We have the Mills Way to Financial Freedom rules that we teach our boys. Today let’s talk about the main Action Steps that we teach our boys so they can work towards reaching Financial Freedom.
They could have your own action steps on their journey to Financial Freedom or if they choose to go in different order than that is their choice. They could also go at different speeds and that is their choice. They just have to be able to live with the possible consequences good or bad. A lot I would say would start with what their goals are.
Let’s dive in on what the Mills Way to Financial Freedom Action Steps are that we taught our boys;
Action Step 1
Action Step 1 is to list their goals. Their goals on what they want in life and by when. Some people may be different than our boys. Some people may want to be debt free or to retire early. Our boy’s goals currently are to master their Xbox games. LOL, we ask them to list their “Why” for each goal. The stronger there “Why” is the more driven they will be to achieve it. When setting goals, we not only want them to set a date to achieve their goal but also what will they give up to reach their goals. Then to list action steps to take today towards their goals. They should find supporters or cheerleaders to help them along their journey. They should also tell their family and friends about their goals and post it around their house to help remind themselves daily of what and why they are working hard to achieve. It is easy to spend and hard to save for some people.
Action Step 2
Action Step 2 is they need to create a spending budget with a payment accelerator amount included in it. Then to start tracking all their spending they do daily. Then at the end of the month total it up and compare it to their budget. I also do yearly recaps.
Action Step 3
Action Step 3 is will want them to save $1,000 up for any small emergencies that may come up. Bankrate said that 61% of people couldn’t pay for a bill of $1,000. So, if they can’t then they have to go into debt for that bill. It may be a car repair to a water heater at your house. Having a $1,000 won’t cover all bills that may come up out of the blue but it does help a lot. They also need to cut up all their Credit Cards and live only on Cash.
Action Step 4
Action Step 4 is to pay off all debts except their home mortgage. We have a formula that we use to figure out the order for them but a person could start with smallest to largest order if you are starting on your own.
Action Step 5
Action Step 5 is for them to start saving for their retirement. We want them to invest in a Roth Retirement account and start at 15% of their net take home income until they get to Action Step 9.
Action Step 6
Action Step 6 is to have them build up an Emergency Fund to 6 months of their average monthly expenses. We want them to keep the Emergency Fund in a brokerage account so they can still make some interest on the money but yet be able to get access to the money in days for any larger unexpected expenses.
Action Step 7
Action Step 7 is to pay their house off if they have a house. If not, we suggest to them to buy a house they can afford or save money and pay cash for a house. If they do buy a house, we want them to pay at least 25% down on it. After they pay off their house, they need to commit to themselves that they will stay Debt Free for life. We also want them to get a 15-year mortgage if they do buy a house with a mortgage and have it at a fixed rate. Then to plow money into the house and get it paid off sooner than 15 years.
Action Step 8
Action Step 8 is to save for their Kids College Fund if they have kids. We tell them this is optional and they don’t have to do this step. But we want them not to co-sign any student loans. We also hope they will teach their kids how to go to college without taking out any student loans.
Action Step 9
Action Step 9 is to maximize their Retirement Savings and Investments up to 25 times their expenses. There have been many examples that if you have 25 times your expenses and take out a 4% withdrawal a year it could last them the rest of their lives.
Action Step 10
Action Step 10 is they have Financial Freedom Choices. If they withdrawal 4% from their retirement savings they have choices to retire, work full-time, go to part-time work, change career jobs or do volunteer. Bottom line they will have the freedom to have many choices.
Our Mills Way to Financial Freedom rules help tie into the above 10 Action Steps to Financial Freedom. We have to remind them that if they are in debt that they won’t get out of debt overnight. There is no magic wand to help them with it. Normally people get in debt overtime and enjoyed spending the money so now they need to pay for the fun they had.
It is such a better feeling being debt free then it is when you are in debt. Or even worse drowning in debt and trying to figure out what bills to pay next month. I have been they’re and that is what drives me to help our kids and others not to be in that debt black hole. If you know anyone that needs help to reach Financial Freedom please pass on my contact information to them.
Here are two positive quotes I like; “There is no way to happiness; happiness is the Path.” By Buddha
“Change Your Thoughts – Change Your Life” by Wayne W. Dyer
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