My honest advice to someone who wants financial freedom

Brief Summary

This video outlines a five-step plan to achieve financial freedom, emphasizing practical strategies and mindset shifts. It covers calculating your freedom figure, hacking your life to save money, leveraging credit cards wisely, creating additional income streams, and using money for expansion through investments.

• Calculate your freedom figure to know your target.
• Implement life hacks to save money without sacrificing enjoyment.
• Use credit cards strategically to build credit.
• Create multiple income streams for financial stability.
• Invest wisely to make your money work for you.

Intro

The video introduces a plan for achieving financial freedom based on the speaker's personal experience of escaping a dead-end job and becoming a millionaire in his 20s. The speaker emphasizes that financial freedom is still attainable today with the right plan and aims to provide a clear roadmap for viewers to achieve it as quickly as possible.

Step 1: Find Your Freedom Figure

The first step involves determining your "freedom figure," which is the amount of money needed to live without financial worries, generating enough passive income to support your lifestyle indefinitely. This figure varies for each person based on their desired lifestyle. The video suggests estimating costs for housing, transportation (like a Porsche 911), vacations (around three per year), bills, food, health insurance, and leisure activities. After calculating the total annual expenses, multiply that number by 25, based on the "rule of 25," to determine the investment needed to sustain that lifestyle. This rule ensures you can withdraw money each year without depleting the principal, assuming a return of over 4% on your investments. The S&P 500 has historically provided higher returns. Investing in an S&P 500 ETF through an app like Trading 212 is recommended, utilizing dollar-cost averaging to mitigate risk. Trading 212 offers fractional shares, making it accessible for average investors.

Step 2: Hack Your Life

This step focuses on strategies to save money and reach your freedom figure faster. The video advises against superficial cost-cutting measures and instead suggests "life hacks" to save money while maintaining your lifestyle. Car hacking involves buying a quality used car that has already depreciated to avoid high monthly payments and debt. Brand hacking suggests opting for generic or store-brand products, which can save up to 87% without sacrificing quality. Housing hacking involves renting out a room on Airbnb to cover the rent. Tax hacking involves legally minimizing tax liabilities through deductions for business expenses and utilizing tax-free savings accounts like ISAs in the UK or Roth IRAs in the USA. Deal hacking emphasizes negotiation, especially when buying a car, by researching market values, getting quotes from multiple dealers, and buying at the end of the month to leverage sales targets.

Step 3: Get A Credit Card

The video challenges the common misconception that credit cards are inherently bad. Instead, it argues that they are valuable tools for building a solid credit score when used responsibly. A good credit score is essential for securing better borrowing terms, such as lower interest rates on mortgages, which can save significant money in the long run. The advice is to use credit cards to build credit, maintain low balances, and pay them off every month.

Step 4: Create Additional Income Streams

Creating additional income streams is presented as crucial for financial freedom. Relying solely on a job is likened to a stool with one leg, which is unstable. Multiple income streams, such as side hustles or investments, provide financial stability. The video suggests choosing side hustles that leverage existing skills, such as affiliate marketing, freelancing, e-commerce, or traditional gigs. It addresses common excuses for not starting a side hustle, emphasizing that there is ample time available and that it comes down to prioritizing financial freedom.

Step 5: Use Money For Its TRUE Function

The final step discusses how rich people view and use money differently. While poor people see money as a means to pay bills and middle-class individuals view it as a tool for building credit to acquire loans for bigger purchases, rich people understand that the true function of money is expansion. This involves using money to generate more money through passive income streams, such as investing in the stock market (particularly S&P 500 index funds), cryptocurrencies (with caution due to higher risk), and real estate. The video shares the speaker's personal experience of transitioning from working long hours to investing in assets that grow independently.