Last Updated on 10 February, 2024 by Abrahamtolle

Do you want to be rich? Do you want to have financial security and freedom? If so, what is the ultimate guide to personal finance and financial freedom?

Personal finance is the process of managing your money so that you can achieve your financial goals. For many, that means financial freedom to do whatever you like and work with things you enjoy – not just a job you need to survive.

How do you get “rich”? How can you reach financial freedom?

We’ll show you four easy steps. They are easy, yet most will dismiss them immediately because they require a long-term mindset, they require discipline, and they are obvious.

Let’s start:

Initial step – income

Make sure you have income. Without income, you’ll never become “rich”.

Try to maximize your income. Is it scalable? Most jobs are not scalable:

• Should You Choose A Scalable Or Non-Scalable Profession/Career – A Career Choice Dilemma

Second step – spend less

Make sure you are spending less than your income, ie. a positive cash flow. It’s really that “simple”. However, you need to be a little bit “independent thinker” to avoid most of the cognitive mistakes most make when investing.

Third step – invest

Make sure you invest your unspent income to get a positive long-term return. But be patient. Compounding takes time:

• Compounding – The Eight Wonder According To Einstein

Fourth step – make it simple

Women have proven to be better investors than men. They are not trying to be smart. They work, earn money, save, invest, and forget about it.

The best way for the majority of investors is to pick a few equity mutual funds. Don’t pick sectors, and don’t time your investments. You might want to consider international diversification. Make sure you do dollar-cost averaging.

• Dollar Cost Averaging vs. Lump Sum Strategy Backtest

Fifth step – be patient

Be patient. To get “rich” takes time. We are talking decades. Do like Warren Buffett – get rich slowly.

How do you spend less?

You don’t need to be a frugal hermit. However, if you ask yourself the questions below you might go a long way to reduce overspending:

Are you buying things you truly need?

Most people buy a ton of stuff they rarely use. Do you REALLY need this item?

How many hours do you need to work to pay for what you buy?

Calculate your hourly income after taxes. How many hours do you need to work to cover a particular expense or purchase?

Don’t care about what others do

Live your life as you like to. Don’t be envious.