Adam's Brain
Steps To Reach YOUR FINANCIAL FREEDOM

Steps To Reach YOUR FINANCIAL FREEDOM

You can watch this video On YouTube.

[[Steps To Reach YOUR FINANCIAL FREEDOM Chinese Version]]

If someone points a gun at you and asks you "Your Money Or Your Life?", what would you do? Most of us would give our wallets, of course our lives are more valuable, no brainer.

But really, is it?

How important is money in your life? How is your relationship with money? Are you spending most of your time chasing after money, try not to run out of money before the next paycheque? Or are you enjoying life and money is serving you to your advantage? If you're not sure, Ask yourself these questions:

  • Are you spending enough time with family and friends and doing what you love?
  • Does your job help you to realize your values?
  • After a day of work, do you go back home full of energy?
  • If you get fired from your job, do you have enough savings to live for 6 months without any income?

If your answer is ‘no’ to even one of these questions, money might be more important to you than you would admit.

Most of us are too busy making a living, our lives are consumed by work, and work has become more important than our families, our health, and the dreams we have. When life or death events like robberies happen to us, it's our instinct to survive, we know in the moment that we value our lives more than money. But here's something weird, when time is stretched long enough, we are willing to spend half of our lives working to survive. And most of us didn't even noticed, that we are controlled by money.

Or maybe you have noticed it, maybe there were a couple of moments that made you question your life's purpose, "is this all my life about?", you ask yourself, but you couldn't see a way out and you couldn't find any solution to your questions, you could only go back to your daily hustle, you put your doubts behind you, and moved on.

"Well, This is how life should be," you tell yourself, "if it's not, why are so many people living like this?" You accepted this reality you're in, and you stopped looking for answers... Because, what's the point, right?

But what if I tell you, that your doubts are the signals that you shouldn't ignored, and there are answers to your questions? What if I tell you, that you can flip the table, and have a better control of your money and take advantage of it? That you can chase after your dreams, and make them possible? That you don't need to always be chasing money, but instead, you can have the freedom to decide what your life can be?

There are countless examples of how people have changed their lives by changing the way they interact with money, as well as by implementing some simple and basic principles when they are dealing with money, including myself. If you think that your financial life needs better direction, this video is for you. In this video, I'm going to show you some of these basic financial principles you have ignored that can help you to get your financial life back in order. To do that, you need to go back to the basics, to understand how is money affecting your life, and how can you change your relationship with money.

Are You Ready? First, you need to understand how you've got here.

The Old Financial Map (of which you're in)

Study hard, go to college, find a job, work as hard as you can and retire at age 65, at the mean time, buy some expensive things to compensate yourself for the hard work you've done, like buying a house, and some cars as well. In a nutshell, no matter we have realised it or not, this is the life's plan for most of us.

Maybe you're in college, maybe you have a job, if you're still watching the video, most likely you're somewhere on this map. Beside the aspirations for an outstanding career, Money, is the sole purpose of this road map.

You work, you get paid. You work harder, you might get paid more.

This road map started in the industrial age, people's work was designed to match the productivity society demanded, and it worked out not bad. Unfortunately, after almost 2 centuries, we are still working like this in the information age, with the belief that if we work, we can prosper our lives. But the truth is, we are trapped in it.

Without noticing it, everything we do have been defined by money, and by consumerism. At our jobs, we fight for more money. Outside of our jobs, we are consumers. We shop for fun, high price always means better and higher social status, that's why we are willing to pay more than 10 times the price of a normal bag for a Gucci bag. We all want good futures for our kids, so we spend all our time at work and let kindergartens and nannies to raise them up. We show how much we love them by constantly buying them new toys, instead of spending more time with them. And we think this is normal.

Instead of being more independent, we have become extremely dependent financially — depending on money to show our status, depending on ‘the economy’ to give us a good job, depending on ‘the job’ for a steady income, depending on our pensions to survive after retirement, and depending on Medicare to pay for our illnesses. Do you really think this is what prosperity looks like?

If you don't think so, then you need to find a new road map.

