It may sound very simple, but that’s because it is.

Take your time and think

It might sound crazy, but the most important thing you can do is take a step back and think.

Get a clear picture of where you are financially, what freedoms you already have, and the options available to you.

Gaining knowledge is the foundation of your journey.

Earn Money

Doesn’t need to be a lot, as long as you can earn more than you spend then you can start to think about Financial Independence.

Consider ways you will be able to increase your income in the future.

Avoid falling into the spending trap. For many people when they start earning more, they choose to spend more. That is not how you get ahead. Control your expenses, and don’t let them creep up as your income increases.

If you can’t control your expenses then there is really no point in starting your journey towards FI.

Control your expenses

Know what you are spending.

You must ensure that your income is higher than your expenses and spending. If it’s not, make it happen. Any excuse you give here only hurts you more.

Don’t go spending hundreds at the bar/pub on the weekend. If it’s what you enjoy then that’s ok, go and enjoy just a couple. Keep things under control and in moderation.

Take it easy, find the cheaper things to enjoy.

Don’t bother trying to buy the cheapest possible bread, milk, and sugar, or the cheapest possible butter. You’ll be surprised at how much time, money, and fuel you can spend stressing over the little things. That time is valuable.

Control your major expenses. Though always remember that it may be easier to control your income.

Keep a simple budget

Understand when you get your income, what expenses you have, and what spending money you will allow yourself to have. This is simple maths.

Keep a simple spreadsheet, add to it all your expenses. Make sure it accounts for all of your money, including your spending money.

A weekly/monthly budget could look something like:

It really doesn’t have to be difficult, but it has to be accurate enough. The single most important number in that budget is the Remaining. Everything else can be different from week to week, month to month, but you must know exactly how much money you have leftover by your next income payment.

Decide what to do with your savings

Savings isn’t about just having cash. It’s about having freedom to spend that cash where you feel appropriate.

The most important thing here is knowing your options.

Options include understanding the Risk and Reward scenarios for every option.

Remember how I said that “time is valuable”? This is where you need to spend your time: Making sure you understand the options available to you, their Risks, and their Rewards.

Do you need a savings account to protect you for a rainy-day? That’s up to you. How much should you have in there? Again, totally your choice. It is far more important that you understand the Risks and Rewards of having a rainy-day account, compared to other options, and if the other options can be more than one thing, both an investment and also be your rainy-day account.

There are Risks everywhere. There’s even a very large Risk in doing nothing.

The worst thing you could do is to continue moving blindly into the future without understanding the options that are available to you.

Help me find a reference, I have heard and agree with a statement that is similar to: “The best investor already knows where their money will be spent before they get their money”. Decisions should be made long before the money arrives. Proactive, not Reactive.

Recognise that it takes time

Not only does it take time to start getting returns, but it takes time for you to learn the best places to get those returns.

“Tuition Fees”: You will always lose money in the beginning because you are learning! Take it easy on yourself, invest smaller so mistakes don’t hurt as much.

Go and make those mistakes! It’s the only way you’ll learn!

You can reduce the “tuition fees” by surrounding yourself with people that have already walked the path you are choosing, those that are currently on that path, and those that have taken a different path.

“20 years”: I keep hearing that consistent investing takes 20 years to build sizeable wealth.

Invest everything you can

Keep your “rainy-day fund” safe, and make sure you’re not financially over-stretching in any way.

Once you know your finances are under control, you know how much you can afford, then do it! Invest that money! Get that money working for you!

Always keep an open mind, listen to those around you, clearly identify the underlying value of any investment, and spend your time wisely.

Gaining knowledge is the foundation of your journey.