A feeling of deep calm, a quiet confidence within yourself knowing that whatever may happen – hoped for or not, you’ve got this. You are savvy, knowledgeable, and prepared.

And here’s one of the primary reasons why you feel this way as it pertains to your financial peace of mind, you’ve had hiccups, you’ve had sleepless nights. You know how it feels to be scared when it pertains to your money, and navigated through. Through unwanted setbacks, acknowledging mistakes, with humility choosing to be a student to teach yourself and ask experts the questions you didn’t have answers to, and then you took responsibility for your own independence as it pertains to money.

Part of the peace that arrives has nothing to do with your literal money (how much is in your account, how much you’ve saved, where you’ve invested), but rather to do with trusting yourself and not wanting to ever feel the way you’ve felt in the past as you know first hand how unsettling not being financial free can be.

However, yep, the other significant part of financial freedom is monetarily having a sound foundation, so we will talk about both the concrete as well as the conceptual components to being truly financially free. After all, we need not to have had a catastrophe financially to know the role that the value money plays in being able to live the life we love living. And that is good news. While yes, sometimes a catastrophe arrives which we didn’t not invite and had no control over, there are other times when it takes a catastrophe to wake us up to shake us until we finally change our ways.

What I would like to share with you today are 14 foundational pieces that will establish and continue to grow your financial freedom. Whether you work for a boss or work for yourself, I will be sharing how to make your way to financial freedom and also remain financially free once you arrive without being stagnant. In other words, when we are financially free, we now have space, energy and opportunities that we didn’t have before. Whether that is creatively because our mind is free to not worry about our finances because we have put into place systems that we trust and know work in our favor, and because we have space mentally, we have more energy to expend on what we love to do instead of what we have to do which leads us to more opportunities crossing our paths because we our present and fully engaged with the moment, bravely being ourselves and dancing with life instead of surviving and just making it through.

It only takes the experience of counting your pennies and crossing your toes that just enough will be arriving in your bank account in order to pay for rent or the mortgage to light a fire to never want to feel that way again. However, I would like to suggest that having had such unwanted experiences, they will greatly benefit us both to change our circumstance and, equally if not more importantly, to remain in the desired financial place of thriving and being free.

Before we explore today’s list, I will point out that this is not necessarily the typical list of save more, spend less – thrift, thrift, thrift! I will be sharing with you some examples from my own life that in hindsight demonstrate that playing it ‘safe’ isn’t always a wise move if you want to make the gains (in any respect) that you desire. As well, while yes, we are talking about money, so much of the financial advice we read (but not all – i.e. Deepak Chopra and Kate Northrup along with others) focuses entirely on the logical and mathematical side of how to be financial free, and while that plays a powerful and necessary role – knowing how the monetary world works and basic math regarding interest, etc., there is also a part we cannot know entirely or with certainty and that is why knowing ourselves, living a life of true contentment and being brave enough to find and then embrace our dharma is crucial to remaining financially free.

~Note to readers: Be sure to tune in to the audio version of this podcast episode as each foundational piece will be discussed in detail with examples.

1. Have a plan – where do you want to go, how do you want to live?

Your plan needs to have layers, be more rigid in the short-term while being more broad in the longer-term.

2. Come to peace with your past, don’t berate yourself – celebrate the lessons and accomplishments.

In episode #354, a book by Kate Northrup was shared about how to reframe the journey with money so far as a Love Story rather than a past to be shameful of. Reading this book helped me shift how I utilized my money in the past – to build TSLL, to publish my books, to remodel my house, etc. – so I could understand the value both in my choices, but also my mistakes and be grateful for receiving what I had gained. In this episode we talk about How to Find Your Financial Freedom – understanding, writing and loving your story with money thus far and moving forward.

episode #354: How to Find Your Financial Freedom: The Importance of Understanding, Writing and LIVING Your Love Story with Money

