How to achieve financial freedom in 5 years

How to achieve financial freedom in 5 years

The road to financial freedom is not an easy one as some scammers and con artists try to convince you. It takes a lot of sacrifices, learning and even taking some risks along the way. If you are ready to pay the price and are stubborn enough to persevere then the reward will be well worth it.

A few years ago I asked myself: “How to achieve financial freedom and is it possible to do it in five years?”

Well, it’s only been a year and a half and I am still far from my goal but I have learned a lot already and believe I am well on my way to it.

Financial freedom is something that a lot of people strive for but very few actually achieve. The thing is that we all have a choice and a chance to be financially free. It’s only a matter of believing in yourself and being ready to pay the price. A few years of hard work are nothing compared to a lifetime of freedom.

What does it mean to be financially free?

It is very important to understand well the concept of financial freedom and the ways to create it for yourself. In essence being financially free means that you own assets that produce enough passive income for you to cover all your expenses without you having to do any real work.

Those income producing assets can be real estate that you get paid a rent for, a business that you have invested in or created yourself, any kind of paper assets that are making money (stocks, bonds, mutual funds, hedge funds, etc.), a high-traffic website, creative work that pays you royalties, and many more.

But how do you create these assets and what does it take to achieve financial freedom?

1. Create a goal to be financially free in 5 years

The first step towards any achievement in life is to know exactly what you want and seta a goal for it. It seems logical but a lot of people miss this step completely. Put your goal in writing, set a realistic deadline and commit to it by taking action. Knowing what action to take is the hard part and you need to figure the exact steps out based on your personal strengths, knowledge and experience.

2. Create a budget

The biggest mistake that a lot of people make is spending more than they are earning. This is a sure recipe for disaster, getting in debt and being a slave to the banks for the rest of your life. Whatever you do and no matter how much money you make you need to live below your means if you want to have a chance of being financially free.

Creating a budget will make it a lot easier to track your finances, especially if math is not one of your strengths. When you subtract you expenses from your income the balance has to be positive and what you do with that ballance is one or both of the following:

  • Pay out your credit cards and whatever other high-interest debt you may have;
  • Save, invest in yourself and create assets.

3. Learn about money

Probably the most important factor in achieving financial freedom is financial literacy. You need to learn how money works if you want to leverage its power. If you want financial freedom you should not be working for money. Instead money should be working for you.

I encourage you to get as much training and books on finance as you can. Being financially literate is something that you can’t learn in school but is very important for just about anyone. This is the main reason why so many people with good education are working for others that are not that well-educated. In the end it is financial education that really matters.

4. Change your thinking

If you want to become rich you have to think like the rich. Thinking only of scarcity, struggle and being afraid of change and taking risks will get you nowhere. You have to realize that your thinking and your mental attitude is what determines a great portion of your results.

A lot of people say things like: “It takes money to make money.”, while the truth that the rich hold is “Money is just an idea and you can create it.” There are way too many examples of people starting with nothing and creating a huge wealth. There are currently 8 million millionaires in the US, most of whom are self made.

Poor people say: “Building a business is risky” or “Investing is risky”, and they are right, since they don’t know how to do it. Through proper education this can change and the risk can be drawn to a minimum. What I really think is risky is working for someone else and putting your fate in the hands of your boss.

The truth is that we are only limited by our beliefs and fears. Unless we are willing to change them they will be holding us back forever. Facing your fears, challenging your beliefs and escaping your comfort zone are crucial to achieving financial freedom.

5. Follow your passion

Life is that much easier when you are doing what you love. Find the thing that you are most passionate about and figure out a way to turn it into your full-time job. Don’t try to reinvent the wheel. Figure out what other people are doing and how they are making money.

Our age, technology and the internet are providing us with unlimited opportunities. It should be your main focus to leverage everything you have available to make things work. I am passionate about online business and I urge everyone to give it a try. The main reason is that it can work for any kind of passion even ones that you may not be able to monetize in any other way.

