by ChristoÂ van Zyl
Many things can happen with your money: You can spend it; save it, invest it or speculate with it. You can gamble with it. You can lose it. You can also give it away, and/or make it growâ€¦ But is there any kind of order to this and what does it really take to achieve financial freedom? Are there really only 7 steps to financial freedom?
The answer is a resounding â€“ yes!
There is a structure, an order of progression if you will – specific things that happen in a specific way. If you learn this secret you will save many years of financial turmoil.
Iâ€™ve worked with thousands of people. More than 90% – even though they have attended workshops and seminars, read books and counselled with friends – can still not tell you how to really make it all the way through to financial freedom. They can all say, and believe that:
- â€œMoney should be your slave and not your master.â€ (True, but how?)
- â€œIt takes money to make money.â€ (False: See Does it take money to make money?)
- â€œYou should not work for your money, your money should work for you.â€ (False and true: You have to work for your money first, and then your money will work for you. See steps 2,3,6,7)
In addition to several of the above being false, they simply donâ€™t show you the full path. I found very few people who actually understand, and have applied the steps to become financially free.
This article is here to help you identify the 7 Steps to Financial Freedom. Note that I say identify because each of these steps have more to them â€“ a lot more.
So why do so many people fail?
The number one reasons people fail to create financial freedom is because they skip the essential stepsâ€¦ The 1,2,3 if you will. They leap past essential steps, skip straight through to 6 and 7, and then return to step 0!
What are the actual steps.
The 7 steps to financial freedom have to do with the progression or improvement of skill in working with your money. Some are easy and some harder, but are all possible. They follow a natural progression from 1 to 7, but before we cover the 7 steps, letâ€™s start from the very beginning – at step zero:
0 Lose it. This is the easiest. Most have done itâ€¦ and most return here. Even rich people lose it. Most of the millionaires I know and several of the ones I have worked with have at one point or another lost it all. They had to start over. Thatâ€™s okay. Learn from your and their mistakes â€“ and only make new ones. It takes a lot of hard work to make your money grow and to become financially free. It takes very little, if any effort to lose it.
The 7 Steps to Financial Freedom:
1 Value it – You have to start here â€“ placing a high value on your money. Values are things that are important to you. If money is important to you, you look after it and give it priority and quality attention. You can only make more money if you choose that financial freedom is important, or of high value to you. What if you donâ€™t value money? Well, then return to step 0.
2 Earn it. You donâ€™t run behind a money bus and simply catch the money as it falls of the bus. Find some wealthy people and ask them: â€œWas it easy to make so much money?â€ With the exception of a very few who inherited a large sum of money, the answer will be:
â€œNot easy at all â€“ it took many years of hard work and multiple failures. I was living poor for a long time before I achieved what most people can only see now. Many think that I am â€˜luckyâ€™, but they somehow missed the 7-10 years of hard work I have put in to get where I am today.â€
Do you see? You earnÂ money. It takes time. It takes effort. It takes dedication. (All good values) You make mistakes. You learn. It is a known fact that, because they skipped step 1 and 2, more than 80% of people who win millions of dollars are – within 4 years – back to step 0.
You donâ€™t have to learn this lesson the hard way. Secret: If you want to save yourself a few years, read the article â€œAction Tips from Successful People.â€ If you have genuinely earned your money, continue to the next stepâ€¦
3 Save it. Saving is the real first step to financial freedom. It takes discipline and it takes consistency. Save everyÂ month. E-v-e-r-y month!! In order to become wealthy, it makes sense that – in addition to paying for taxes and day to day living expenses like water, electricity, food, clothes and transport – you should keep some money for yourself â€“ right? In the article â€œ10 Reasons why you should pay yourself first, and howâ€ we covered why and how you should save. But there are 4 additional specific reasons why you should save:
A. It teaches you control â€“ When you control your money you are more aware of what comes in and what goes out, to whom, by when, and why. The more control you have over your money, the more you are able to save.
B. You save to give away â€“ giving is part of becoming wealthy. Ideally, you will give away up to 10% of your monthly income. If you cannot give 10%, start with 1%, and increase this percentage as often as you can. Giving is not just very rewarding â€“ it is essential. It is necessary because it helps you to let money flow through you, and not stop with/at you. (Money standing still â€“ rots. Money that flows â€“ grows, see step 5.)
C. You save to put away for emergency â€“ Things happen. The last thing you want is to lose all your hard effort (from step 2) and return back to step 0. Ideally this emergency fund is up to 20% of your monthly income. Again, if you cannot start with 20%, start with 2%, and increase this percentage as often as you can. Use this fund as a â€œbufferâ€ fund to loan against in case of extreme emergency. However, if you do loan against it, you have to pay yourself back, with interest as your own penalty.
D. You save to put away for investments â€“ If you have given away (to others), and have put away (for your financial safety) then you can put additional money away for investments, which can go toward step 6. It is at this step 6 where the magic of making your money grow begins to get exciting! However, you cannot succeed at step 6 if you have not succeeded at step 3. If you have successfully completed step 3 â€“ saving, then, and only then should you proceed to step 4.
4 Spend it. Do you see why most people remain poor? They start here – at step 4! Their money comes in and it goes out. They simply spend without giving it a thought.
When you spend money, one of four things can happen:
A. You can lose it â€“ This is true for more than 80% of the population on earth. Money comes in and they spend it. Nice clothes, interesting food, a beautiful vehicle, an investment propertyâ€¦ But because they did not start with step 1, they go back to step 0.
