Today's video is how to become
financially independent.
We are going to talk about the
steps to take in order to
become financially
independent,
which means you don't have to
work a nine to five job
anymore if you don't want to
or rely on someone else for
money.
I've been able to become
financially independent
myself,
so I am sharing my best
strategies with you.
Let's dive right in.
All right.
If you've ever asked yourself,
how do I become financially
independent?
I'm going to answer that
question for you in today's
video.
Make sure and stick around
until the very end because the
last strategy is the most
important.
All right?
Step number one on how to
become financially independent
is to set a goal to become
financially independent.
If we don't have the goal of
financial independence,
then we're not going to get
there.
We won't be able to work
toward that goal.
And of course,
we want to set smaller goals
along the way so that we do
not feel overwhelmed by the
ultimate goal of financial
independence.
This is exactly what I did.
I set small goals along the
way and I was able to become
financially independent.
I set a goal to buy my first
property and have roommates in
there collecting cash flow
from them.
I then decided to purchase
another property,
which was strictly an
investment property,
and I started creating cash
flow from that investment
property,
and then I purchased a third
property,
which I ended up moving into
leaving my roommates at my old
place and getting new
roommates at my new place and
increased my cash flow that
way.
Once I had those three
properties,
I took a look at my numbers
and I decided,
all right,
I need one more property in
order to become financially
free or become financially
independent.
And I set the goal to get that
property,
and I ended up getting that
property.
And this was not just an easy
process that I did very,
very quickly.
It took time,
but I set the initial goals
and I was very specific about
what I wanted to achieve.
I wanted to have a certain
amount for my down payment,
so I set that specific amount
and had a deadline that I
wanted to achieve that by.
So when you are setting your
financial goals,
make sure you are very
specific and you have a
timeline associated with those
goals.
And an extra tip to kind of
help with this.
If you're thinking,
well,
I have my goals,
but I'm not really sure what
steps I want to take or need
to take,
you can look at someone else
that has achieved what you
want to achieve and just
think,
all right,
what would they do if they
were in my situation?
I know I've asked myself this
question multiple times.
My friend that invests in real
estate that I asked a lot of
questions to,
if I had something that came
up,
a problem that I wasn't really
sure how to solve on my own,
I would just think,
all right,
what would he do in this
situation?
And I would think,
oh,
he would do this,
and then I would do that.
It makes a difference if we
can have someone that we can
kind of emulate,
and it can just be as generic
as,
all right,
if I want to be a millionaire,
then what would Tiffany do?
She's already a millionaire.
Would she be spending her
money on buying this new car
or would she save up for a
down payment on another
property?
She would probably save up for
a down payment on another
property.
And then once she has that,
she could pay for that car
with the cash flow she is
getting from her property.
It just helps put things in
perspective.
And then step number two on
how to become financially
independent that really helped
me do that was to have a
budget or a spending plan so I
knew exactly how much money
was coming in.
I knew exactly how much money
was going out and where it was
going out to,
and then I could make
adjustments.
If I didn't have my spending
plan,
I wouldn't know those details.
I wouldn't be able to track it
and make progress,
make adjustments.
The way that I like to set up
my spending plan is by using a
Google sheet,
and then I also use a free
app.
It's called Empower.
You can hook all of your
financial accounts to empower,
such as you're checking your
savings,
your credit cards,
your 401k,
everything you can think of
that is financial.
And that way you can see your
full picture in one place.
That makes it so much easier
rather than writing down all
of your expenses every single
month and then taking a look
at that and thinking,
all right,
where should I make
adjustments?
You can immediately pull up
the app,
see where you've spent money
and think,
all right,
maybe I shouldn't be spending
so much money on this thing or
in this area.
And you can make adjustments
very quickly.
Also,
a little bonus tip to go along
with this is to check your
money every single day.
I check empower almost every
day.
That way I know exactly what
is happening with my money and
I can make adjustments
immediately.
It's just on the top of my
mind.