6. Create a plan

Once you figure out what you really want and what you are going to do then it is time to create a plan. It is always a good idea to start with the end in mind. So the big goal is to be financially free in five years. Break it down into yearly goals and decide how you plan to reach them.

Plan for at least a year ahead and have certain milestones that will help you stay on track and measure your progress. Make your plans as detailed as possible and try to predict the way things are going to work out. Tie your plan to your budget an make sure your spending fits into it.

Try to predict positive as well as negative outcomes and always have a back-up plan if things don’t go exactly as you plan. Make it a habbit to review regularly the tasks that you planned for and the ones you accomplished. Every Sunday night plan for the week ahead and prioritize your tasks accordingly.

Don’t be afraid to review and make changes to your short or long term plans whenever you see it fit. Just make sure you are focused on the final goal at all times.

7. Network with like-minded people

A lot of successful people say that “It’s not abour what you know but who you know”. Knowing the right people can make a huge difference in your life. Whether it’s poeple you can team up with, get advice or mentoring from or simply someone to encourage and inspire you it will make your journey a lot easier.

There are too many out there that think they know it all and are quick to tell you how and why “It’s not gonna work”. Instead you should surround yourself with people that are open to the question: “How can we make it work?”

It’s always a good idea to have a mentor. Someone who was once in your shoes and made it to where you want to be in a few years. That is the kind of person that can help you the most if he or she is willing to.

If you can’t find a mentor join a club or a community of people with common ideas. Find local or online communities that may be a good fit for you.

Research and try a network marketing (MLM) company. Just make sure you join one that has been around for more than 5 years, has an actual product that is not overpriced and offers a good training program. Even if you don’t make money from it the training and contacts you create can prove valuable.

Here is a great free e-book that provides as in-depth experience of networking.

8. Resist the temptetion to give up

The only way to truly fail is to give up. There will be set-backs and there will be temporary defet but they are only opportunities to learn and grow. Take the time to learn from your mistakes and move on.

This is another reason to make friends with people like you. They will lend a hand when you are down and not let you give up when you feel like it.

Not giving up is the difference between winning and loosing. Whenever you think you should quit ask yourself: “How bad do I want to be financially free?”

To sum up I can say that the key to achieving financial freedom is the ability to convert earned income into passive income. It is not an easy thing to master but the reward is deffinitely worth it.

Do you have any other tips that you want to share? I will be glad to read them in the comments below.

18 thoughts on “How to achieve financial freedom in 5 years

  1. Hi

    Great information on how to become financially free in an extended period.

    This is realistic, and your experience tells me that this certainly will not happen in a short period. Dedication and patience are obviously needed, and setting out a plan like you have suggested will help anybody go a long way to financial success.

    The successfull people online make it look easy, but i would say a massive percentage of them have gone through the grind to succeed.

    I look forward to some of your future posts.

    Cheers

    1. Thanks for commenting, Chris. Everything that you have already mastered becomes easy and the better you are at it the easier it looks to other people. On the other hand only the one who succeeded knows how hard it was to reach success. It takes hard work, dedication and persistence. The only time you really fail is when you quit.

  2. The idea doesn’t seem all that impossible right now, does it?
    Financial freedom and considerable wealth don’t necessarily have to be synonyms, so to speak.

    Thanks for clearing some fact up – the whole financial freedom thing is already year on the market, yet too few people seem to get it.

    Cheers, Vlad!

    1. That’s right Vlad, financial freedom does not only seem possible but is actually absolutely achievable. And yes there is a difference between being financially free and being rich. Financial freedom is the first step towards great riches since it allows you to make proper use of your time and focus on your goals.

  3. These are very practical and down-to-earth tips. Thank you for sharing!

    I was surprised when I read, “There are currently 8 million millionaires in the US.” That means +8,000,000! It’s a big number! So earning a million dollar doesn’t seem so hard after all. I want to be financially free by providing good value for people. I don’t want to be financially free only to give myself a sense of satisfaction. Because I know that many people are getting rich nowadays by selling really bad products that only make people’s life worse. I mean for example, alcohol, porn, drugs and so on.