A NEW ROAD MAP — FINANCIALLY INDEPENDENT THINKING

We always say, "Don't run before you can walk", this is true in terms of your money as well. To change your road map, listening to the so-called "experts" in the news and following whatever advice they give you without thinking is not going to help you, instead, you need to start from examining the mentality about money that you have unconsciously adopted in you life. You need to change the way you do things like:

  • Spending more money than you earn, like relying on credit cards
  • Buying high and selling low, buying things that you don't need with an impulse
  • Always feel like you're in need for more money
  • Without thinking by yourself, blindly listen to "experts" in the news for investment advice

Do you see the pattern here? You lose money in these nitty gritty things that all seem very small, but over time, the money you earned vanishes in these little trenches.

To combat this, you need to be Financially Intelligent, by knowing how much money you earn, and how much money you spend, and no matter what you buy and do, you need to understand what's the true cost of it?

You need to have Financial Integrity, you need to know how much money is enough for you to be happy, and what is unnecessary luxury.

And finally, you need to be Financially Independent, you need to have sufficient income for your needs and comforts from sources other than the jobs you have. It also means getting rid of false financial beliefs and unnecessary debts that trap you, as well as being able to judge the soundness of the financial advice from the so-called "experts".

Most importantly, you need to understand: Financial independence is freedom at a psychological level, it involves money, but it's not about money. It's a mentality. It's about freeing yourself from the guilt, resentment, envy, and frustration money brings you, and being true to yourself.

And now, there are a few steps to start your journey towards Financial Independence.

STEPS TOWARDS YOUR FINANCIAL INDEPENDENCE

Here's a tip before we start, it is absolutely necessary that you hold yourself accountable and be accurate when you're doing every step that I'm going to share with you, even tho they might seem very basic. Just like everything else in life, whether it's sports or playing instruments, it's the basics, not the fancy tricks, that make the masters. Doing these steps might make you emotional, but you don't need to share your emotions with anyone else, or at least, you only need to share them with your life partners, and most likely they are going to be supportive. And you need to consciously follow the steps from now on, and make them your habits. Just like other habits, it might take a few months for you to fully realize the benefit this road map brings you. But once you see it, you will be in a new world, and your financial life will only get better from there.

The foundation is always the most important part of any building. And to build your financial independence, the foundation is by knowing: What is enough for you. **Because wealth & money is relative. If all you want is a luxurious life, having mansions & sports cars, $20 million might just be a starting point. But if a cosy & simple life is enough for you, $100,000 might last you for more than a year.

Step 1: Making Peace With Your Past

Your past is behind you. If you've made any mistakes with your money that you regret, learn from it, but leave it behind.

Ask yourself: How much have you earned in your life until now? You need to find out your total lifetime earnings.

To calculate this, you can check your records at the Social Security Administration, refer to your paycheck stubs or employers’ records. If they are not available to you, simply sit down and look back on your life, and calculate a rough number of your possible total income through the years.

By doing this, you will have a clear picture of your ability of making money, this approach will stop you from confusing yourself about your money. Instead of delusion, clarity fosters confidence, and confidence will play a tremendous role in helping you to set realistic goals for your future.

Calculate your net worth: List out everything you own, and figure out how much do they worth based on the current market value, and calculate the total number.

The word "Net Worth" might sounds too fancy to many people's liking, because most of us only hear about the net worth of millionaires or billionaires from the media, but it doesn't mean only they have net worth. Your "Net Worth" simply means the sum of the value of everything you own.

You can never know what is enough for you if you don’t know what you have. By listing everything you own and calculating your net worth, it won't be surprising that you find a lot of things you bought that are now useless to you, if you find them, sell them for cash. You might think that this is very basic, and it's such a hassle — but don't you realize? This is a fundamental practice for any business, and You life, my friend, is a business.

This is another way of giving yourself clarity. If you've never done this before, your financial life might have had very little direction. But now, you're forcing clarity onto yourself.

I know, this might make you emotional. Things might bring up sad memories, certain purchases you've made might make you feel nostalgic, guilty, shame, embarrassed, or even angry. But remember, No shame, no blame. A dispassionate and compassionate attitude can really help making this step truly helpful — and relieving the emotional burdens you’ve had for years.

