The 1st Truth About Financial Freedom — What Most People Learn Too Late
The biggest mistakes people make (and how to avoid them)
So, here’s my non-nonsense advice for anyone searching for financial freedom. And this comes from someone who was raised by struggling Taiwanese immigrants and became financially free in my 30s.
I got my first job at 18, making around $6.25 an hour, folding jeans at American Eagle. I also had a lot of different random jobs at GNC, which is the General Nutrition Center, and was a receptionist in an art school.
Of course, later I became a full-time public school teacher and started tutoring after school each day to make extra cash.
Even as a full-time teacher with a master’s in education, I was still struggling. Even though I was working non-stop, I felt like I was stuck.
It felt like I was running on a treadmill where I was working hard, but I wasn’t really going anywhere. But then things changed. I started tutoring every day after school, and I invested everything that I earned. That’s when my financial freedom journey really kicked off.
To me, financial freedom meant never stressing about money, being able to travel whenever, spend more time with my friends and family, and even take my mom out to dinner without secretly checking my bank account.
Guess what?
Eventually, by the time I was 33, I didn’t need to clock in for someone else anymore. People always ask me, Steve, is this even realistic today with inflation, student debt, and insane rent prices? And my answer is yes, but not if you’re just copying everyone else.
So, if you’re really serious about this, here’s a super straightforward five-step road map to financial freedom. All right, step one, you’ve got to figure out your freedom number.
#1. Find Your Freedom Number
This is basically a fancy way of saying how much money you actually need never to work again. And look, your number might be different than mine.
It totally depends on your lifestyle. Maybe you need $3,000 a month, or maybe you need $10,000.
For me, it’s always been pretty simple. For the longest time, three to $4,000 a month covered everything I cared about. Honestly, I didn’t need fancy cars or designer clothes.
I liked living a simple life where I could go on walks with Domino, work out in my garage gym, and just spend more quality time with my friends and family.
So, think about your ideal lifestyle,
So, let’s go through an example, and let’s first talk about housing. If you’re somewhere like Miami or like me in SoCal in Los Angeles, $30,000 is pretty normal.
Next is transportation. If you’re financing a luxury car, that’s easily around $24,000 a year with gas and insurance.
Speaking of car insurance, it’s gotten pretty expensive lately. So, I always shop around.
Next, let’s talk about vacations. And let’s say that it’s going to be around $5,000 a year, which will probably get you around two to three solid trips a year.
Next, we can talk about the boring stuff like utilities. And this can include electric, internet, and water, which can be around $3,000 a year.
Next is food, and people are going to have a combination of both cooking at home and maybe going out occasionally.
We can say that this is around $5,000 a year. Next, we can say that there’s health insurance, and this can be around $2,500 a year for a mid-tier plan.
Let’s talk about the fun stuff because we are human after all. So, this can include maybe your gym, Max. I just finished thThehite Lotus.
I thought that last episode was really awesome, by the way. Maybe your Netflix, Amazon, Impulse Spies, and we’ll say that this is around $4,000 a year.
So, if you add everything up in this example, it’s going to be around $73,500 a year. Now look at your piece of paper and see what your number is, and then you can get that number and multiply it by 25.
So why 25? Well, it’s because it’s called the rule of 25, and it basically gives you your freedom number.
And in this example, $73,500 * 25 is around 1.8 million bucks. And I know some of you are thinking, “Wow, this is like a really big number.
I don’t know if it’s doable. But I promise you, it is absolutely doable if you have a clear plan.
#2. Spend Smarter
Spend smarter. Notice that I didn’t just say stop buying coffee. I mean, sure, small stuff helps, but we really want to focus on the bigger wins.
So, for example, cars are honestly one of the biggest ways people can waste their money. You know, the average car payment is around $740 a month.
For me, I drove my Honda Accord for more than 13 years. No crazy payments. There was super cheap insurance and zero stress.
If you think about it, that’s money I could invest instead. Another easy hack is to switch to generic products. If you think about it, do you really notice the difference between Costco and Charmin toilet paper? Yeah, for me, not really. Even saving a couple of bucks weekly adds up to hundreds of dollars each year.
Oh, and there’s also the thing with roommates, and people often call this house hacking. I pretty much lived with roommates for my entire adult life until just last year.
I was able to let my roommates pay for my mortgage and my other utilities. And if you have the means to do so, you can get a place and rent out the other rooms. And it’s going to help you save a couple thousand each year.
#3. Get Smart With Credit Cards
Get smart with credit cards. And no, credit cards aren’t evil. They’re actually kind of awesome if you use them right. Because really, good credit means better loan rates, cheaper interest, and it can help you save tens of thousands of dollars throughout your entire life.
So, here’s a three-step trick. You first want to keep your usage under 10% of your credit limit or under a 10% credit utilization ratio. Second, of course, you want to pay on time.
You want to pay the statement balance in full every single month. And if you follow these three guidelines, I promise you, your credit score is going to thank you.
#4. Increase Skills To Increase Income
You’ve got to increase your skills to increase your income. Basically, you want to make sure that you have more than one way of making money.
Seriously, just relying on your job these days is kind of risky. I mean, if you look at the news with the layoffs, automation, all the AI implementations, and all the chaos, you want to make sure that you have backup.
The best way to increase your income is to start some sort of side hustle. You essentially want to start with something that you’re really good at.
So for me, tutoring math made perfect sense because, of course, I was already a math teacher. But there are a lot of other options out there, with maybe sales, affiliate marketing, becoming a virtual assistant, a video editor, a content creator, or a graphic designer.
Uh, you can even make digital products, do coaching, tutoring; the list can go on forever. And before you say something like, I don’t have skills, or I’m too busy. I mean, let’s be real here.
Everything that you need to learn is pretty much online for free, and I would highly recommend all of you to start with YouTube, of course, and a chatbot. Plus, a lot of these side hustles basically cost $0 to start.
#5. Invest Regularly And Keep It Simple
You’ve got to invest. Of course, saving money is important, but you cannot save yourself to wealth.
You have to invest it. You see, a lot of rich people, they don’t see money as something just to spend. They see it as something that can work and grow for them in the future.
Something that you can invest in and something that I’ve been investing in for many, many years is the S&P 500.
Historically, the S&P 500, or the top 500 companies in the United States, has grown around 7 to 12% a year. Even after inflation, that’s still around 7 to 9%.
As you start investing as a beginner, I highly encourage you to keep it simple. You can use apps like Fidelity, Schwab, or Vanguard, or if you’re out of the US, you can even look into Interactive Brokers.
Within a lot of these brokerage accounts, you can set up automatic monthly deposits and invest in something super simple like low-cost S&P 500 ETFs.
It literally takes around 5 to 15 minutes to set up, and you can totally start today. If you want to take one small action and start saving money,
DISCLAIMER: This article is originally published on Substack, The Trio Unit