For example,
if you get on the scale every
single day,
you are going to lose weight
just by getting on the scale
because it's at the top of
your mind and you're thinking,
oh,
I really do want to reduce my
weight.
So you start making
adjustments.
You didn't necessarily map out
a whole plan,
but since you are aware of it,
it just becomes part of what
you are doing.
The third item is to pay off
any high interest debt that
you have.
We want to make sure that we
are investing our money when
it's appropriate,
but if we have high interest
debt right now,
for example,
if it's 18% or 24%,
whatever it is,
if it's above about 8%,
we want to make sure and pay
that debt off before we invest
because we are not going to
make more money investing.
We'd actually make more money
by paying down our high
interest debt because when we
pay that debt off,
we are not paying that high
interest rate,
that 18% or whatever it is.
So make sure you know what
your debts are and the
interest rates associated with
each debt and start paying
those down if they are above
about 8%.
And if you want more details
on how to pay off this debt,
I have another video for you.
I will leave a link above.
You can check that out later
on.
I have a client that came to
me.
She had a lot of high interest
debt,
she had some unfortunate
circumstances in her life and
she had this debt and she
really wanted to pay it off.
So she made that list with all
of her debts and the balances,
the minimum payment,
the interest rates,
and she started paying those
debts off one by one.
And once she did that and then
had a savings,
she came to me and we were
able to get her money invested
and set up a retirement plan
for her.
So it's really critical that
we are paying off those high
interest debts so that we can
move forward and become
financially independent.
And then item number four is
to set up an emergency fund.
And we actually want to set up
an emergency fund before we
pay off all of our high
interest debt.
That way in case there is an
emergency that comes up,
we aren't going into even more
debt.
So make sure you have a set
number for your emergency fund
and get that emergency fund
funded.
That way when there are
unexpected expenses,
we have money to pay for that
without going into debt.
And if you want to know how I
figure out how much to keep in
your emergency fund,
I break this down in another
video,
I will leave a link above and
make sure that you are keeping
your emergency fund in a high
interest savings account.
This is what I've done and
I've been able to make extra
money every single month just
from that interest rate.
I like using Ally a l l y.
There are a lot of options out
there.
So pick one with a higher
interest rate.
And depending on how much
money you have in your
emergency fund,
you can make maybe $50 to a
hundred every single month.
Once we have that emergency
fund,
then we are protected when we
have an emergency come up,
and that way we can get closer
to financial independence.
And then item number five is
to invest our money.
If we want to become
financially independent,
that means that we are able to
live our desired lifestyle
without having to work for
money or rely on someone else
for money.
So we need our money working
for us so that we don't have
to work for the money.
The way we do that is by
investing our money.
I've been able to do that
through real estate and the
stock market.
The stock market is the
easiest way to make your money
work for you.
It's very passive.
Real estate does take some
work.
It is more semi passive,
but those two together is what
helped me become financially
independent.
Of course,
you can do the way that works
best for you,
but if you are interested in
investing in the stock market,
I have a free masterclass on
how to do that.
I will leave a link below in
the description.
You can check out that free
masterclass.
It is really important that we
are investing our money as
soon as possible.
We want to take care of those
other things.
One way to make sure that we
invest our money is to
automate it.
We can automate our investing
that way we don't have to
think about it.
And going back to creating
that emergency fund,
we can also automate our
savings.
We can set an auto transfer
from our checking to our
savings,
and that way we don't have to
think about saving our money
either.
But if we can automate our
investing,
that is going to make it so
much easier for us to become
financially independent.
We aren't going to have to
remember to log into our
investment accounts and
transfer money over and select
our investments.
I also talk about this in the
masterclass,
so make sure and click that
link below and check it out.
And if you are thinking,
well,
how much money do I need to
invest in order to become
financially independent?
Great question.
The way I like to look at this
is to take your annual
expenses in retirement and
multiply that number by 25.
