7 Pillars to Grow Financial Freedom

Financial independence is often a line in the sand. It’s says “I never have to work for income again.”  Financial freedom is a different kind of thing. Financial freedom means you have a few more choices than you had before. It’s incremental. It starts small and every year we can try to grow it. There is no definitive line in the sand. It can start as a sprinkle of options and those options can keep growing and growing into a downpour.

Growing financial freedom

Here’s the awesome thing about growing your financial freedom: you can take steps every day to see real growth. And here are 7 key ways to that you can consistently grow your financial freedom. To start, you could focus on growing two or three at a time. You don’t even have to do all of them to make some real growth! It can be a fully customimizable path to more financial freedom.

Each are scalable. There not just huge milestones that might take years to accomplish! I love growing financial freedom because you can make progress every single day.

7 Pillars to Grow Your Financial Freedom

1. Pay down debt

Debt payments are one of the worst kinds of expenses simply because you can’t quit them! There are lot of reasons they limit your ablity to grow financial freedom. They eat up your income. There is often interest (or extra expense like full car insurance and PMI). They create psychological stress in ways regular expenses don’t. They limit your ability to take risks. They push up your baseline income number.

But the big reason I hate them vs regular expenses: You can’t just stop paying! If you needed to reduce your expenses so you could start a new job, travel, ramp up your savings, you could drop a lot of other types of expenses. You could eat out less, lower your food bill, give up cable or internet. But you can’t just stop making credit card payments, house payments or student loan payments. If you had a car loan, you could switch vehicles, but often there is a balance due and extra cost in doing that.

The less debt repayment you have on the books each month, the more financial freedom you will have. A BIG part of the reason we have been able to walk away from our 9-5 jobs for the last 2.5 years is because we have no debt.

2. Cash on hand

Having a bit of cash on hand will rapidly grow your financial freedom. It’s easy to see how choices quickly start to open up when we have cash in our pocket. And the more cash, the more options. This isn’t necessarily literal cash. Keep it in a bank, money market account, index fund or even in a Roth IRA. It simply means money you can access.

Depending on the season of life, pick the amount right for you. Sometimes it makes more sense to keep this number low in order to grow your financial freedom other places. When we were buying our rentals, cash on hand was VERY low because we were hustling to build that passive income. Going into this mini-retirement, we kept $50,000 on hand.

3. Lower baseline/fixed expenses

Low expenses are the jet fuel to custom designing your life. EVERYTHING gets easier when your expenses are low. You need less income. You can test new jobs. You can work less. You can spend more money on really fun or important things. You can save more. You can invest more in stocks, a business, or yourself.

Low expenses don’t mean a dull boring life. It simply means you have a LOT more options. Our monthly nut is really low. It doesn’t mean we don’t sometimes spend a lot of money. We just aren’t spending it on our monthly obligations.

For most people, paying bills each month isn’t a thrilling experience. If you could take the $1500 you were spending on reoccurring bills and drop that cash on something awesome each and every month…..well, that would be a lot more fun.

4. Grow Investments

Growing your investments creates more financial freedom in two ways. First, and most obviously, you have a resource to pull from. You can use it to cover one time costs like a home or business. Secondly, and most importantly, it will eventually drop your baseline expenses.

At some point in life, you will need to be saving about $1000 a month for retirement. How long that stage lasts depends on how soon you start. If you start in your early 20’s, you might eliminate that expense for the rest of your life.

Hopefully everyone hits the point where they just need to “cover the gap.” Your retirement savings, if left untouched, will grow to be enough when you are 65, and you just need to cover your expenses until then.

Combine that with low baseline and fixed expenses (3), no debt (1), a bit of passive income (5) and maybe some income from your own lifestyle business (7).  With that, my friend, you’ve got a LOT of financial freedom!

5. Passive income

A little passive income goes a LONG way! It is AMAZING! $500-$1500 a month when combined with a few of these other things rapidly starts to grow your financial freedom. We have a military pension ($1450 a month) and two rentals ($1200 a month), which gives us a lot of options. But there are so many ways people create a mostly-passive income. I.e., We will be renting out our house while we travel this spring bringing in $2500. And this summer, when we are home, we are going to rent out our pop-up camper!

There are hundreds of ways people create income that is passive. Selling printables on Estsy, loaning money for real estate, selling stock images, video or music, leasing land, or anything you set up once and it continues to bring in income.

6. Grow and Guard the Gap

This is the essential component that brings all the pieces together. You need to grow the space between your income and your expenses. Then you need to “guard” it by using that money towards one of these other six items. Use that gap to pay down debt, build your investments, have some cash on hand, or invest in your own lifestyle business.

