The Financial Freedom Blueprint

I've spent the last decade researching, understanding, and reaching financial freedom so that you can take away my knowledge and make it yours in just 5 minutes. Read this blueprint, and I'll save you years of hard work by laying out the exact steps I took to reach financial freedom, plain and simple.

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The Financial Freedom Blueprint

Financial freedom is not just about having enough money to live comfortably; it is about having the freedom to do what you love when you want without the constant pressure of financial constraints. Achieving this freedom requires a clear plan, discipline, and dedication. Here's a ten-step blueprint to help you create your own path to financial freedom.

Step 0: Your Personal North Star

Before you embark on your journey to financial freedom, you need to identify your personal North Star—your ultimate financial goal. This could be anything from retiring early, travelling the world, or starting your own business. Your North Star is your guiding principle, the vision that will motivate you to stick to your plan and make the necessary sacrifices along the way.

Step 1: Shift Your View of Money

In our society, many of us view wealthy people as 'bad' and this can prevent us from making money ourselves. To change this, we need to see money as just a tool we use to exchange our work and time for things we need or want.

Our thoughts about money are often shaped by our early experiences and what society tells us. These can create negative feelings about money which push it away from us. To fix this, we must stop attaching emotions to money, see it as neither good nor bad, and realise that it can be used for good things too.

We also need to understand that we earn money based on the value of our work, not just the hours we work. Plus, we need to think about 'spending' differently, seeing it as an investment that can benefit us in the future.

Lastly, it's important to strongly believe in our ability to make money because our brain will work hard to make our beliefs come true, guiding us to make good decisions and adopt habits that help us achieve our money goals.

Step 2: The Two Main Paths to Freedom - The 4% Rule (Passive Path) and The Cash Flow Rule (Active Path)

There are two main paths to financial freedom: the 4% rule (passive path) and the cash flow rule (active path).

The 4% rule is a guideline often used in retirement planning. It originated from a study done by financial advisor William Bengen in the 1990s that looked at the historical returns of the stock and bond markets in the United States.

The 4% rule is a retirement planning guideline that suggests withdrawing 4% of your investment portfolio annually, adjusted for inflation. This rule is based on historical market performance and aims to provide a steady income while preserving the portfolio's value over a 30-year retirement period where the average market return per year is 6-8%, and inflation is 2%. This means that on average if your portfolio goes up by 6%, inflation is at 2% (again on average over 3 decades as the current environment we are in is a once in a lifetime sort of event), then pulling out 4% means you principle remains untouched, and you live off the gains from the market like an infinite money printer.

To determine how much to save/invest, the 4% rule can be inversed as the 25 times rule where you'll need a retirement portfolio that's at least 25 times your desired annual income. So if you intend to spend $50,000 a year, you'd need a portfolio worth $2.5 million dollars.

Despite the simplicity and the historical returns, however, it's important to remember that the 4% rule is not foolproof and should be regularly reviewed and adjusted as market conditions and personal circumstances change.

The cash flow rule, on the other hand, emphasises creating and managing income-generating assets to cover your expenses, including business, property, dividend yielding stocks etc. This involves considerable work to build up and has a much higher risk profile as creating a profitable business or finding the right property takes a certain level of skills, determination and luck.

For this blueprint, we will focus on the 4% rule, as it is more achievable for most people and is a set-and-forget kind of system.

Step 3: Determine Your Net Worth

Your net worth, which indicates your current financial standing, is calculated by subtracting your liabilities (such as mortgages, student loans, and credit card debt) from your assets (such as cash, investments, real estate, and personal belongings).

For example if you have one asset say a stock portfolio of $100,000, but you owe the bank $60,000 in loans, you're net worth is $100,000 minus $60,000 which is $40,000.

This figure is a clear indicator of your current financial standing, so calculate your net worth and track it regularly. This gives you a baseline to measure your progress towards financial freedom and how far you have left to reach your 25X number.

Step 4: Start Budgeting

Creating and sticking to a budget is a critical step towards financial freedom. Your budget should include various sources of income, such as salary, rental income, freelance work, dividends, side business earnings, interest income, royalties, and commisions, while allocating funds for essential expenses, discretionary spending, savings, and investments.

Creating and tracking your cash flow in and out of your bank account will help you understand where your money goes, control your spending, and prioritise saving and investing. Without having excess money left at the end of each month to go towards your investments, financial freedom is impossible to achieve, so make sure to first understand where your money is going and why.

