The path toward financial freedom requires some pretty heavy planning. Todd and I seldom divulge much about our personal lives, yet with the decisions that my husband and I have been making, I feel like readers could benefit from some of the ideas we’ve been implementing. As a bonus, Todd can’t argue, “You didn’t tell me that!”
Our idea of money freedom requires:
- Setting goals
- Creating behaviors
- Discussing our plans, progress, and reasons for working so hard
1. Setting goals
The most important factor is that my husband (age 27) and I (age 24) hold the same idea about money. I’ve often read that wealthy men become wealthy through two positive attributes: their spending habits and the even more frugal spending habits of their wives. Am I trying to boost my ego as a wife? No’but I think that we all want to splurge sometimes. You need someone who can remind you that you don’t need that pair of shoes or new computer right now. A spouse with common goals will discourage bad habits and unnecessary desires. Meanwhile, a spouse who acts nonchalant or encourages abundant spending habits could quickly spell disaster.
My husband and I go to coffee shops to compile our thoughts on work, school, and schedules. We love the youthful environment. My husband announced his resignation at work; detailed ideas of how we’re going to financially support ourselves and our projects without his income are crucial. We’re heading to the coffee shop more often now. Can’t believe I’m going to be the breadwinner for a little while!
Record your finance goals and keep them updated. We update an excel template every month to show our net worth. You need to see where your money is going, areas that are growing, and roughly how much money you need to cover yourself. When one of our rental properties is vacant, we have to cover all those expenses’utilities, mortgage, insurance, taxes’until the property generates income again.
Track your long-term goals. I made a progress chart for us to color each $10,000 growth mark to $1 million like those United Way boards. Every so often, we can fill in another tick when we know it’s stable. Beside our chart is an estimate of how much our net worth needs to grow every six months to keep in target with our final goals. Your estimates will never be exact, though you build something to dream off of.
2. Creating behaviors
I’m surprised at how easy it has been for us to get into some great habits’biking as much as possible instead of driving. My husband even has studded bike tires for his winter commutes; he’s pushing it more than most of us could handle, yet this savings means we don’t need two cars.
The easiest behaviors to change (the ones I prefer most) are the ones you can do once and not look back, like electric bills. Even though we rent a house, my husband replaced the thermostat with a programmable thermostat. We switched to energy efficient light bulbs. When our lease ends, we’re taking our energy efficient items with us to save at our next home. Doesn’t it make sense to cut back on the things you don’t need/use anyway?
Other temptations, however, aren’t so easy to forego‘especially eating out when we don’t want to cook or managing our unproductive time during the weekends. No one is ever perfect, and it’s so easy to see how other people aren’t perfect. The hard part is recognizing bad (i.e. expensive) habits that we have and transforming them. You’ve probably heard of the latte factor, which is a great thing to cut, of course… but what if you don’t have a latte factor habit that you know of? Again, a spouse will let you know… unless he holds the same habits.
3. Discussing plans, progress, and reasons for working so hard
My husband and I work seven days a week, five for someone else and two for ourselves. A quarter of our income transfers hands to another person working on our real estate development. Gaining financial freedom is a process. Quitting would be so easy! For that reason, we constantly talk about our plans and ideas. Don’t put your goals in a time capsule to pull out in ten years and say, “Well, looks like we didn’t quite meet our goal, honey.” We’ve got reminders everywhere in the house… short of the bathrooms, I guess. And the reminders are working.