7. Building your own lifestyle business

Work is work, right? Actually, I don’t think so! We have been shown one specific way of work for so long that, for many people, it’s hard imagining it looking different (and better!). Work doesn’t have to be 9-5 for 50 weeks a year. There is something really amazing that happens when you find work that fit these three qualities:

  • Square in the middle of your natural skill set and core competencies. Something that creates “flow” and you feel gifted at.
  • Passion. You have an interest, internal motivation and excitement about it.
  • Fits the other things you value. There is enough time, space and energy for everything else you care about. You can travel, spend time with friends, hike on nice days, drink coffee with people you love and have relaxed conversations. Or what ever that is for you!

If you can find that, why would you ever quit? In my mentoring, I work with people to help create a life that is such a perfect fit that they would never want to retire. That might be 2-3 hours a day on a project, 30 weeks a year. It might be 20 hours a week, 20 weeks out of the year. If you have the other 6 pillars working for you, you might not need a lot of income.

I’ve seen people make jewelry they sell on Etsy or at craft fairs in the summer to fund their travel. I know people who work at the ski hill in the winter or lead whitewater rafting trips in the summer. I know a lady who makes over $100,000 taking dogs on adventures in the mountains for the day. People bring in income selling veggies, starter plants and flowers at the farmers market or having a food truck just for special events. Or folks who tackle a few renovation projects each summer. Not to mention the thousand ways people create income online doing something they love.

The mold for what makes something “work” is becoming antiquated, and I believe, more risky. If you don’t have a job you love, it’s easier than ever before in history to simply build it yourself. You can write all the rules. If it is exactly in your skill set, your passionate about it, and it fits the rest of your life, why not? In fact, why would you ever stop doing that until your body or your mind gives out?

Grow Financial Freedom and Use it!

It takes time to grow these 7 pillars. Each day you make progress. But in 5-10-15 years you realize you have a LOT more options than before. Then you need to start shifting gears to actually using the financial freedom you have grown to build a life that really lines up with your purpose, passion and values. I like to call it your Custom Built Life. No two will look the same. But just like growing your financial freedom, you can grow into this custom built life.

For Adam and I it meant adopting kids, living abroad, traveling through 27 countries, taking mini-retirements, building work we love, and being outdoors all summer long. We are still building it! Just like a custom home, every part is something that we love and resonates with us. 

Use these 7 pillars to grow your financial freedom. Then choose your own adventure. Custom Build Your Life. When you have the 7 pillars working together, you have a lot more options. Use them.

 

For Conversation: Which pillar are you focusing on growing right now?

 

 

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34 thoughts on “7 Pillars to Grow Financial Freedom

    • Thanks Karlie! That is an important area that really opens more options up later. =) Even the freedom to be able to stop investing and divert that income. =)

  1. Jillian, great post. During our Leadership Summit last week, I saw a diagram on “Purpose” that compliments your Point #7 well. Picture two circles. The one on the left is you, and in the right of that circle is the activity that meets your “criteria 1 and 2” (skill set and passion). The circle on the right is society. Inside, on the left of that circle is a need that society has. See where those two circles overlap? That’s Your Purpose.

    Compliments your thinking quite well, me thinks?

    • I love it! It’s so great when we find that. I like to add the “fits everything else we value” simply because when we find something that we are great at and feel really passionate about, I’ve seen too many people give it their entire life. 70 hours a week at the cost of health, marriage, friendships and rest. That might work in our 20’s, but I’m always sad when I see people burn out on the things they are great at and love. I think the sooner we can make it fit the rest of our life, the better. =)

  2. Great breakdown! This journey can often feel insurmountable, but when you break it down into more actionable tangible items, you really get a sense of what you’ve already accomplished.

    • It can feel overwhelming. That’s why I like to break it down into small, actionable steps. We don’t have to do every thing at once. But pick a few things to move the needle. Looking back after a few years of consistent effort and it is amazing how much progress has been made!

  3. Love this! We started years ago with 1-4 and now we’re focusing on 5, 6, and especially 7! It’s exciting, and your blog and mentoring have been a key part in our journey towards that Custom Built Life you describe.

  4. I feel like I’m in a combination of steps 1, 2, and 3. Our current debt is a low-interest mortgage and a low-interest car loan. We have several months’ cash saved up, but I prefer a little more cushion. And we have a lot of bulk in our spending that we’re slowly weeding out.

