Show me how you spend your money and I‘ll tell you what’s important to you. In an effort to be in line with one of the pillars of personal freedom — financial freedom — I decided to take an indepth look at my spending habits. Unbeknownst to me, they were not those of someone with the desire to achieve personal freedom; in fact, my habits demonstrated the opposite.
In this article, I want to encourage others to take their freedom back by explaining the mindset you must possess and tactics you can use to achieve financial freedom.
3 Essential Strategies for Achieving Financial Freedom
If you cannot save money, then the seeds of greatness are not in you.
– W. Clement Stone
Jay-Z recently released his thirteenth studio album, which hip-hop enthusiasts praised for its many nuggets of wisdom. Jay-Z explained, “I’m trying to give you a million dollars worth of game for $9.99.” One personal takeaway for me was a line from the final track , “Legacy,” in which he sings: “You run this hard just to stay in place.”
Many professionals work hard throughout the course of their career yet financially never really progress. We all seek personal freedom, but few actually experience it because we are in fact running in place, believing that making more money will push us forward. Yet the only way to move forward is discipline.
As a young professional in New York City, it’s a constant battle because of the vibrant social scene. That being said, recently I developed three strategies to help me remain disciplined and keep moving forward on my path to achieving financial freedom.
1. Shifting to a mindset of contentment
Poor is the man whom is not content with what he has.
– Rita Gonzalez
The value of personal freedom isn’t just in dollars and cents. Therefore, it can not be obtained simply by increasing one’s income. Part of the formula to obtaining personal freedom is developing an attitude of contentment.
Living in the United States, a country where excess is part of our very being, makes it difficult to embrace a lifestyle of contentment as it seems contradictory to who we are. We often view more money and consumption as the answer, when in fact it’s the problem. Recently in a conversation with a friend, he made a comment that fundamentally shifted my perspective: “How much money is enough money? It’s never enough! Whenever you think you’ve reached the finish line, it gets pushed back — our desires never stop.”
In Secrets of the Millionaire Mind, T. Harv Eker wrote, “Money will only make you more of what you already are.” Holding this true, if you’re not content at 21 making $50,000, you won’t be at 40 making $300,000 either.
2. Learning to distinguish between value and cost
Naturally, we make spending decisions based on the cost of a good or service, rarely giving thought to the actual value. Growing up like most kids, when my siblings and I went to the grocery store, we had a range of items that we asked our mom to buy. One item I vividly recall was Lunchables. Yet our persistence was always met with great resistance by our mother — her response was to ignore us, give us the look of death, or respond with a flat-out no.
As a child I didn’t understand why my mom wouldn’t buy the Lunchables for us. She had a job, and it only cost $4. What I didn’t conceptualize was that my mom wasn’t looking at the cost of Lunchables. She was assessing the value. Let’s say she had $150 to spend on groceries every two weeks. To her, it’s not worth almost 10% of her grocery money to buy one Lunchable for each of her three kids.
Determining the value of your purchases is another tactic to change your spending habits and become more disciplined, because it changes the conversation’s focus from affordability to worthiness.
3. Develop a rewards system
Saying that I always enjoy taking the train instead of Ubering, or bring my lunch to work instead of eating out would be a lie. In fact, at times it can be frustrating when we live in a world that tells you to treat yourself daily. Staying disciplined over an extended period of time can be extremely difficult if you don’t celebrate the small wins.
For example, during the winter for a period of about two months, I was saving consistently and not giving myself the opportunity to indulge. By the end of that two-month period I was bitter, because I felt like I was missing out on the lifestyle that I deserved. Eventually, this built-up tension led to a random splurge one weekend, almost bringing me back to where I was before I embarked on this spending crunch.
Therefore, to avoid random splurges I created a rewards system. One of my rewards I developed was treating myself on Saturday or Sunday to a nice meal if I didn’t eat out during the week. This system made my expectations more realistic and allowed me to occasionally enjoy some of the fruits of my labor.
The key to a successful reward system is ensuring that you celebrate the small wins. This forces you to break the big goal down into smaller tasks that you can complete daily, making the goal more attainable.
Give yourself a freedom audit
An exercise I recommend completing is going through your bank statement and seeing how you are spending your money. When you pay your necessary expenses such as rent, student loans, etc., how is your money being spent after? I’m sure you will be surprised!