    1. Thanks for sharing your opinion Roope. I totally agree with you and share your values. We should all try to make the world a better place and the reward is sure to come.

  4. Love this post and I couldn’t agree more with the learn all about money target.

    Before I became an Internet Marketer I was earning £200.00 in retail or £250.00 as a warehouse operative. Now as a Successful Marketer I generate a little over £4000.00 a month on average. a lot of change happened when I starting making a lot of money that called for me to understand the laws of finance.

    One of the most important laws I’ve learnt is known as the law of Parkerson. What this law means is you must always grow and maintain a higher cash flow coming in than expenses going out so you hold more asset value then liabilities.

    Thanks for sharing.

    Sam.

    1. It’s great to hear about your success with online marketing. It sure is a nice feeling to reap the rewards of your hard work.
      Learning and understanding the laws of finance is equally important for people at any income level. Being able to manage your money wisely is a key to gaining financial freedom. Maintaining a positive cash balance is the first step that seems to be the hardest for a lot of people. With so many temptations out there it’s easier than ever to get in debt and become a slave of the banks. That is why financial education is your most important asset.

  5. I just read your post titled, “How to Acheive Financial Freedom In 5 Years.” I really enjoyed your post and the various solutions that you list to build wealth. I’m not saying it because I need words to fill this comment section. I am now 58 years old. I should’ve started the process a long time ago. Instead, I now have less time to build wealth. Thank you for writing this post!
    Edward Mijarez

    1. That is something all experts agree on – the earlier you start, the better. Building financial freedom takes time and effort. However, you should not get discouraged since you are most probably much wiser and more experienced. Remember that there are more than enough examples of people that built their businesses and wealth well into their sixties. Believe in yourself and work smart towards your goal. Good luck.

  6. Hi Alex, this is very motivational! Great post you have here.

    Not only to achieve financial freedom in 5 years, everyone should always set goals in everything they do. Many people focus too much on the process along the way and tend to forget about their objectives. It is essential to look back at the goals you set at the beginning and evaluate if you are on the right course.

    You have just reminded me to review my goals again! Thanks Alex.

    1. I agree with you mate. Goals are a very important factor for the success of every undertaking.

      Thanks for your input.

  7. Hi there buddy,

    Thanks for sharing this post. I’d add in set a goal and absolutely stick to it, no matter what. Also set aside a little side thought of what is the absolutely worse thing that can happen? (not achieving the goal) then do absolutely everything, blood, sweat, tears, and guts to make sure that does not happen!

    Bookmarked this post for reference. Thanks for sharing it again 🙂

    1. I totally agree with you. Dedication is extremely important. I am glad to see your enthusiasm and thoughts on the subject. Best of luck on your journey to financial freedom.

  8. This is such a helpful post. I am sick of being so financially embarrassed. It’s getting very restricting. The feeling of not being able to afford the things you want in life sucks.

    I’m gonna start creating a plan to get myself out of this rut I’m in. I need to start taking my online business a lot more seriously. I am already seeing results and earning a bit, but not enough to live on YET.

    1. Thanks for sharing your thoughts, I am happy you found my post helpful. It is great that you are serious about pursuing financial freedom as I can see the passion in your words. Even better that you are leveraging online business. Looks like you have taken some steps towards achieving your goal just make sure to stick to it untill you succeed. Let me know if I can help you out with anything.

  9. Financial freedom is something we all want in the long run. You talk about specifically in 5 years, but I strongly think, if you dedicate enough effort and work smart, it can be achieved much quicker.

    I heard stories of internet marketers who quit their jobs during their first years. And that’s because they had a huge goal they wanted to reach so bad.

    1. How long it takes to achieve financial freedom depends on a lot of things. Also, remember, that simply quitting your job doesn’t mean you are financially free.

      I think that five years is a more reasonable and achievable time frame for the average person. Still, how long it takes is not that important. All that matters is to keep trying untill you get there.

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