    This list did help spur me to make the decision to use a large bonus I have coming this fall to pay towards the car loan (allowing us to pay it off in about 13 months instead of 32 months!) I had been considering saving it to pay for grad school, but what you said about not being able to take a break from debt payments was meant for me. Even though my employer is reimbursing me for some of my school expenses, I have to upfront that cash & cover anything above the limit they pay. If I need to, I can take a semester off, but that loan payment comes every month no matter what!

    • Ongoing payments is the part of debt repayment that drives me nuts. It’s easy to take on more payments or higher payments when it seems to fit easily in the budget. But if people need or want things to change, they have less financial freedom and choices. I always hesitate on taking on more debt payments because I know it reduces my options for that many years.

  5. I like this list 🙂 Our big one this year is growing investments. First year we’re maxing out a 401(k) so pretty pumped about that.

    I want to start thinking about diversifying us as well. I’d love to earn some more side income (passive or otherwise), be able to invest that in real estate, etc. A ton of options and a lot of work to get there, to be sure.

    • Congrats on your first year 401k max! Even a few years of that gives people such a great head start. The great thing is that you don’t have to build all 7 at once. Just focus on 2 or 3 at a time, while being mindful of the long game.

  6. I really like this bucket approach. As you stated, I’ve never met anyone in real life who built all their wealth in one asset class.

    We are done with #1, aren’t good with #2 because we are growing our investments and trying to get passive income set up (#4 and #5). Most months we are good with #6.

    This fall my wife will be launching an Etsy shop, right now she is working on inventory and sampling different price points with friends and Mom groups.

    • That’s awesome! It’s so cool when people make progress in a few areas because there is a lot of synergy when they are combined. Best of luck on the Etsy shop! I know a few people who have built really fun, interesting income there that fits their life.

  7. Financial freedom is something that would have never occured to me 5 years ago, and now I’m here. Not quite financially independent, but I have the freedom to do only the work that I want to do which is an incredible privilege and joy.

    • Being able to just do the work you want to do is HUGE! Congrats on making so much progress in 5 years. It’s amazing how much ground we can cover to really start to custom build our life. Even moving each of these levers a bit over a few years can create so many options.

  8. I’m working hard on my graphic design side-hustle to get it more lucrative and passive. My goal is to get it to $1000 a month. With that, my savings, a pension, and ‘possible’ social security if it survives I’ll be set.

    • $1000 a month is a great goal! It’s amazing how even that amount of money can really add so many options and make things possible. It’s awesome that you are finding a way to take something you are passionate about and not just creating income but making it more passive.

  9. Wonderful summary and love that you added step #7 as well. Mastering step #7 is the thing that will keep you engaged, happy and young! Working on pillars 1-5 (/6) gives you all the freedom you need to fully concentrate on taking on step #7. Financial Independence can be the key to making one more leap up on Maslows’ pyramid and pursue your true passion – self-actualization. I’m working on step #7 since last summer and love it!

    • I totally agree with the engaged, happy and young! Almost everyone I talk to would love 2-3 hours a day on some sort of project. If people can have those projects bring in a bit of passion income, I find it simply makes people happier. They have some structure to the day, a sense of purpose, fun interactions with other people, and income. The income adds happiness in a few ways. I think if people take a few years to start figuring that piece out, it does give more financial freedom and options.

  10. Passive income is what I’m seriously working on right now. I’m all for total investments, but cash flow is what really matters to me the most because that’s what really tells us what we have outside of W-2 income every month.

    • Having some passive income makes a huge difference in not just having more financial freedom and choices but really FEELING like we can make those extra choices. When people have a some passive income and a little passion income, it really gives people confidence to make changes in line with things that really matter to them.

    • Debt payments take away so much of our financial freedom and just slow all the growth of the other pillars. If the other pillars are really strong, it’s not impossible to still have a lot of financial freedom. But I see so many take on extra debt without much pause.

  11. As I was reading this, I kept nodding my head the whole way! We recently realized that the ultimate goal for us pursuing FIRE is not to never work again but to have the financial freedom to design the life we want to live. And we also realized that we’re already there! We are on #7 at this point so I’m planning on quitting my full-time job in the next few months and working on building a freelance writing, marketing and PR business. As always, great insight, Jillian!

    • That is so great Veneta! It’s awesome when we can really start custom designing our life and finding work that we love and fits the rest of our life.

  12. I think the best way to achieve financial independence is to start your own business. Growing passive income through saving and investing can be extremely slow and time consuming. Starting a business can experience “hockey stick” like growth, which leads to financial independence a lot faster.

    • I agree at some point, people should find work they love and helps achieve their goals. There are pros and cons of starting a business while starting out, but when it works well, it’s a great option.