The last two days of our 16-day challenge were light. They were about getting back on track with the daily challenges, rather than covering a new area of the Wheel of Life.
Today we’re going back to the wheel. Day 6 is all about how to use your finances to achieve financial freedom.
Are you Stuck in the Financial Rat Race?
How often do you dream of financial freedom? The key to achieving this freedom is NOT making more money. Even people with six and seven-figure salaries can remain stuck in the financial rat race.
The key to escaping this rate race is changing your spending habits.
Did you score yourself below a 7 when you filled out your wheel of life during day 1? If you did and I asked you why I bet you would say ” I need to make more money “.
That is certainly part of the equation, but it is not the first step in the order of operations for financial success.
The first step is to learn how to use money. Most people who live paycheck to paycheck do so because they don’t know how to use money. Their money starts to burn a hole in their pockets the minute they cash their paychecks, and they spend frivolously.
If this sounds like you, then don’t be too hard on yourself. We are hardwired to spend everything we make. Simply put, saving money is boring.
We crave the dopamine release that comes with a new purchase. Luckily, how we treat money isn’t all biological.
How we are raised has a big impact on our attitude towards money. In most cases, we inherit the money habits of our parents. If our parents are savers, then we are more likely to be savers, and vice versa.
If your parents lived paycheck to paycheck, then you need to unlearn what they taught you about money. Remember the order of operations for financial success I mentioned earlier?
Now we are going to go into this order of operations in more detail.
The Three Steps to Financial Freedom
The first step towards financial freedom is to cut your expenses. Financial freedom is first and foremost about living within your means.
Analyze how you spent your last paycheck. How much of it went to absolute necessities, and how much of it was spent on expenses you could cut?
The second step is to invest money rather than save money. Saving is boring, but investing is addictive. Learn how to properly invest your money and you will be on the fast track towards financial freedom.
Investing also ties up your money in a way a savings account doesn’t. With a savings account, it is much too easy to dip into your savings on impulse.
The third and final step is to go out and make as much money as possible. This is where make more money fits in the order of operations for financial success. Only when you learn how to use money wisely will making more money give you financial freedom.
Today’s Challenge: Cutting Expenses
Today’s challenge is to incorporate cutting expenses into your daily routine. First I want you to make a list of all your daily expenses that aren’t absolute necessities.
Next, I want you to pick one of these expenses and commit to giving it up for the remainder of this challenge. This can be as simple as giving up your morning Starbucks and making your own coffee.
This small change will be the beginning of a big shift in your attitude towards money, but it’s up to you to follow through!
If you’re ready to finally escape the financial rat race, then book a financial coaching appointment with Arman today.