How to Create Financial Freedom
After setting a goal of ‘Financial Freedom in 5 years’ at theend of last year I decided to re-read one of the best books on finance I’ve ever read – Your Money or Your Life by Joe Dominguez and Vicki Robin.
The book is a blueprint on how to successfully navigate yourself from working 40 hours a week with no savings and no investments to a point where you work through choice and have enough income to cover your monthly expenses. Basically you are financially independent, you no longer need to earn money to live.
The process begins by lowering your living expenses to a level where you’re happy but not suffocated by the amount you own.
The surplus money goes towards paying debt. Once you’ve cleared everything you owe, you invest the money and the money you make from your investment builds up until it reaches your monthly expenses and you become financially free.
Of course this process takes time. Most of us have a mortgage and therefore probably have well over £100k to work through before we can begin to focus on saving and investing.
In the meantime we may already be building up the income that will help us achieve our goal of financial freedom. If we own property then rent is one source of income. Savings glean interest. Investments pay dividends. All this income counts towards the type of income that will help you cover your monthly expenses without committing to work.
There is another type of income that will help you achieve your goal – residual income. Residual income is income (commission) that continues to flow long after the work has been done. For example with Amazon, or Avon or Kleeneze you sell products and you get a commission, one time. A residual income usually involves a subscription service or some ongoing product or service and you’re paid a small amount of commission month after month. As you gain more customers your income builds. The effect is one of compound effort, you steadily build your customers and your commission grows a little each month.
I decided last year that I wanted to add a ‘residual income’ to my multiple streams of income to help me reach my target. The best offer I found was Utility Warehouse. Their residual income model is potentially very lucrative and they offer services that everyone needs – gas, electricity, phone broadband and mobile. This makes it easy for me to find lots of customers who will use the services over the long term thus allowing me to build my residual income. My goal is to increase my residual income year on year with Utility Warehouse until the income meets my monthly expenditure.
I also get lots of additional bonus payments and those will go towards paying down my mortgage so I can attack my goal from the other end too.
If you’re interested in doing something similar please contact me at [email protected] and I’ll be happy to discuss the opportunity with you.