Step 2: Truly Understanding Your Cost

Money is energy, it flows in and out of our lives. And that's why, by looking at money, we can have a clear grasp of what a person is like. An alcoholic will have significant amount of money spent on alcohol, a nerd might spend a lot on books, you get the idea.

While money itself has no intrinsic value, our lives do — or at least it's valuable to ourselves. It’s tangible, it’s finite, and it will end someday. If you are doing a job, you are selling the most precious resource you have: your time, which is basically your life, for money. You'd better know how much you are really selling it for.

Ask yourself: How much are you selling your life for?

You need to know the actual cost in time and money required to maintain your job, and compute your real hourly wage. Here's an easy way to understand it:

We are going to use an example to illustrate this. First, write down the numbers from your employment contract, for instance, $800 for 40 hours of work.

And then, Write down the number of the extra hours and money you've spent on doing job related stuff, like:

  • the money you spend on the clothes you wear to work. Let's say you spend $1,000 on clothing for work every year, and that's $20 per week, assuming that you don't spend extra time on shopping.
  • the hours you spend on preparing yourself for work. If you spend 30 minutes everyday preparing for work, that's 2.5 hours per week.
  • the money and hours you spend on traveling to and from work. Assuming that it costs you $50 and takes you 7.5 hours to travel every week
  • The money and time you spend on work meals. Assume that you only have one meal at work everyday that costs you 1 hour and $20 on average, that's $100 and 5 hours per week.
  • After work, most of us get home tired. You need to add the time you spend on relaxing yourself after work, include shopping and vacations as long as they are one of the ways you use to relax. On average, it takes many people about 2 hours everyday day to relax after work, and that's 10 hours per week, assuming it doesn't cost you any money.
  • Maybe you normally have a 7 day vacation that costs you $2000 every year, and that's roughly 3.5 hours and $40 per week
  • Assume that every year you get sick from work for 4 days and going to hospitals and buying medicine costs you $500, that's 1.8 hours and 42 dollars per week, without even considering the suffering you go through

In addition to the above, you also need to add the time and cost for things like TGIF drinks, team building activities on the weekends (if you have any), but we are gonna ignore them for now.

TypeHours/WeekCost
Basic Salary40800
Costuming0-20
Preparing Before Work2.50
Commuting7.5-50
Meals5-100
Relaxing at home100
Vacation3.5-40
Job-related illness1.8-42
Total70.3548

Now, You need to add all the extra time to your original work hours, and add your extra cost to your original salary on paper.

And then, calculate your true income following this formula:

(Salary - Job Related Costs) / Total Hours = Your Real Hourly Rate

Most people think: "I can make $800 per week, and I work 40 hours, so my time is worth $20 per hour." But if you calculate your hourly rate after including all your costs by following the example, and comparing to the $20 per hour salary on paper, your true hourly rate is: $7.795/h, which is only 39% of the number on paper. And that's without even calculating the tax you pay.

Does it look scary?

  • This number in our example sounds scary, and it varies to every person, so you should use the same logic but base on your own lifestyle to calculate your number, give or take some events, but the principle remains the same.

Step 3: Keep Track Of Your Money

Looking back on our past base on our memory is always vague and hard, that's why diaries are very helpful. And this is what you should do with your money as well. You need to keep track of every cent that goes in or out of your life.

There are many apps out there that can help you to track your earnings & spendings very easily, they also provide great analyses base on your numbers. Yon can try different ones and stick with the one that feels most useful to you.

And if you don't like using cellphones or computers, a pocket sized notebook will do. Simply create a recording system that works for you, write down your earnings and spendings regularly, it only requires simple mathematics, and you will have a clear view of your financial status that reflects your life.

And soon enough, this will be an accurate description of how you are actually living from now on. The longer you do it, the more accurate it will get. And because the feedback is instant, it will influence your behaviours every time you look back, and you will see your changes along the way.

And from now on, every time you spend money, ask yourself:

  • Do I really need this? Or am I indulging myself?
  • How can this item enhance my life?
  • How many hours of my life does buying this item really cost me based on my current salary?

Financial Intelligence is about taking maximal advantage of money. If the money you spend doesn't bring you true value, you end up with less life. Tracking your money is not about budgeting, it's about valuing your own life. It’s a sign of self-esteem, instead of lying to yourself.

