The Steps to Financial Freedom – Part Two

Imagine what you could do in your life if you had financial
freedom. In the first article in this series we looked at taking
control of your current situation. Controlling your spending,
controlling and eliminating your debt, and starting a savings
plan – all so you can have a firm foundation to take the leap to
financial freedom.

In this article we’re going to look at some simple strategies to
go from financial control to financial power.

Step Five – Save and Prosper

We touched on this in the first article, but for different
reasons. Now we’re moving on to building wealth. A major part of
your strategy has to be cash. Cash is the only true financial
wealth, so you need some. You need a lot. Now you have cleared
your debts and you have your spending under limits, you have
some spare cash to save. Find the highest interest account you
can and start depositing regular amounts. Each month put as much
into your account as possible. Set up an automatic payment to go
from your salary account. Set yourself a target, let’s say
$10,000 and go for it with all your effort.

Step Six – Split Hairs

When you’ve reached your savings target you need to start
getting creative with your money. Our example target is $10,000
so the way we’re going to get creative is by splitting it three
ways. First we’re going to find another highest interest
possible account and transfer about $4,000 into it. This is
going to be your emergency account. In reality an emergency
account should have the equivalent of about three months’ salary
in it; and you never touch it, unless it’s a genuine emergency.
Next, put $3000 aside for investing (see step three). And the
remaining $3,000 stays in the savings account, where you keep
adding to it.

Step Seven – Speculate to Accumulate

High interest bank accounts are fine and they’re a fairly safe
place to build your wealth – slowly. But if you want to build
wealth faster, you’re going to have to take some risks. There
are three ways I see of doing this: one is to start a business;
two is to invest in property; three is to invest in stocks and
bonds. In the example we’re working with we’ve set aside $3,000
to do this. On the one hand it’s not a lot of money – it won’t
go far in stocks or in property. On the other hand it’s a third
of our savings and that’s a big risk. But if you worked through
step one in the first of these two articles you’ll have a better
understanding of yourself. You’ll be able to work out for
yourself what kind of risk you are prepared to take. Because
believe me this step is risky. So you might decide to just
continue saving, that’s fine. You are now in control and hey –
that’s a lot of freedom in itself. Or you might decide that you
can stand the risk of losing that $3,000. If you do, then you’ll
probably have a clear idea of how you want to risk it. The only
advice I’m going to give here is to make sure you plan it. Have
a plan for your investment, do your research, don’t get lured by
‘get-rich-quick-for-no-work’ schemes, set a limit to what you
are prepared to lose – and stay disciplined and focused.

Step Eight – Plan to Enjoy

This isn’t so much of a final step, as something you should be
doing all the time in all areas of your life. People who plan
and set goals and have timescales for achieving things have more
failures and more setbacks than those who don’t make plans and
set goals. Yes, you read that right. But the reason they have
more setbacks is because they are doing more, they are always
moving forwards, they are never giving up. And the bottom line
is that they achieve more than those who don’t plan. So set
goals and put plans in place. And make sure you plan to enjoy
your financial freedom – whatever it means to you – because if
you turn the achievement of your dreams into a form of
unremitting slavery you will end up sabotaging yourself

Craig Brown
http://www.articlesbase.com/finance-articles/the-steps-to-financial-freedom-part-two-3368.html