“You can only build a house by putting down 1 brick at a time.”

My father used to say, “you can’t build a house by putting down 50 bricks at a time. It’s just not possible. You can only build a house by laying 1 brick at a time.”

The first step to achieving financial independence is ‘Doing Small Things Often’

What happens is, many people do nothing for long period of time, and then want to do so many things in a short period of time.

They’ll do nothing for years, then they try to fit 10 years of work into 6 months.

That doesn’t usually work.

Doing small, smart things often usually does.

The second step to achieving financial independence is ‘Having a Solid Understand of Where Your Money is Going’

The average Australian doesn’t really understands where they’re spending money.

So the second key is getting a solid understanding of where your money’s going.

Once you do that and understand where your expenses are, you’ll start thinking about them differently.

Now, doing a budget sounds like the simplest thing, but to do it properly, you need to:

1. Track your expenses over a long period of time i.e. 3 months, if not longer.
2. Itemise each of your expenditures.
3. At the end of each week, sit down with a glass of wine and ask “Ok, what have I spent this week?”.

To do this, you can use either a spreadsheet, or one of the many free apps or financial programs out there.

You’ll be amazed at what you’ll,  find.

You might find you’re spending more than you actually make (while that might sound ridiculous, I deal with many clients who are spending more than they make by shuffling money from credit card to credit card. Some don’t even realise they’re spending more until they sit down and see the figures).

Then the questions arises, ‘What to do about it?’

It’s great to understand what your finances are doing each week, but then you need to ask ‘Well what do I do with it?’

You might have a surplus, so what do you do with that?

Or you might discover you are actually going to backwards. What do you do about that?

What can you do to reduce expenses? What can you consolidate?

For example, in my household we have 4 mobile phones. Now, they’re necessary, but is there a smarter way of dealing with that? Can we go to a provider and get a better deal for 4 phone bills?

Another example is insurance. For most people, it’s necessary to have some insurance. However, people rarely have the right level.

Many insurance experts say households either have more than what they need or they’ve got less than what they need.

For the people that have more, they’re paying more for something they don’t need.

If you can free up some of that cash flow and commit it to other places, all of sudden you’re in a situation where you’re starting to build some wealth… without any extra effort.

For the ones that are under-insured, there are some interesting and quite effective ways of paying for your insurance without compromising your daily cash flow by having your super contributions fund it. Your financial advisor can advise you if this is an option or benefit to you.

The Myth That Just Earning More Will Solve Your Financial Problems

The problem many people have is thinking that if they can just earn more, everything will be ok.

They seem to not be able save anything and don’t understand why.

They might actually on a really good wicket, say $130,000 a year, but can’t save a cent. So they think… “What I need to do now is earn $150,000 a year”.

But what happens when they start earning $150,000?

…Without thinking about it, they’re expenses go up and before long, their in the same position. This time saying “If I could just earn $170,000”.

If you look at their history, they’ve just been repeating the same pattern over and over.

You see, if you’re in the habit of spending 100% of what you earn, you’ll always be behind. Whether you’re earning $20,000 a year or $200,000 a year.

But if you have a clear understanding of where your money is going, are in the habit of saving some and have a clear solid plan in place… you’re going to have a much better chance of getting where you want to go.

This brings us to…

The third step to achieving financial independence is ‘The Power Delayed Gratification’

What stops many people from achieving financial independence and freedom is that these days, we’re very much a ‘Now’ society. A society where the future is so far away, we don’t think about it.

We want everything now.

The Power of Delayed Gratification

It seems to me that our parents and grandparents generations were much better at this than we are.

While our parents and grandparents…

“thought of tomorrow at the expense of today”.

Many people today…

“think of today at the expense of tomorrow.”

A dollar saved and invested wisely today can be worth 10 fold to you in the future.

Whereas, a shiny object bought today will often lose it’s shine in a few weeks… if that.

Start Building Your Financial House Today  

At the end of the day there’s no magic to this. It really is all the little things, brick by brick, that will add up to build a wealth for you tomorrow.

It’s not just about understanding your expenses alone.

It’s not just about making more money.

It’s not just about taking an interest in your superannuation.

It’s not just about doing things like combining 5 super accounts into 1 and ensuring it’s invested correctly.

It’s about all these things and more.