3. Set a weekly date to look at your finances, pay bills, budget (monthly) and make purchases (fun or necessary)

Friday’s arrival for many of us is a grand day indeed, and now in my work and personal life, I love it for yet another reason – financial Fridays! Yep! With the help and suggestion from Kate Northrup’s book (mentioned above), I have turned my Fridays each week into a focus on whatever financially needs to be done. If it is the first of the month, on the first Friday of that month I will balance my budget. On a designated Friday each month, I pay all of my utilities. And even more helpful is exercising discipline to only make purchases on Fridays so that I have time to consider if the purchase is necessary or possible. I set aside all other work, as much as I possible, and once I am done with my financial responsibilities on Friday, the weekend begins.

I used to do this monthly, but that let too much slip, became too relaxed on accountability and it just didn’t keep me as focused as I need to be for my business (financially, not creatively). I am happy to give all of my attention creatively each day all month, all year to my blog and business, but financially, I never really enjoyed it. Ironically, when I started understanding more of the nuts and bolts about my business and gave it more regularly (weekly) attention, it became much more enjoyable and again, shifted the mindset and thus my peace of mind was strengthened as I went from hoping to knowing.

4. Find and use a monthly budgeting system that works for you (don’t be pressured into buying a pre-prepared system)

There are oodles of online budgeting software and systems out there, and while I have explored and tried a few, I reverted back to a simple Excel spreadsheet that has the simple mathematical equation set up, and I go about entering all of the expenditures, deposits, separating them into their categories and seeing each month side by side so I know exactly where I am. My accountant helped set my spreadsheet up so I was certain to have the line items they needed when it came to the annual appointment, and now I can relax knowing I am keeping track of what they need to keep my books neat and tidy, as well as understand my business for myself and see where my money is going.

5. Spend consciously: Live within your means

As I mentioned above, what we are discussing today regarding financial freedom steps to a third option away from spend less and save more. In episode #386, Frugal Friends’ podcast co-host Jill Sirianni shared that while we often choose one of two options to reduce and eventually eliminate unwanted debt – earn more or spend less, there is a ‘radical’ third option which is to remove the impulse and mindless purchases. How do we do that, evaluate our values and make sure we are aligning our money management (expenses and savings) with what we value. Author of finances J.D. Roth also advises, “Spend extravagantly on the things you love, but cut costs ruthlessly on the things that don’t matter.” The over-arching term and practice is to spend consciously. I.e. no mindless/unconscious spending or reacting, in other words impulsively spending due to a sale that pops us or a beautiful something you see when you weren’t intending to shop.

Conscious spending dovetails into what living a life of contentment is all about – consciously being present each day, knowing yourself so that you are responding to life, rather than reacting. All of this applies to money and when we do so, our debt may not be eliminated immediately, but we are putting into place sound practices, much like a healthy diet we will keep for a lifetime, that will lead us to our financial freedom and keep us there as we go about enjoying the life we love living.

6. But, make wise investments when necessary (in other words, take out a loan when necessary)

“Businesses don’t succeed by cutting back – they succeed by expansion and investing in growth.”

A quote that has been repeated by countless financial advisors and money experts. Common sense in the world they live in, but to the everyday folk, we sometimes don’t realize that we have to invest first to gain what we seek. And this can be scary. If we’ve never done it before or have seen others invest (but not wisely) and we’ve seen the negative situations they find themselves.

Most people cannot afford to pay cash for a house. In other words, most of us will take out a mortgage. This is a wise investment. When it comes to our businesses, we have to first do our homework and understand the work and patience it will take to arrive where we want, but we may not be able to start it entirely on our own, so we take out a loan. This gets our foot in the door so we can demonstrate what we have to offer and how sincere we are in our giving what we can uniquely give. There is no guarantee, there is no timeline, but we put the odds in our favor when we know ourselves with clarity and what we value. Again, conscious spending and investing come into play in how we take risks (or don’t take risks) as well.

