Your journey to financial freedom changes over time, the key is knowing the financial stages and setting up spending plans that line up with where you are and where you want to GO.

1. Phase 1: Wealth Accumulation
2. Phase 2: Wealth Preservation
3. Phase 3: Wealth Distribution

When you think about financial phases think about it in terms of life stages, the only difference is it can happen anywhere in your life cycle depending on circumstance. How is that possible? Financial phases are interconnected with relatives and sometimes generous friends. For example, you are at the beginning of Phase 1, just starting your career you are either married or have a desire to marry soon. You make a low to modest salary but based on your age you know your earning power will increase over time then your Phase 1 path intersects with a family member or friend in Phase 3 path and suddenly you’re plunged into Phase 2.

As we look a little deeper into the phases you will see the differences between spending plans based on what phase you are entering or exiting.

How fast can I move out of phase 1? It depends on what road you choose…

At this phase, you are just starting out with your own money you’re Finally in the driver’s seat to make whatever spending decisions you want. You can either begin phase 1 (wealth accumulation) or you can enjoy your newfound freedom and spend, spend, spend on all the things you think you want. On this path, you can easily hit a pothole. Here you will find the spending exceeds your take-home pay; when you hit this pothole you lean on your trusty credit card to come the rescue so you can instantaneously have that thing! 

  What your trusty friend Credit Card forgot to tell you is there are strings attached to his free-flowing spending plan. Now you’re sitting on the side of the road waiting for the tow truck to get you to safety.

What’s the alternative?????

Begin Phase 1 with a plan based on how you define financial freedom.

Maybe Freedom IS

• Paying off school debt
• Paying off your credit cards
• Having enough to go on vacation every year
• Not living from paycheck to paycheck
• Never having to worry about money

Your definition of freedom is personal, if you define it then you’re in control of your path and that is the definition of true freedom.

During the accumulation phase, it requires a laser focus on saving and liquidity. I know what you’re thinking I barely make enough to make ends meet how can I think about saving and liquidity? What is liquidity anyway? CASH

Since very few people carry cash think of it as access to cash in the bank; consider it your emergency fund when life happens; this will prepare you for the road ahead, so you don’t begin to rely on your not-so-good friend

Where do you start? Glad you asked, one small step at a time, remember the power of time and compounding is on your side.

Example: You deposit $100 in your favorite bank or credit union; they are offering a savings rate of ¼% you put in $25 every month for ten years at the end of that period you have a total of $3140.66

It seems like a small return on your money, but the reality is in this phase you will have an opportunity to make your money work for you… say your employer offers a 401k where they match up to 3% so in this scenario you invest in the company plan whether it is stocks or mutual funds, the average return is 6% now you have made over the same period of time $4299.41.

Still doesn’t entice you???

NO?

If you took this example based on $25,000 annual salary @ 3% investment of $750.00 with an employer match of $750 it equals a monthly input of 62.50 for you and 62.50 for your employer now you are saving $125.00 a month, compounded total @ a 6% return is $20,769.28 over the same period.

YOU SHOULD BE EXCITED!!! It’s the beauty of compounding. As your salary increases over the years even if you kept it at 3% the math still works @

$50,000= $41,356.63 $60,000= $49,591.56, 75,000= $61,943.97or $100,000= $82,531.31

The amount you make is not the key it is really about the decisions you make on your path to freedom.