Building your blueprint to FI starts with the basics. A simple thing like tracking your spending can set you on a path that will change your life forever. Today, we get back to FI 101 and uncover the stark difference between goals and systems.
What Will Life After FI Look Like For You?
As you approach your goal of FI, you may start to daydream about your newfound freedom. The best part is that you get to choose what matters most to you and incorporate that into your life.
You get to choose. This is a choose your own adventure, you’re not locked into a nomadic lifestyle or a suburban lifestyle, you can do whatever you what. But the cool thing is and the important thing is to put a little bit of thought in on the front end to evaluate which financial decisions you’re making and then take the bandwidth that that affords you and create the life that you want for yourself.
Anywhere along the path to FI, you are afforded more freedom with each step. Even after you take the first step and leave the flight or fight mentality, you can start to see big possibilities. You'll finally have the chance to step back and determine what you want out of life.
What Do You Believe About Yourself?
As you determine what you want out of life, you'll be forced to uncover what you believe about yourself. What are the belief statements that you tell yourself about yourself?
A few common ones include:
- I'm not good with money.
- I have a shopping problem.
- I have a credit card problem.
Instead of combatting those negative beliefs about yourself, you continue to repeat this in your life. However, there is another option. You can start to change your mindset surrounding you and your finances by choosing to believe something different.
You could change that if you could just take a step back and say that was a choice to believe that going forward I’m going to believe something different, I’m going to believe a different narrative that I can take small actions, small choices that will align who I believe I am with my future goals. And then every day you get to make small votes in favor of this future self.
As you start to craft a new belief system about yourself, think about the version of yourself you want to become. You can take steps towards the best version of yourself one day at a time.
How to Build Your Blueprint
First, look at your mindset. Do you think you are good or bad with money? Who do you think you are in terms of money? The script you have created for yourself can be changed. What would the best version of yourself look like?
The best part is there is no right or wrong answer. You just need to find a way that works for you and your life. Remember, as you go through seasons of life, the script can change again. The beauty is that you aren't locked into anything.
You likely have goals, but do you know their deeper meaning? What is the why behind your goals? It is important not to stop at what your goals are and not to confuse your goals with a system. A system will get you to your goal one chip at a time. A goal without a system is unlikely to come to fruition.
If you have your systems in place, the goals are going to come on their own.
The goal of FI may be freedom. When you build this blueprint, it will inevitably lead to your freedom. As with all systems, it starts with the building blocks.
Tracking Your Money
In order to start building your blueprint as a system for success, you'll need to start with the simple steps.
Start by tracking your spending, tracking your income, and tracking your net worth. Take the time to get this all in one place. Be honest with yourself about the situation. You can improve it unless you know the whole story.
Tracking Your Income
Tracking your income will vary based on how often you get paid. However, you'll want to know exactly how much money is coming in each month. This number is your inflow.
Overall, your income should be relatively easy to track.
Tracking Your Spending
Your spending may be more difficult to track. You can start by tracking your spending for one month, but three months will show a more accurate picture of your average spending.
As you track your spending, start with the structural recurring expenses. These are expenses that are fixed and will always be a part of your budget. Then move on to your variable expenses such as groceries, gas, entertainment, and more.
Track down the root of each expense and determine whether or not it is worth its value. You'll need to keep this part of the tracking as a part of your routine. You never know when an expense may become expendable. Every $100 you can cut out of your recurring monthly expenses equates to $30,000 less in your FI number.
As for how you pay for these expenses, one option is to put all of your recurring expenses on a single credit card.
For example, Brad puts his recurring expenses on his Chase Sapphire Preferred card. When he wants to hit a welcome bonus for a new travel rewards credit card, he puts his other expenses on the new card. Currently, he and Laura are working towards the spending bonus of the Chase Hyatt Visa card.
If you are interested in learning more about how to maximize your travel rewards based on your spending, then check out our free travel rewards course here.
Tracking Your Net Worth
To move forward, you need to know where you stand. List your assets and liabilities to get your net worth number. We recommend Personal Capital for net worth tracking. Check out our full review here.
These first three steps are truly the start of your own blueprint to FI.
Let's hear what our community has to say.
Note From Paul
Paul wrote in to comment on the wisdom of always keeping the economics about buying a car at the forefront of the discussion. Another important factor to consider are the safety features offered by the car.
While yes it is good to drive our cars as long as possible and not just get into the habit of buying the new car, lease the new car every few years, there are a lot of really great safety features out.
Take this into consideration when you buy your next car.
Thoughts About Goals And Diania Merriam
This week's episode speaks to the importance of knowing your goals. Diania once had the goal of becoming the world's highest-paid female CEO. However, the reason behind the goal was simply status. A cool job is one of many status-driven goals that many of us have.
We all have those moments where the goal tied to the status never works out well. But if its the goal that’s tied to what’s behind it, that can sometimes work better.
Remember, the status is just a hollow goal with external pressures. The most important thing to know about yourself is what you think about yourself when you are alone.
Just don’t care what other people think, that will not give you long term happiness. It just simply will not.
Take steps towards the goals that make you happy every day. Set up the systems you need to take you to where you want to go.