5 Steps To Achieve Financial Independence, Step 3

Today we are going to look at STEP 3 in the Formula For Achieving Financial Independence, Accelerate Your Savings. First, lets look at the First 2 Steps:

Step 1 – You Must Earn More Than You Spend
Step 2) – Get Out Of Debt Now

I want to touch again on the importance of the ORDER of the formula while reminding you of this very important “Secret”: Achieving Financial Independence is about recognizing your relationship with money, taking responsibility for it and then, improving your relationship with money. The way you improve your relationship with money is to learn these timeless principles and implement them in their respective order. It can take you a few months or several years. Either way, it’s worth the effort.

Financial Independence, Myth versus Reality
Becoming financially independent is not about the glamor of having $10 million dollars, driving luxury sports cars and living in 3 homes around the world. If you focus on these material items, you are going to be allured by get rich quick schemes like hot stock tips or other scams, only to find yourself going in circles. Becoming financially independent is about achieving peace of mind and being free to do what you want and spend time with those you care about. Then, when you are in “your element” you will surely be contributing to others in a more meaningful way with higher purpose.

Step 3 – Accelerate Your Savings
Once you are out of debt, you can begin to use money as a tool that works for you. Money now becomes your servant versus your worst enemy. We are going to do this by learning how to accelerate your savings. I want you to think of your savings accounts as an actual business that provides you with passive income. Every cent, every dollar and so forth adds to your passive income stream day and night even while you’re sleeping. How do you think Visa and Master Card do so well? They charge you interest on what could have been in your savings accounts. To illustrate this point, lets look at the following information regarding the amount of revenue credit cards produce annually:
Profits of Top 10 U.S. Credit Card Issuers in 2008
1. Chase: $780 million profit
2. Bank of America: $520 million profit
3. Citi: $530 million loss
4. American Express: $850 million profit
5. Capital One: $1.00 billion profit
6. Discover: $710 million profit
7. Wells Fargo: $990 million profit
8. HSBC: $520 million profit
9. US Bank: $1.07 billion profit
10. USAA: Not listed
(Source: Nilson Report, March 2009)

It takes time, but the ultimate goal of accelerating your savings is to reach the point where your earnings from interest supplements or ultimately, more than pays for your monthly expenses. This is a great feeling because your money is now productive and you’re building wealth every month. And here is the best part: Once set up and monitored monthly, this interest income is generated with little to no effort on your part. It just pays you interest income and grows month in and month out.
In this post I am not going to recommend particular investments. I just want you to grasp this concept and to start looking at your savings accounts as actual businesses. Now that we’ve discussed Step 3 conceptually, the following are links to articles that will walk you through the mechanics of improving your savings habits. Once you begin to apply these, you will literally boost your savings and ultimately create passive income.

How To Improve Your Savings Habits – Techniques for Building Effective Savings Habits

High Interest Checking Accounts – In this article I talk about how I am using high interest checking accounts to earn more than 4% on my savings and create passive interest income.

Here are the 5 Steps For How To Achieve Financial Independence

Step 1 Earn More Than Your Spend

Step 2 Get Out of Debt Now

Step 3 Accelerate Your Savings

Step 4 Become An Expert At Something You Love

Step 5 Accelerate Your Income Build Wealth