Cash Flow,  Financial Freedom,  Planning

Financial Freedom Plan With Planner

If you want to achieve financial freedom, you need a plan. This ten step process will take you from rags to riches.

  1. Determine what financial freedom means to you
  2. Write down goals
  3. List your landmarks
  4. Pay yourself first
  5. Create your timeline
  6. Start increasing cash flow
  7. Create a transition plan
  8. Quit your job
  9. Hit your cash flow goal
  10. Free your time

Steps 1 through 5 can be done today, and you’ll be well on your way to financial freedom.

Step 1: Determine What Financial Freedom Means To You

Begin with the end in mind. I’ve talked about what it takes to change your mindset, and part of that is knowing where you’re going.

Here are the questions you need to answer:

  1. What do you want your money to do for you?
  2. How much cash flow (per month) do you need to do those things?
  3. When do you want to get there (exact date)?
  4. What type of investments interest you most?
  5. How much time do you want to spend on your investments?

So I might say I want my money to allow me to travel internationally at least twice a year and eat out every night. After some research I find that a cash flow of $8,000 per month should more than cover those things. I’d like to achieve this in 10 years and I’ve always been interested in real estate as an investment.

Spend some time actually visualizing your future self. What types of things are very important to you, and what do you love spending time doing? Maybe you really want to find a way to help others, or maybe you love playing video games. These are things that can help you understand what you want to do with your money, and how much cash flow you’ll need.

Once you answer these questions it’s an easy path to creating great goals for yourself.

Notebook with pen

Step 2: Write Down Goals

Almost everyone I’ve met has goals. But he truth is there are good goals and bad goals. And most people have bad goals.

A bad goal has no deadline.

So if your goal is “I want to be promoted to a managerial position at work,” you have a bad goal. Your goal needs a due date. You have to create urgency for yourself.

If you decide you want to be promoted by one year from today, then you might realize that you need to start talking to the people who can promote you. You might decide to go to them, share your goals with them, and ask if they can help you get there.

You might also realize that you need to broaden the scope of your goal. I may not be able to be promoted from within my company in one year, but what if I start a job search as well. Maybe I can take the next professional step at another employer.

Ultimately, you need a due date to create the need to act now. If you don’t act, your goal will never be realized.

A bad goal doesn’t use numbers

If you’re reading this article, you may have the goal “I want to be financially free.”

Sorry to say it, but this is a terrible goal. Not only is there no deadline, but there is no understanding of what circumstances will allow the goal to be reached.

Will you be financially free if you have $10,000 in a bank account? $100,000? Do you need to be making money every month?

You can see it’s impossible to tell when you’ve actually reached your goal.

So a good goal is specific and uses numbers. In fact, this is so true that “I want to have $500 in my bank account” is a better goal than “I want to be financially free.”

A bad goal doesn’t know how it will be achieved

Let’s go back to our first example. “I want to be promoted to a managerial position at work in one year or less.”

This goal is OK because we at least have a time frame, but there’s been no thought into how we get there.

If you need to talk to your superiors and ask them for help, that should be written into your goal. If you need to start a job search, that should be written into your goal. If you need to acquire new skills, that should be in your goal.

So here’s what that goal would look like once it’s a great goal:

“I want to be promoted to a managerial position at work in less than one year, and I will achieve that by taking on a leadership role on my next project, asking my superiors for help and advice, and starting a new job search.”

A good goal has a deadline, uses numbers and knows how it will be achieved

Now you can begin to see what separates a good goal from a bad one. A good goal uses specific numbers (“I want $10,000 in my bank account”), it has a deadline (“I will achieve this by July 15th of 2021”), and it knows the steps that will be taken to achieve it (“I will put 10% of my income every paycheck into a savings account”).

Now write a great goal (or two or three)

Now that we know what a great goal looks like, let’s use your answers from Step 1 to write one down. And feel free to write more than one.

The simplest way to do this is to put your answers from questions 2, 3 and 4 all in a row.

I will create $________ (answer from #2) per month in cash flow by __________ (answer from #3), and I will do it by paying off (school loan, car, etc.) debt and __________ (answer from #4).

You’ll have a goal that specifies exactly how much money you need to make from your investments, what your target date is, and what investments you’ll acquire (and debts you’ll pay off) in order to make this a reality.

Step 3: List Your Landmarks

Now that you’ve got an excellently written goal, it’s time to start mapping out your path to that reality.

We need a list of landmarks that will get your closer to your cash flow number. A landmark is a smaller win that gets you closer to your cash flow number.

Paying off a car loan is a landmark. Purchasing a rental property is a landmark. Starting a blog is a landmark.

And each of these can have smaller checkpoints within them that are worth celebrating. Taking your car loan from $10,000 to $5,000 can be a checkpoint. Signing your first tenant to a lease is a checkpoint. Publishing your first 10 articles is a checkpoint.