For example,
if you know you're going to be
spending $40,000
every single year,
then you'll multiply 40,000
by the number 25.
That is going to give you a
million dollars.
So you would need a million
dollars invested not sitting
in your savings account
because that's not going to
give us enough interest to
live off of but invested.
And then we will be able to
become financially
independent.
Take a moment and figure out
what your annual expenses are
going to be in retirement.
And this doesn't have to be
permanent.
You can definitely adjust
along the way so you can even
use what your expenses are
now.
Or some of the financial gurus
say it'll be about 70 to 80%
of your current expenses
depending on how old you are,
how far away retirement is for
you.
But that's a good place to
start,
either current expenses or 70
to 80% of those expenses
unless you're very young and
you don't have really any
expenses.
So take your best guess and
calculate the number and work
toward that number and then
adjust along the way.
And another thing to point
out,
if you already have passive
income or semi passive income,
you can deduct that from your
annual expenses.
For example,
if my expenses were $50,000
every single year,
but I have $10,000
in rental income every single
year,
then I would subtract the
10,000
from the 50,000,
my original annual expenses,
and that would give me
$40,000.
And I would multiply that by
the number 25,
which is a million dollars.
So if you do have rental
income or if you are getting
social security or if you have
a pension,
you can definitely subtract
out that passive income that
you know you will continue to
receive.
And this way when we have our
million dollars or whatever
amount you came up with
invested,
we can start withdrawing 4% of
that money every single year,
that $40,000,
and it will continue to grow
enough that we are not going
to run out of money.
That's why we needed invested
and not just sitting in a
savings account.
And then step number six,
and this one is pretty
obvious,
but we want to live below our
means,
right?
If we are spending more or
everything that we are making,
we are never going to be able
to invest money to become
financially independent,
to start making our money work
for us.
So make sure that you have
your spending plan set up that
you know exactly what you are
spending and how much money
you have coming in.
And then step number seven is
to continue to educate
yourself about finances.
The more that we can learn
about saving money or
investing money or setting up
our spending plan,
things like that,
the better we are going to be
with our money as long as we
are applying those principles
that we are learning.
Of course,
you can check out videos like
this on YouTube.
There are podcasts that you
can follow.
There are also books you can
buy.
Speaking of books,
I do have my book.
You will be financially free.
So I will leave a link to this
below in the description.
And this is really going to
help you get your money set up
and learn to save and invest
your money.
I talked specifically about
how I was able to invest in
real estate and the stock
market,
the steps that I took,
so that you can apply these
principles to your own life.
Comment below and tell me one
way you are going to continue
to educate yourself about
finances.
And then step number eight,
to help us become financially
independent is to reduce our
taxes.
We want to think of different
ways that we can minimize the
taxes that we are paying.
And one way that I've been
able to do this is by starting
my own business.
I get a lot of deductions by
having my own business.
So this is one thing that you
can do as well.
It can be a very simple
business.
You don't have to spend 40
hours a week on your business.
It can be very minimal,
but you can have a lot of
deductions and pay less in
taxes.
For example,
I get to deduct off the space
I am using for my YouTube
studio here and I can deduct
off some of my travel expenses
and my phone bill expenses and
taking clients out to dinner,
things like that.
There are just a number of
different deductions you can
get by starting your own
business.
And then step number nine,
and this is so important and
it is to be patient.
Be patient with yourself.
I know that you want to
achieve financial
independence.
I really wanted that too.
But it is going to take time.
This is not something that
happens overnight.
So be patient with yourself
and be patient with your
investments.
If you are following these
principles,
you can become financially
independent.
I know that it is possible.
If you found this video
helpful,
please hit that like button
and share it with someone else
who would like to hear this
information and to the
subscribe button to subscribe
to my YouTube channel and to
the little bell to get
notified on when I post new
videos.
And if you wanna see even more
great content from me,
make sure and check out the
videos on the side of the
screen.
Thanks so much for watching.
I'll see you in the next
video.