Originally created for my startup BodesWell, this map, by my brother Nathaniel Bellows, is a prioritized list of the stages of financial planning.
Landing a plane.
Stabilizing a patient in the ICU.
Packing for a trek to the South Pole.
Even going to the grocery store, we bring a checklist. We make checklists to improve our journey and increase our chance of success.
So why don’t we have a checklist for our financial journey?
Well, now we do.
The 7 Steps to Financial Independence starts at the very beginning - how much are you earning and how much are you spending. Step 1 is to gather, categorize and track all that data. Then build a budget that reflects your last year of earning, spending and saving.
If everything else stays the same, what do your 50s look like? Your 60s? Your 80s?
Of course, nothing stays the same. We all have dreams for our life. We want to help mom with her long term care. We want to help our kids with college. We want to buy that house on the lake.
Money is the fuel for your life journey. At this point, you probably don’t know if you have enough fuel to get where you want to go. You might not know how to get more, or even where to start.
Step 2 in our checklist is about making sure you are covered in case your luck turns sour. You need to have a money cushion to pad your bumpy landing.
Step 3 could have you doubling your retirement investment money year after year, but one out of four people don’t do it. In Step 4 you will shed any expensive debt you’ve been carrying, but you’ll do it step by step and over time, so the rest of your life can continue.
From there, the world starts to open up. You may have already taken care of the first few Steps, in which case you will breeze through the first few items start thinking longer term.
Step 5 is about making big plans. What do you want your life journey to be, and what do you need to get there? Step 6 is for making sure that at some point work can be an option, not a requirement for you. And Step 7 is where the advanced tactics for financial independence start to kick in.
But before we get into the details, a word about where this came from. I wrote the 7 Steps to Financial Independence with the help of millions of people on the internet. In particular, the 14 million members of the Personal Finance forum on Reddit and the 100,000 plus thinkers at Bogleheads.org, especially Alex Frakt and Larry Auton. Our work has benefited immensely from the writing and accomplishments of John Bogel, Todd Tresidder, Michael Lewis, Tim Urban, Warren Buffet and Charlie Munger, Nick Maggiulli, Patrick McKenzie, Angela Strange, Scott Galloway, Brad Klontz, Hillary Bok, Kristen Anderson, Lex Sokolin, Tren Griffin, Michael Kitces, April Dunford, Peter Adeney, Anand Sanwal, David Graeber, Michael Mauboussin, Alexa von Tobel, Elizabeth Warren, Ben Thompson, Tim Ferriss, Josh Wolfe, and many others. Thank you.
As with most things, the first step is the hardest. Learning to walk, learning long division, learning piano, Spanish, dating, and personal finance all start with overcoming the fear of taking that first step.