Both landmarks and checkpoints will be necessary to keep you on the path to your cash flow number. Let’s start by creating a list of landmarks. And in the next step we’ll talk about checkpoints.

So pull out a pen and paper, or open a word document and start making a list of every way you want to increase your cash flow.

List your debts

Paying off debt is amazing. It is a guaranteed increase in cash flow and you know exactly how much more money is coming into your bank account each month.

So start listing off every debt payment you have and how much you pay on that every month.

Car payments, student loans, personal loans, and yes even mortgages. Write all of them down.

Note: Quick note about mortgages. The amount you pay every month includes insurance payments and taxes. If you pay off your mortgage you will still have to cover insurance and taxes every month.

Research your investments

You should really spend some time researching the investments you’d like to take part in. Google is your friend, and if you want to learn more about how various investments can affect your cash flow, you can check out these articles.

The two most important pieces of information here are how much cash up front you will need to get started, and how much your cash flow will increase as a result of investing.

Those two items should be sufficient to build your timeline in the next step.

Find anything else you can to increase cash flow

Paying off debt and investing are not the only way to increase your cash flow, they are just the two biggest in most cases.

There are dozens, possibly hundreds of other ways to increase your personal cash flow, and I’ve created a list of 50 ideas to help you find some of those ways in your life.

Step 4: Pay Yourself First

Before we can move forward we need to do an analysis of our finances. In order to create cash flow, you’ll have to find money within your existing income to put to work for you.

Paying yourself first is a practice that is a staple among financial philosophies. I like the way the way George Clason presents this concept in The Richest Man in Babylon:

Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.”

– Arkad from The Richest Man in Bablyon

The idea is that you set aside AT LEAST 10% of your income to put to work towards the building of your wealth.

You should do it before paying bills, before paying taxes, or buying anything. You’ll find that even if you were struggling to get by before, you’ll find a way to survive even with 90% of what you were taking home. And now you have a tool (the extra money) to start building wealth.

Determine your monthly wealth paycheck

In order to create a meaningful timeline, you have to know how much you are paying yourself each month. We can take this number and use it to create our timeline in the next step.

Here’s how to calculate your wealth paycheck:

  1. Figure out how much you bring home each month on average
  2. Multiply that number by 0.1
  3. That’s the MINIMUM number you should put aside

If you bring home $1,000 per month from your job, then your wealth paycheck should be $100 or more. Obviously the higher your wealth paycheck, the faster you will reach financial freedom.

So write down the highest number you can, but it must be at least 10% of your monthly take home pay.

Step 5: Create Your Timeline

You have your list of landmarks. Great! You know how much you’re going to allocate towards building wealth (your wealth paycheck). Even better!

Now it’s time to create a game plan, a timeline for reaching your landmarks.

In order to keep your focus and minimize the risk of giving up on your goal, we need to be strategic about what order we attack our landmarks.

There are a few factors to consider when making our timeline:

  • How long it will take to reach the landmark
  • Amount it will it increase your cash flow
  • The emotional effect it will have on you

In order to gain confidence and maintain focus, landmarks should mostly occur fastest to slowest. If you can pay your car loan off in 4 months, but it would take 8 months to save up for an investment, you should pay your car loan first.

There are the exceptions though. If there’s something that will have a huge impact on you, then it can be prioritized sooner. If paying of your college debt will cause you do walk a little taller and toughen your resolve to finish this thing, then maybe you should put it in front of some of your quick wins.

Order everything by time needed

First step is to take your list of landmarks you just made and order them by how long it will take you to finish them. The quickest wins (like paying off a low balance loan) go at the top of the list and the slow wins (like paying off your home mortgage) go at the bottom of the list.

The time you write down should be how long it would take to hit that landmark if you started working towards it today by putting your entire wealth paycheck towards it.

So now you might have something that looks like this:

  1. Cancel Amazon Prime (0 months / $10 per month cash flow)
  2. Shop for better insurance rates (1 month / $100 per month cash flow)
  3. Put together a home gym (3 months / $40 per month cash flow)
  4. Pay off my car loan (6 months / $400 per month cash flow)
  5. Pay off personal loan (8 months / $400 per month cash flow)
  6. Purchase a website (22 months / $1,000 per month cash flow)
  7. Pay off my home mortgage (78 months / $1,200 per month cash flow)

Note: Notice the total cash flow increase here is $3,150 ($10 + $100 + $40 + $400 + $400 + $1,000 + $1,200). It’s totally fine if this number is lower than your goal number you came up with in Step 1.

Adjust as needed

You know yourself better than I do.

Look at the list we just made. You can see there are a couple quick wins by cancelling a membership and shopping for better insurance rates.

Maybe after that you decide paying off your car loan is a huge motivator and a big win. If that’s the case then don’t hesitate to put your car loan ahead of something that you can do more quickly (like the home gym).

