund.
So I keep it really simple.
I don't have a ton of
different individual stocks.
I maybe have 10 different ones
so that I can keep my eye on
them.
And then I just keep it simple
and invest in a stock market
fund.
And then,
like I said,
I like investing in real
estate and I do have
roommates.
So I get cashflow that way.
And then I do buy and hold
properties and I have renters
in them.
So I collect rent every single
month.
So it creates cashflow for me.
So that's just a quick example
of how these two steps have
worked for me.
And if you are interested in
getting started in the stock
market,
webull is doing a promotion
right now where you can get
six free stocks by opening a
free account,
if you use my referral link,
which I will leave in the
description below.
So you can click on that link
and get your six free stocks.
If you found this video
helpful,
please hit that like button
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Thanks so much for watching.
I'll see you in the next
video.
And next week I will be
discussing step number five in
my five by two financial
freedom framework.
So make sure you hit that
subscribe button so you don't
miss out on that content.