Isn’t it everyone’s dream to have more money and be financially free? But no one knows where to start – in fact, it feels like the dream is simply way too hard, so we don’t even try.
But what if I told you that starting on your dream of Financial Freedom was way easier than you think. It is really just one simple step away, and you can take that step today!
I recently wrote about why everyone should have an Emergency Fund setup. But what most people don’t realise is that creating your emergency fund is actually the first step to true wealth creation.
It breaks us free from the financial traps our modern lives set for us – it sets us up for financial freedom!
Let me explain….
The First Step to Financial Freedom
If you followed the steps I set out in my post Why You Need an Emergency Fund then you are already on your way to having an Emergency Fund set up. You have, in fact, already taken the first step to financial freedom without even knowing it.
If you haven’t started, then go back, review the steps, and get started now!
By setting up your own Emergency Fund, you give yourself the financial breathing room to handle any money issues that pop up. Creating your emergency fund forces you to understand where your money is going, where you can stop the leakage, and what you should be saving for a “rainy day”.
But what I want to talk about here is how you shift your emergency fund to become your Personal Growth Fund. If you understand that your emergency fund is about saving your money, then your Personal Growth Fund is about changing your mindset about money.
What is a Personal Growth Fund?
Firstly, your personal growth fund is an extension of your emergency fund— a simple bucket of money you can fall back on in tough times. But at a deeper level, it is a path to changing your mindset about money and what it means to you.
Without a doubt, having a pool of money that you can fall back on will impact how you feel about life in general. It will reduce your stress levels around money and help you get your mojo back!
But it isn’t about the simple setting up of your emergency fund that matters most. It is about the mindset that you must develop to achieve it. It is about the personal growth you must go through to break free from the traps money creates.
It will only be through the right mindset that you will succeed.
The creation of your emergency fund is the step to remove your basic money stress. Shifting your emergency fund to a personal growth fund is about embracing how you see and use money to achieve the lifestyle you truly want.
The Shift From Scarcity to Abundance
The truth is that most of us live with a scarcity mindset. We feel that we do not have ‘enough’, and no matter what we do, we can never get enough.
It doesn’t matter what we are talking about, whether it be money, where we live, the clothes we want, the car we drive, the holidays we want to go on…the list is endless. Even when we get ‘more’, we still feel like it isn’t ‘enough’.
There is simply never ‘enough’.
And we fall into the trap of spending all our time and money chasing the feeling of having ‘enough’. This is the mindset trap that will keep us poor – both time and money poor.
We need to shift our mindset to that of abundance. We need to see life for how it truly is – we are surrounded by abundance.
We live in a time where we truly live like royalty. Our lifestyles far exceed that of kings and queens of the past. We really only have the money issues that we create for ourselves.
In Australia, our standard of living is among the highest in the world. And there are safety nets everywhere to catch anyone who is really in trouble. We actually have very little to worry about when it comes to living a decent life.
So what we are talking about is truly understanding this, embracing it, and lifting our thinking up to another level. It’s about breaking free from the limiting money beliefs you may have and using money as the tool to fund the lifestyle you want.
The Biggest Success Factor is Your Why
I covered this in creating your emergency fund as the first step – know your why. But it is even more important as you shift your mindset to one of growth and abundance.
If you do not have a very clear vision as to why you are doing this, you will fail. Unfortunately, it is a symptom of our modern lives that we are constantly smashed with reasons to give up on our goals.
The funny thing is setting up your growth fund is easy to do, but it is even easier not to do. That is why the majority of people are still basically broke and would be in serious trouble if they lost their job.
We are also living in a time when everyone is shouting at us to take our money. We have advertising hitting us from every angle, telling us how desperately we need this new shiny “thingamabob”.
Most of us are permanently attached to the most insidious device ever created for stealing your time and money – your mobile phone! Imagine what it must be doing to your brain if all this is flashing at you right as you go to bed!
We become hypnotised by the corporate marketing machines, who are selling us out of our dreams to line their pockets.