When you’re done reorganizing the list, it should be in the order you expect to take on each landmark. So here would be my final list:

  • Cancel Amazon Prime
  • Shop for better insurance rates
  • Pay off car loan
  • Pay off personal loan
  • Put together home gym
  • Purchase website
  • Pay off home mortgage

I put it in this order because I believe it gives me the best chance to stay focused and make it to the end of the list. Paying off my car loan and personal loans will be huge in giving me the confidence I need to finish all the items.

Add in checkpoints for your first year

Because my plans change so often, I normally only like to have one year of my financial plan mapped out.

So the reality is that your one year plan is more important than the list you just made. Your one year plan is broken into 12 months, and each month should have a checkpoint that you can celebrate with a nice dinner, a bottle of wine, or maybe just a night of video games.

It’s important to recognize and even celebrate the little wins along the way. And you get to decide what your checkpoints will be. Here’s how I would do my one year plan:

  1. January – Cancel my Amazon Prime membership and switch my home and auto insurance providers to save money.
  2. February – Bring car loan balance down to $5,000
  3. March – Bring car loan balance down to $4,000
  4. April – Bring car loan balance down to $3,000
  5. May – Bring car loan balance down to $2,000
  6. June – Bring car loan balance down to $1,000
  7. July – Pay off car loan!!!
  8. August – Bring personal loan balance down to $6,600
  9. September – Bring personal loan balance down to $5,200
  10. October – Bring personal loan balance down to $3,800
  11. November – Bring personal loan balance down to $2,400
  12. December – Bring personal loan balance down to $1,400
  13. January – Pay off personal loan!!!

This one year plan demonstrates the power of creating additional cash flow.

While working on the car loan, we could only pay down $1,000 per month. So it took 6 months to pay off the $6,000 car loan.

But as soon as the car loan was paid off we added $400 in cash flow to our monthly wealth paycheck. This allowed us to pay down $1,400 per month on the personal loan balance of $8,000. Instead of spending 8 months paying it down, it only took 6 months!

That’s why we want to tackle the quick wins first. Once we pass that landmark, we pick up our speed and something that would have taken 8 months, now only takes 6 months. You keep your focus by continuing to pass landmarks at a quick pace.

Step 6: Start Increasing Your Cash Flow

Now it’s time to actually start creating the additional cash flow we need to quit our job.

We’ve got a one year plan and honestly that’s going to keep us busy for a while. Your job for the next year is to follow the plan you just created.

Push yourself to hit your checkpoints every month and then when you do, give yourself a little reward for hitting the new milestone.

After the one year plan

So what happens after you crush your first year?

After you complete your one year plan, it’s time for a new one year plan. Perhaps your priorities have shifted, which can change your list of landmarks, and that’s totally OK.

Just re-prioritize and make a new plan. Completing your first one year plan is the hard part. After that you’ll be itching to do it again.

Years 2 through ?

Looking ahead you’re going to be aiming for the mythical landmark of quitting your job.

Increasing your cash flow is great, you’ll have more money every month. But that’s not what financial freedom is about. Freedom is having the money to do whatever you want, and that includes having the option to quit your job.

So let’s start working on our job quitting transition plan.

Step 7: Create A Transition Plan

This is the stage that most investors never quite make it to. Maybe they invest in the stock market and their retirement plans, and they even have a sizable emergency fund. But they never manage to make the jump to retirement until they qualify for the federal government senior benefits.

Kate and I have a checklist of requirements we used to allow her to quit her job at the age of 30, and I’ll be using the same checklist to quit my job by the age of 36.

Here it is:

  1. Emergency fund equal to 3 months of all personal and business expenses
  2. Monthly cash flow that surpasses all personal and business expenses and covers a private health insurance plan
  3. No bad debt – Only acceptable debt is on assets with positive cash flow

That’s it. An adequate emergency fund, adequate monthly cash flow and paying off all our bad debt.

Let’s start there. What do I mean by bad debt?

Eliminate Bad Debt

I think most people understand that having a loan on a TV or furniture is bad debt. But what about your home? What about your car?

The only question you have to answer is, “Is this asset making me richer?” If the answer is yes, then it’s good debt. If the answer is no, then it’s bad debt.

In almost all cases a loan on a car is bad debt, and in many cases a loan on your primary residence is bad debt.

The loan I have on my primary residence is good debt (although it’s close). Because Kate and I run a short term rental out of our basement, we cover the cost of our mortgage payment. This allows the appreciation of the home to outpace the costs of living there.

In most cases, if you just live in your home and pay on a 30 year mortgage, that mortgage is bad debt. The cost of taxes, insurance, utilities, maintenance and the interest on your mortgage is more than the appreciation you’re getting each year on the home.

