Five Basic Steps to Financial Freedom

DISCLAIMER: I am NOT a certified financial adviser nor do I have qualifications in accounting. If you need professional help with your finances, consult with a certified professional in this regard.

Wealth is like a game of chess – a mind game. If you don’t know the rules, you will never win. The first step towards victory therefore, is to understand how the game works. This is called financial intelligence.  

Wealth can be defined in many ways and it means different things to different people. Following Financial intelligence, the next step would be to define wealth in your own terms.

Victory in the game of wealth requires mental toughness, which is characterized by courage to sacrifice, strong desire to win, and resilience to endure adversity. Mental toughness is formed by consistently thinking about wealth and different ways to grow it.

The strategies you will adopt to create wealth will force you to think about your financial goals, which may help you achieve the financial freedom you desire and deserve. Whatever the goals you may set, begin with the end in mind.

Finally, as you embark on your long journey to financial freedom, train yourself to take responsibility for your thoughts and actions before you take advice from anyone. Let’s dive into more details in each of the five basic steps to financial freedom;

1.    Increase your Financial Intelligence.

“It is not real estate, stocks, mutual funds, businesses, or money that makes a person rich. It is information, knowledge, wisdom, and know-how, a.k.a Financial Intelligence that makes one wealthy.” – Robert Kiyosaki

In his book, Increase your Financial IQ: Get smarter with your money, Robert Kiyosaki describes financial intelligence as that part of our mental intelligence we use to solve our financial problems.

Robert further states that whether you are wealthy or poor, you will always have money problems, but financial intelligence will help you solve them regardless of your net worth.

Although success is defined in many ways, the one definition that resonates with me says “It is the ability to solve problems and achieve goals that you have set for yourself”. That implies that if you improve your financial intelligence by consuming content on Financial literacy (books, seminars, videos, magazines, etc), you will surely be successful in the game of wealth.

We live in the age of information, and knowledge of any kind is available to anyone who desire to improve themselves in any specific area.

2.    Define Wealth in your own terms

“Wealth may be an excellent thing, for it means power and it means leisure, it means liberty.” – James Russel Lowell

Wealth is a very interesting and fun game. The key to winning is to be in control of yourself and your capital. Consequently, you will be in charge of your life and achieve the happiness and fulfilment you desire and deserve. I define wealth as a fun mental-game, that’s the way I view and understand it.

However, wealth means different things to different people. I suggest you create your own fun definition that will help you visualize what wealth means to you. As you embark on a journey of financial intelligence (Step number 1), you will discover several definitions of wealth and eventually, one will stand out and speak to you. Adopt it.

3.    Think Wealth, to be Wealthy

“By adopting particular values and attitudes, you can learn to become rich” – Sharon Maxwell Magnus

You probably heard the adage “If you change your attitude (mind-set), you will change your life.” The next step after finding your own definition of wealth is to sensitize your mind consistently with content on financial literacy and in a specific area of business where you plan on building your wealth.

The more you consume content on wealth, the better you will think about wealth, and the wealthier you will become. As you think, so you become.

Starting a business or investing are not the only ways to build or create wealth. You can leverage your skills or talents and make a great fortune for yourself. Art, such as singing, writing or painting can make you wealthy if you nurture your talent and expertise with the help of professionals (mentors), study, and persistent practice.

Think about J.K Rowling who became the first billionaire author from selling books and adapting those books into blockbuster movies, or Jay Z who became the first hip hop billionaire from selling music and other business ventures.

4.    Begin with the end in mind

“A goal is not always meant to be reached; it often serves simply as something to aim at.” Bruce Lee

According to Steven R Covey, this rule or habit (as he calls it) “Begin with the end in mind” is based on the principle that all things are created twice. There is a mental or first creation, and a physical or second creation of all things.

Think about someone who wants to build a house without drawing a complete house plan first. How will they know when the house is complete (goal), if the plan is not drawn to detail?

The process of building wealth is almost akin to building a house. When building a house, a plan must be drawn according to scale, detailing how many rooms the house will have, the positions of the kitchen, dining room, bathroom including the dimensions of each unit in the entire house. This is a blueprint of a house that will enable the builder to complete the project.

The building of wealth is no different. If you going to run a business as means to create wealth, draw a business plan/model before you start. If you are going to invest, educate yourself and consult with people who are successful and trusted investors (mentors) for guidelines and strategies for successful investments.

5.    Take responsibility before you take advice

“The problem with turning over to a financial expert is that you fail to learn, fail to increase your financial intelligence, and fail to become your own financial experts.” – Robert Kiyosaki

The game of wealth is plagued with sharks that are always on the lookout to prey on the players who don’t know the rules so they can rip them off, sometimes legally. Remember rule number one. Whenever you encounter challenges in your wealth creation journey, tap into your financial intelligence before you consult a financial expert.

At this point in your journey, you should be accumulating wealth either through business ventures, investments, or by monetizing your skills or talents. In South Africa, it highly unlikely that merely relying on your salary from a 9-5 job will make you financially wealthy, save for when one is engaged in illegitimate and corrupt dealings. 

“You can be a successful doctor and be poor. You can be a successful schoolteacher and be poor. But you cannot be a successful entrepreneur and investor and be poor.” – Robert Kiyosaki

When it comes to investing, say Richard Templar, the author of Rules of Wealth, “Take it slowly and build a portfolio based on experience, knowledge, decent advice, up to date research and helpful friends”. This quote sums it all up, and decent advice from financial experts should be a last thing to resort to if you are financially intelligent.

Self-discipline and patience are the key qualities of wealth champions. You cannot win the game of wealth if you cannot manage yourself and your own money. In conclusion, “Basic money management means being able to budget, taking a long-term view of your money so that you save and understand what things cost” – Dr. Pat Spungin, Child Psychologist and Entrepreneur