So if you don’t have a strong enough why, then you will fail. It’s as simple as that.
What is Your Why?
Once you are on the path of creating your personal growth fund, you will begin to realise it is no longer about the money. It is now about the path you want your life to take.
So where do you want to be? Why are you doing this in the first place?
Here are three things to consider.
Identify your values: Consider what is truly important to you in life. What principles guide your decisions and actions?
Explore your passions: What activities or subjects genuinely excite you and make you feel alive?
Reflect on your strengths: What are you naturally good at? What do others often praise you for?
If you are still looking for inspiration, then check this video out from Simon Sinek, where he covers a simple and slightly different way to find your ‘Why”.
Making Money Work For You
If you follow the steps to creating your emergency fund, your relationship with money will begin to change.
What is your why – building a strong enough vision of the future that will pull you through. This is the beginning of building the future that you truly want.
Understanding where the money goes – identifying where every dollar goes, so you know what you are wasting your money on. You begin to understand the value of your money and the time it took you to get it. So stop wasting it!
Cutting down your spending – stopping the leakage of money and removing spending that you don’t really need. You begin to practise ‘mindful spending’ where you only spend your money on things that are of the highest value to you (not the most expensive!).
Making it a lifestyle choice – building a habit of spending less than you earn, and saving the rest. And this is where the real changes kick in….
I can’t stress enough the compound effect on both ends of this process.
- The more you cut the crap from your spending, the more you have to save.
- The more you save, the longer you can live on your ‘savings’.
- Eventually, you have more money invested than time left on this earth…
And then, my friend, you are truly financially free! Your money is now working for you, and not the other way around.
Will you have to make sacrifices to get there? Absolutely! Is it worth it? Absolutely!
Start of Your Wealth Journey
We found that building our ‘emergency’ fund easily became a habit. And that’s when I realised it had become our ‘growth fund’ – if you allow it to become a part of your lifestyle, it will change everything.
We first adjusted our spending to start building our emergency fund. But once we had three months of living expenses covered, we decided to keep going. And it quickly shifted from our emergency fund to our personal growth fund.
We soon became very comfortable living on the lower monthly spending, and saving the rest. So why stop?
Then it became a challenge. How far could we take it? We even found ourselves finding more areas that we could save money on, reducing our monthly expenses even further. This just accelerated the savings and grew the fund even faster.
Before we knew it, we had over two years’ living expenses covered!
The funny thing is, the more savings we found in our monthly expenses, the longer our emergency fund would last if we needed it. We could now live comfortably on much less than when we started!
Then We Started Investing…
Once we had this much saved, we realised we needed to make it work for us. So we started our investment journey – check out this post for all the details.
Now we not only had an emergency fund that we could fall back on if we needed it, but it was growing bigger every day, through our investments.
Can you see now why I like to call it a ‘growth fund’? Once you start this journey, the growth it will create in your life is amazing.
What started as an emergency fund for us turned into a whole journey of wealth creation that gave us financial security and independence. It has given us an amazing lifestyle and allowed us to retire by 50!
For you, the first step might be as simple as using your emergency fund as an offset on your mortgage. So it is not only giving you financial stability but also building your wealth by increasing equity in your house.
The other key part here is to simply never stop. You have created the habit of saving the money, so keep doing it. Even when you have a year or two of living expenses covered, don’t stop. This will become your regular investment money to build your wealth.
Change Your Mindset Change Your Life
I find it so interesting that the simple process of ‘saving money’ can lead to a life of abundance – if the right approach is taken.
My wife and I are living proof it works, and we certainly aren’t alone. There is absolutely no doubt in my mind that anyone can do this if they choose.
Like I said earlier, there is nothing difficult about this process. Identify where you are spending your money, cut the stuff you don’t need and save the rest.
So what is stopping you from starting today?
I’ll guarantee it is the mindset you have. It is the doubts and your lack of your personal why that is stopping you from making the changes today.
So that is where you must start. Change your mindset, change your life!
So start today and remember – you have absolutely nothing to lose by doing it, and everything to gain!
Until next time…
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