7. Set up a system for your receipts (email and paper)

As we know, an audit can happen and we will never know when. There are certain things that will alert the IRS to auditing your returns more likely than others, but there is a randomness to it as well. So long as you keep clear and organized books and have your receipts ready for the past seven years whether in paper form or email, then you have nothing to worry about. Again, ask your accountant for all that you personally should be doing to be prepared and reduce stress or worry.

8. A budget that works with your life

Similar to the myriad of budget systems available online, there is quite a bit of differing advice when it comes to what amounts to allot for various expenditures – mandatory and discretionary, etc. But Senator Elizabeth Warren’s balanced budget money formula is fairly universal and good advice to heed: 50 percent for needs, 20 percent for savings and 30 percent for wants.

However, if you don’t have a fixed income, say for example for all you entrepreneurs out there or creatives, each month brings in a different amount, so what do you do? Granted, stick to the percentages you might be saying, but sometimes you have to dance as you know your business – its high income months and its lower income months as well as the needs of the business. This is where value spending and savings comes into play. And while it comes into play whichever type of income you have, when you have to essentially move with the energy of the month, the first bulk of your income goes to your needs, but only the absolute musts, and then you move on from there, and any left-over goes into profit and discretionary.

If you do run your own business, a book I highly recommend exploring is Profit First by Mike Michalowicz.

9. Find an accountant who understands your money life (especially if you are an entrepreneur)

Whether you are teacher whose taxes are likely quite simple and thus the expense to pay your accountant will be quite minimal, or if you run your own S-Corp or Sole Proprietorship, unless you are an accountant yourself or savvy with the tax code, I recommend finding an accountant. Although, there are efforts by the IRS in the coming years to make it a far simpler process to file your taxes all by yourself online (which would then compete with online or drop-in tax-filing businesses such as H & R Block and Turbo Tax), they aren’t available to everyone yet (they trialed a few states earlier this year). Stay tuned on this front as it looks like that will be an option, and a free option, in the future.

An accountant, especially for a business owner, provides the knowledge of paying the taxes you owe without overpaying. I will share my own story with this overpaying in the audio version. 🙂

And by finding an accountant, make sure they understand what you do, and respect your business. It took me three accountants to finally find one that understood my business and thus understood what business expenses were for what I do. Don’t be afraid to leave and find another accountant so that you can have the peace of mind you need.

10. Plan ahead for quarterly tax payments

While not everyone will have quarterly payments, if taxes are not pulled out of your monthly/bi-weekly pay check automatically for state and federal, you will be paying quarterly taxes – essentially, estimating what your taxes will be by the year’s end, so you won’t have a bill at your annual filing.

Set a system in place to save monthly and place a designated amount into a savings account (preferably with a high yield), that in April, June, September and January, you will have the amount you need to pay for your taxes.

11. Open a high-yield savings account

As mentioned above, finding a high-yield savings account is easy to do in our current economy due to the high interest rates. High interest rates may not be great for some things – home mortgages, etc. – but it is great for savings accounts and money market accounts. Now, I am just talking savings accounts as most money market accounts require a certain amount of money to begin earning any decent interest and some, like a CD (certificate of deposit) require that you keep your money in the bank for a certain duration before you can withdrawal. But savings accounts where you have access to your money at any time, but it does take some time often (1-3 days) to withdrawal, are a great place to put that money you will need for quarterly taxes.

• Forbright Bank, 5.30% (recommended by NerdWallet), no minimum balance required
• Barclays, 4.5% (recommended by NerdWallet), no minimum balance required
• Capital One 360 Performance Savings, 4.25%, no minimum balance required

12. Get out of debt (duh!), but do it wisely

I say ‘duh’ because for likely our entire lives we’ve known that ‘debt’ is a bad word. However, context is always necessary, and there are forms of good debt. Blanket-speaking, student loans and educational debt is good as well as mortgages, but again, each individual situation is unique, so it is wise to understand the debt we are taking on, what it is providing us and is it a way of investing in a better tomorrow? Only each person individually can know this because of what they value.