Create an emergency fund

The worst thing that can happen after you quit your job is some of your income streams start to disappear. To limit the risk of this creating a serious problem for you, it’s important to have an emergency fund before quitting your job.

You get to decide how big it is, but my rule is that it should be big enough to cover all expenses long enough for me to react. I think three months is enough to figure out how to sell a bad asset, get it cash flowing again, or worst case scenario, go looking for a job again.

Regardless you’ll need to write a number down. How big does your emergency fund need to be for you to quit your job?

Sufficient cash flow (and replacing job benefits)

The tricky part with cash flow is to figure out how much is enough. I have three rules.

  1. Allocate at least 10% of cash flow to pay myself first (wealth payment)
  2. Remaining cash flow must cover all expenses
  3. Those expenses must include all benefits an employer would provide (namely health insurance)

So your minimum monthly cash flow number to quit your job is:

(current monthly expenses + cost of private health insurance) รท 0.9

Again, write down the number you need to hit in order to quit your job.

Step 8: Quit Your Job

After you complete Step 7, you’ll have a number for how big your emergency fund should be, and you’ll have a number for how much your monthly cash flow should be. And you’ll know the debt you possess that is categorized as bad debt.

You’ll spend year after year slowly increasing your cash flow, and if you run out of landmarks on your list, it’s time to make some new ones (if you haven’t already).

Normally, that comes in the form of investing. Buy more dividend stocks, more businesses, more real estate. Figure out any way possible to reach your cash flow goal.

You’ve got your emergency fund, your bad debt is gone, and now you’ve finally hit your cash flow number. Once you have met all the criteria on the list, it’s time to quit your job.

Make sure your health insurance is in order, but past that, it’s just need to make the jump.

Step 9: Hit Your Cash Flow Goal

You can certainly do this step before quitting your job, but at some point you have to reach the goals you set in Step 2.

You may have said that it would take cash flow of $50,000 per month to reach financial freedom, but you were able to quit your job with $8,000 per month.

You’ve paid off your bad debt, you’ve passed all your landmarks, but you’re still nowhere near $50,000 per month. How do you bridge the gap?


In order to quit your job you would have had to do some investing of some kind. Now it’s time to turn that investing into a system.

You’ve got two investment properties? It’s time to make it ten or twenty. You’ve got a successful blog? Great, it’s time to buy another successful website.

I can’t tell you exactly how to get there, but if you’ve made it this far then you don’t need me anymore.

Step 10: Free Your Time

I’ve written on creating time freedom before. By following the steps in this article you’ve already done everything right.

And if you’ve reached this point, then you’ve probably created more responsibilities for yourself than you started with. Maybe you manage some rental properties. Or perhaps you run a business or create content for a blog. Whatever it is, it’s time to remove yourself from the equation.

Write down every way you currently spend your time that you’d prefer not to be spending your time. Then decide how you will replace yourself.

There are two ways to do this.

Outsource your work

Investments like real estate and business ownership provide significantly better returns than other types of investing. Problem is, they also require significantly more time investment.

You can still keep your active investments, but make them more passive by paying others to do the work you do.

Obviously this is going to take away from your cash flow, so it will take time to remove yourself. Continue to increase your cash flow, so that you can pay others to take over for you without taking a pay cut yourself.

Move to passive investments

The other strategy is to pull the money out of your active investments and move it over to passive ones (like dividend stocks). The cash flow return on passive investments is usually much lower than on more active investments, so again this will take time.

Perhaps you simply begin sending your wealth payment into passive investments and wait for them to start supporting your lifestyle. Or perhaps you get more aggressive and sell off your properties and businesses to move them into the passive options.

Whatever your strategy, you reached your financial goals and now you’ve created time to spend however you like. I think you can say you’ve made it.

Changing Your Plan

It’s OK to change your plan. In fact, it’s practically guaranteed that you will need to change it a few times before you reach your ultimate goal of financial freedom.

Maybe you have another child unexpectedly, or maybe you experimented with an investment and it just blew up. Kate and I re-evaluate our financial freedom plan every year around New Year’s.


10 easy steps to financial freedom, right? Well, not exactly. You can read this article in about 10 minutes, but it may very well take you 10 years to live through these steps.

Kate and I are somewhere between steps 6 and 9. We’ve increased our cash flow considerably. To the point where she has quit her job. But our investments can’t yet support all our expenses plus health insurance.

Most of these steps have already worked for us, but some of them we haven’t put into practice yet. I’m hopeful you’ll follow us, or perhaps beat us, to creating your financially free life.

Happy investing.


I'm living the path to financial success and sharing everything I learn in this blog. I believe in the power of cash flowing investments, due diligence and time. This is my journey so far.

I learned everything I know from books, podcasts, conversations with friends and family and of course through real world experience as a cash flow investor. And I'm always pushing to learn more.

To see my investing timeline, check out our about page

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