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