But back to the point of getting out of debt. There are again quite a few approaches, and I have experience with a variety of them, and what I will say, yes, it does depend on the type of debt and it also, understandably, depends on your current monthly income and what you need to live from day to day.

In other words, one financial advisor told me to stop making retirement payments and pay all the debt off first. I disagreed and didn’t follow that advice as I knew myself and my situation, and I am happy to say, I not only kept my retirement savings (monthly, automated), but when I became debt free (six months after his advice was given), I increased my retirement savings because I know how valuable that is, especially early on in accruing valuing. With that said, it is wise to take in different opinions and then go back to what you know about your financial responsibilities and capabilities and then make the best decision.

~I talk about a few other approaches to eliminating debt as well as what to do to set yourself up well with credit card companies and the cards you want to keep in the audio version.

13. Understand how a credit score is created, but don’t put it on a pedestal

In the United States, our credit score influences and determines if and what our loans will be, and the APR the bank will give us. It can also be checked for housing and job purposes, so understanding how the credit score is tabulated is important, and while all of it is in our control, there is one component that isn’t entirely and that is time. In other words, there is one part of the equation that simply keeps track of your length of credit, and you can’t fast forward time which is why most (not all) people who have a credit score in the 800s are 50 years and older because length of credit history comprises of 15% of the credit score. In fact did you know that the highest score – 850 is held by only 1.31% and 59.4% of the people how have this score are Baby Boomers (people in their 60s and older). And an even more interesting fact, you don’t have to have zero debt to have a 850 score, most in this category have some debt. It is the demonstration that you can handle debt. Here is the breakdown of how the score is tabulated:

• Payment history (on time payments) – 35%
• Amount you owe – 30%
• Length of credit history – 15%
• New credit opened – 10%
• Types of credit you have – 10%

760 – the magic number. If you have this score or higher, your score will be a positive help in attaining what you seek.

But back to why I advise not putting the credit score – reaching the mid-800s – as a goal. In order to have a high credit score, you have be utilizing debt. So if you don’t want to be utilizing debt, your score will go down, just make sure that you tend to the things you have to pay well – on time, etc., and so long as you keep your score around 760, you will be just fine should you ever want to apply for a loan or anything else that requires a credit check.

14. Automate retirement savings and forget about it

I want to conclude with this necessary point, because we may not know what retirement will be like or when it will happen, but we will want to have the monetary means to enjoy it with peace of mind.

Working with a financial advisor, make sure you are saving for retirement each month, placing it on automation so you don’t think about, and maxing out contributions each year if you are able.

Use this retirement calculator from Nerd Wallet

Strengthening Our Financial Foundation: 13 Ideas to Explore

When we approach our personal financial life as we would a business, with the goal of being profitable, we can step back and be less attached to it when we set into place the necessary ‘helpers’ that will ensure we stay on course. This is the logical approach that must be present for us to be successful in establishing financial freedom. However, we must know ourselves, we must acknowledge which areas we are lacking in knowledge and also be brave in taking educated risks to invest in our future in the short term as this will have the potential to expand the security we have in the long-term.

Once we have reached financial freedom, we are less likely to fall to the whims of trends whether in investing or in purchasing, and rest easy knowing how sweet it is to go to sleep at night with a secure peace of mind about our financial situation.

Other mentions during this episode:

• Read listener of the podcast Emma Sutton-Williams’ article where she recommended listening to The Simple Sophisticate podcast here while talking about what to pack for a trip to Paris (NYPost).
• Listen to my conversation with Frugal Friends’ hosts Jill Sirianni and Jen Smith where I discuss How Contentment Leads to Better Spending.

Petit Plaisir

~The Wealth Money Can’t Buy: The 8 Hidden Habits to Live Your Richest Life by Robin Sharma