I have talked many times about the steps to take to achieve financial freedom. However, I found this awesome little graphic on @r/personalfinance on reddit.com. I thought it may be beneficial for you readers that learn visually. The following visual gives you a basic road map for financial freedom.
The first thing to do is to build yourself an emergency fund. The emergency fund should be a savings account or money market account. You want this money to be very liquid (easy to convert to cash). This money is here for… well emergencies i.e. you get laid off, your car breaks down, you have a medical emergency, your washer goes on the fritz. This account is a buffer between life and your finances. The emergency fund is an important foundation for your financial financial freedom, because let’s face it Forrest Gump said it best when he said, “Shit happens.” The emergency fund will prevent you from turning to a credit card when an emergency happens. Trust me they will happen
The next stop on your path to financial freedom is paying down your debts, i.e. your credit cards, student loans, and car notes. The problem with these debts is you are lining someones pockets with your money. These lenders aren’t really there to help you buy that new TV or car they are there to make money and they are making it off of you.
The next steps on the road to financial freedom are outlined with dashes, and they deal with saving for retirement. Let’s face it you and I don’t want to work the rest of our lives. I mean work is a four letter word. The first step is to contribute to your 401k @ work up to the amount that the company will match you. The match is basically free money, well not basically… it is free money. After you receive the match from your company its time to fund an IRA ( Individual Retirement Account). I prefer the Roth for reasons I will outline in something I call “The Seed or the Harvest.” After you max out your IRA, go back and try and max out your 401k.
This is by no means a comprehensive road map to financial freedom however, it is a good guide.If you want to see how you are doing as you move towards financial freedom use this roadmap as a guide and see how you are doing. Personally, I am building my emergency fund and paying off my student loans.