B. You can waste it â€“ Buy stuff for people. Buy things you donâ€™t need. Buy more than you actually require. Eat out at restaurants all the timeâ€¦ This is the formula for getting poorer. Unlearn this step, or go back to step 0.
C. You can gamble with it â€“ The chances of winning the lottery is a lot smaller than succeeding with a business. The chances of winning substantial amounts at a casino are less than your chances to start a good business. Wealthy people gamble for fun, not for profit. (Secret: An investment should never be a â€œgamble,â€ it is a well prepared and executed transaction.) When you gamble, chances are you go back to step 0.
D. You can improve or benefit from it. This is where you want to go to proceed to the next step. Ask the question: Is what I am buying going to cost me money, or going to make me money? Living costs like rent, food and basic necessities are essential, and have to be paid. However, if you spend your money on things that improve you, like a good book, a course or a seminar, you are spending money to improve your value. When you increase your value, you become more valuable. This will bring more money your way. Continue to the next stepâ€¦
5 Give it away. All wealthy people give money away. They give to church, to charity and to those that really need it, or, to those who can put it to good use. Giving is such a big part of receiving. I havenâ€™t figured out why it works this way just yet – I just know that it does. I have tested it, and it works.
Give away of your time, give away of your skills, give away of your money, and watch how more comes your way. The best way I can explain it is to literally hold 2 watermelons. The rules are you cannot put any down:
When I give you a 3rd watermelon, you may be able to hold it. The 4th one may be very tough and you may just get it right to hold. But from the 5th watermelon, you cannot hold any more. You cannot get any more because you have all that you can hold. It is only once you start giving away (or putting down) the watermelons that you are able to receive (hold, or get) more.
Somehow, money works this way too. In the financial formula of 10:20:70 (Another article in the making), the â€œ10â€ is allocated to giving (away) to someone or another entity such a person, a group, a charity or a church. In short, if you donâ€™t plan to give money away, there is an increased probability that you will unlikely have more money coming your way.
(See this great video on YouTube: Designing for Prosperity)
If you are able to give away regularly, you may proceed to the next stepâ€¦
6 Invest it: This is where money starts to work for you. The simplest example is when you save money in an interest bearing account. The money earns interest in the bank, and you are â€œearningâ€ money which is not as a result of your effort. (In essence, this is why step 3 is essential.)
Investing is a huge jump in skill because there are so many ways to invest:
- a. Investing in yourself! (Education, reading, experts, listening to the right people)
- b. The stock market (Thousands of ways to make and lose money)
- c. Real estate (Countless ways to make and lose money)
- d. Buying or starting a business (Many ways to make and lose money)
- e. Paying for a specialised product/skill (Can make or cost you lots of money)
The easiest way to invest in your future is to invest into your skills and your knowledge. It may cost you time and money, but it remains an investment. The better you are equipped the fewer mistakes you will make. Mistakes cost you time and money. Investing in yourself helps you to avoid mistakes. Most people lose a lot of money and remain poor – or went back to step 0 – because they just jumped into the stock market, real estate or started a business. If you want to start investing, start with 6a â€“ investing in yourself!
Once you have invested in yourself you can start to play in the stock market, real estate, businesses or products and skills. You can spend a good 10 years here if you want. Take it slow, steady and thoroughly. Once you have made enough money, can repeat the process and have excess money, you can go to the next step:
7 Speculate with it: The final step is the most exciting. At this point in time you have mastered the required previous steps. You now have money. You now have stability. You now have safety. You now have knowledge and experience. (And it is several years from today)
Now you can play. A prescribed portion of your money can now be allocated to high risk investments or â€œdealsâ€. But remember: Speculating is not gambling. Speculation is high risk transactions that have a high likelihood of giving high returns, or failing. People who succeed at speculating do a LOT of research before they throw money at it.
People who succeed at speculating have enough money that even if it was a â€œbadâ€ deal – and they lost their money – they will still be financially more than okay. In other words, they seldom go back to step zero.
Becoming wealthy is a step by step process. There are lots of things that can â€œhappenâ€ with your money, but you can make things happen by following these 7 steps, in order, from 1 to 7. Do not skip the steps. Take them 1 by 1. Become proficient at 1 before you go to 2. Invest in yourself!
The Secrets to Wealth is all about investing in yourself!
If you take the time to read everything on this website, I can pretty much guarantee you that I will save you years of mistakes and lots and lots of money. It took me more than 7 years to recover financially because no one taught me the order of these 7 steps!!
What you can do:
– Start now. The sooner you start, the sooner you will achieve financial freedom.
– Remember: It takes time to achieve financial freedom â€“ several years.
– Remember: This is only the identification of the 7 steps.
– Remember: There is a lot more to each of steps 1 through 7.
– Read: 10 ReasonsÂ WHY you should pay yourself first â€“ and HOW.
– Read: Does it really take money to make money?
– Successfully completed steps 1 â€“ 3? Read Multiple Streams of Income
– Join The Secrets to Wealth on Facebook â€“ we learn new things each day.
– Follow me on Twitter â€“ you will see when I have posted something new.
– Subscribe to this blog â€“ you will be emailed new articles as they come out.
– Invite me to come and speak. It costs money, but will save you years.
– Write a comment below if this helped you. I appreciate and evaluate all feedback.
– Click “Share this” below so more people can learn these 7 steps to Financial Freedom.