Step 5: Spend Intelligently and Spend Less

The key to achieving financial freedom is to spend less than you earn. This may involve cutting unnecessary expenses or simply making more frugal choices. Financial freedom can be achieved without sacrificing your lifestyle if you can purchase the same level of goods and services at a cheaper price. This may involve things like refinancing your mortgage, negotiating better rates on your bills, buying things on sale, meal prepping etc.

But remember, spending intelligently also means investing in things that will provide value in the long term, like education or quality goods that will last. For example, instead of buying a new pair of shoes, buy a course on upskilling so that you can get a raise in your job or change careers to one that pays you more per hour.

Whatever method you use is fine, as long as you don't live like a monk and sacrifice your mental health for the pursuit of freedom, because this will lead to burnout and resentment and may cause you to quit.

Step 6: Increase Your Income

While spending less is crucial, increasing your income truly accelerates your journey to financial freedom. This can be achieved by advancing in your primary job, taking on additional jobs, or starting a side hustle. Any extra income can be directed towards paying off debts or investing.

Regardless of all the options out there, you need to focus on what you do best and get paid for doing it. Whether that's working a 9-5 or running a business, whatever can get you the most money in the shortest time period possible is the fastest way to freedom, regardless of your passions or interests. If what you are good at happens to intersect directly with what you also enjoy, your income will rise exponentially.

Step 7: Pay Off Your Debts

Debts, particularly high-interest ones, can be a significant roadblock to financial freedom. Create a plan to pay off your debts as quickly as possible. Start with the highest interest debts and work your way down.

The less money you owe, the more you can invest in your financial freedom, because interest payments are inherently the least productive form of spending. Because you don't get anything back from them; it's simply a bottomless pit of your money disappearing. Do everything in your power to reduce high-interest debts like credit cards or BNPL loans (mortgage is not included as you are getting a roof over your head).

Step 8: Dedicate a % of Income to Investing into an ETF

Once you have more money, are spending less, and have paid off your debts, investing is crucial for building wealth and reaching financial freedom. Dedicate a certain percentage of your income to investing, preferably in a diversified portfolio like an Exchange Traded Fund (ETF). The beauty of ETFs is that they provide broad market exposure and minimise risk while offering potential for steady growth, which fits perfectly with the 4% rule. You need to keep investing each month until you eventually reach the 25X number you need.

Don't worry, because of something called compound interest, the money you will invest will eventually snowball into a greater and greater number over time, so you don't have to dread saving the full 25X amount. Check out this compound interest calculator to play around with your monthly investment amount and how much it will grow over time, and how long it will take for you to reach your financial freedom net worth.

Step 9: Rinse and Repeat, But Don’t Let Lifestyle Creep Get You

Reaching financial freedom is a marathon, not a sprint. It involves repeating these steps consistently over time. However, be aware of lifestyle creep - as your income increases, so does the temptation to raise your standard of living. This can negate your financial progress. Keep your lifestyle in check and continue to save and invest diligently by remembering your North Star.

Step 10: Understand that There are Multiple Paths to the Same Destination

Remember, there's no one-size-fits-all route to financial freedom. The blueprint provided here is a guide, but your path may look different. What's crucial is to stay focused on your personal North Star, adapt as needed, and consistently work towards your goal.

Your 4% rule number may only be a couple hundred thousand dollars compared to someone who may need millions, so stay focused on your own freedom, as there is no need to compare your goals to others. The beauty of it all is that you get to define what freedom means to you.

Summary

Achieving financial freedom is not an overnight process, but with patience, discipline, and a solid plan, it is within your reach. This blueprint is designed to guide you on this journey. Remember, the objective is not merely to accumulate wealth, but to create the freedom to live the life you envision for yourself.

My journey started from rock bottom with no money, multiple addictions and no hope, and yet by following this blueprint I arrived at my baseline financial freedom within 5-6 years. Whether your goal is to travel the world as a digital nomad or raise your kids without needing to worry about a job, your freedom is yours to take.

So, start today. Define your personal North Star, shift your mindset about money, and take the necessary steps towards your financial freedom. It may not be easy, but the rewards are life-changing. Here's to your journey towards financial freedom!

My book The 4 Pillars of Freedom will dive into each of these steps in great detail so that you are fully equipped on your personal journey towards freedom. It's on its way, so stay tuned for the release!

Please note: None of this is financial advice; please refer to a licensed financial advisor for personalised advice for your specific needs and circumstances.