Step 4: Minimising Spending & Maximising Income

Lower Your Expenses

Start living below your means. If your rent is too high, switch to a cheaper apartment; if you're relying on credit cards all the time, start buying less things, and try to pay back your debt immediately; start cooking more, you will realize that eating healthier is actually cheaper than eating fast food; instead of always going to bars & clubs for leisure, start learning new skills or start doing what you're passionate about with your free time, and stop always trying to find the next entertainment to kill some time simply because you are so bored and don't know what to do with your precious time.

You need to understand, no matter how rich a person is, no matter how fancy their houses are or how many luxurious cars they have, the things they have cost them less than they make, which means, while their lifestyles might seem very luxurious, they are living below their means. And so should you. Because the ones who spend more money than they can afford and can not keep up with it, no matter how rich they appear to be on the surface, financial ruin will come to them.

Our happiness as human beings is not defined by what we can buy with money, but rather, it lies in the whole picture of our lives — it lies in our inner sense of what life is about, our relationship with others, and the pursuit of our own goals.

If you can't be happy living below your means, trust me, you won't be happy even if you have a lot of money, you will always need more pleasure that doesn't really help you.

Maximizing Your Income

Be selfish, put your own feelings & priorities first. Respect the time & energy you put into your job. Remember, by doing a job, you're selling your time for money. If you like your job, do it with purpose. And if you don't, figure out another way to get paid.

Nowadays, anyone with a decent internet connection, can have many ways to make money. Creating videos, writing blogs, developing apps, or selling things online. You can create things by yourself, and for yourself. For a lot of digital products, once they are created, they require very little maintenance. And if you do them right, they might even become a new career that you really enjoy.

A lot of jobs are toxic, but work itself is not. Work, for lack of a better term, is the best way to realize your own value and show what you truly worth. The art we enjoy, the music we love, the movies we obsess with, the technologies that made our lives much easier, are all works of others. These people put their heart and souls into their work, while they might not have a job, they have impacted our lives in many ways. And by doing the work they love, they've made a comfortable living for themselves as well.

And so can you. So maybe you should ask yourself, what can you create with your talent?

Step 5: Utilise your Capital

Without a goal, all the steps we mentioned earlier will seem unnecessary. But you know that we do have a goal, and the goal is to free yourself from the unfulfilling daily hustles.

After tracking your money for a while, what you should begin to see in your money diary is a growing gap between your income and expenses — and that means your savings are increasing. For a normal person, this amount of money means they are ready for a splurge. But not to you, right? Because you know, this money that you have saved, it's not just money, it's capital. And you also know, that capital is the money that can make you more money, it's the ticket to get you out of the job that you don't like, and still provides you an income whether or not you continue to work.

And now, you are ready to deploy your capital into the field, and put it to use. You're looking to invest. Investing is another whole new topic by itself and exceeds the topic of this video, so we are not going to discuss it here. But the fundamental idea is that you should start to look for ways to invest your capital as soon as you have sufficient amount of money saved, simply because in today's economic environment, the longer you keep your money as cash, the more value it's going to lose due to high inflation. Index funds can be a good starting point, and most index funds only require $1000 to $3000 to start. It doesn't require much capital to start with, not only will it help you to fight against inflation, but also it will start training you about investing immediately.

However, to invest your money, you need to become knowledgeable about how investing works and what are the long term income-producing investments, so that you can invest your capital in such a way that provides you a safe income, sufficient enough to pay for your needs for the rest of your life.

And as soon as you started investing, no matter how much money you put in, it's time to open up a new section in your money diary to track the earnings from your investments. Depending on your approach with where you deploy your capital, and how much money you put in, the earnings from your investments can vary, the time it takes to get the return you expect can vary as well. But as long as you stick with it, there will be a day that your earnings from your investments surpasses your spendings. And then.... Celebrate! You've made it!


At this point, you've truly empowered yourself to set a solid foundation towards financial independence. Of course, you still need to hold yourself accountable to be financially disciplined, and there will be more lessons to learn along the way, but these steps will make it easier for you to make wise financial choices from now on.

And remember to answer yourself: What is enough for you?

Referred in


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