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Achieving partial financial freedom starts with taking control of your basic expenses. This means knowing what these expenses are.

What is your monthly cost of living? This would include:

Housing bill: your mortgage payment or rent number;

Utilities: home gas bill, electric bill, water bill;

Food: groceries or basic food cost;

Internet: this one you should re-negotiate every year to be lower;

Transportation: public transit or car cost to repair/maintain, gas/fuel

It is essential to know and write down these costs and ensure you have a good idea. If these costs vary a lot for some reason like let’s say you eat out a lot, then put that in a different bucket. Consider if you have no job and only need to cover the basics. Even the internet could be something you go to a cafe and use their internet, if you lost your job, right? So, get real with what your expenses are to live life well but within your means with financial freedom.

The author of this blog is not offering financial advice. This content is for educational purposes only. We encourage doing your due diligence and researching any type of investment. The author has positions in some of the example stocks mentioned in various blog posts here such as SPYI, JEPI, and SPHIX. Whatever discussion is presented here does not represent the current value or news about any stock. You have to look up the current news yourself.

Take account of basic living costs

What would these costs be? For food, when you eat out, maybe you spend $500-1000 but when you need the basics and just grocery shop, then it might be $200-300.

Now for a family, eating out is very expensive so people with families probably do that less to begin with. But let’s say the food number even with grocery shopping only is well above $500 and eating out is more like $1000-1500. Please do this math for your case and let me know in the comments what I got wrong.

Gas and electric bill example

For our case today, let us write down the basic cost numbers. And also let us not consider every type of cost that falls under basic living expenses. Let’s take one bill like the utilities bill. For me, in Boston, gas and electric bills together on average is between $150-300. In the winter, the gas bill is a lot higher (150-200), while electricity is pretty small ($30-40). In the summer, the gas bill is low ($30-50), but the electric is higher ($50-90) but not as high as the gas bill in the winter. So on average, it is around $200, let’s say. I am doing rough math.

So let’s try to have financial freedom from just this utility bill as a baby step towards financial freedom. once you go through the process of doing this once with one bill, your mind will be activated to do this slowly with all your bills.

How to do this? Let us take an ETF example and see what dividend it pays how much we would have to buy it and at what price to get it to pay a monthly dividend of the same amount as my utility bill.

This ETF example that I will cover here is only one example, it is not the only stock out there or even a recommendation by me. It is only one example and you should do your homework on various stocks to figure out what works best for you. How did I think of this ETF example? I do a lot of homework myself and if you get into this mode of what I describe below, you will find yourself also doing such homework to learn more about various assets. In the beginning, though, it is important to just get started rather than overthinking your every move.

How to get started with investing

The way I think about it is that if I invest a little bit of money into the stock and just follow how it is going, I will learn about it along the way and invest more if I like it and invest less or none if I don’t like it. There is no need to put a lot of money down right away into anything while you are getting started.

Also, once you invest, give it some time. These types of buying that I am discussing here are for long-term investment. Where you buy and then just hold unless there is a really good reason to sell.

So if you don’t sell, then after you buy once, you will just keep buying more if you like the results. You would stop buying if you don’t like the results. But you would probably not sell anytime soon. So only put down what you are comfortable with losing completely in the sense that that money is for your future and not for the taking anymore to buy something else with.

It should not be your emergency savings money. Don’t think of it as money you can use for something else while you are getting started.

The people who buy and sell or move around money a lot are pros and they have done it a lot. They also know what risks they are taking, so when you are still new, don’t act like them. These people are also probably very used to losing money and still being OK, so again, don’t act like them if you are not used to taking losses and haven’t yet adjusted to your risk-taking tendencies.

Know what risk you are comfortable with and take it slow.  Take some small amount like $20-30 per month and put it into a stock to see how it works, for example.

Simple approach in a nutshell

Just don’t do a lot of selling would be my approach. But, I am not your financial advisor, so do as you please and use your judgment. I am just a random blog writer on the internet.

Google dividend stocks

Let’s look at this example and let’s google SPYI. Do it yourself to get the most current information. 

If you google SPYI yourself (I just did), you get this information:

SPYI has a dividend yield of 11.63% and paid $5.88 per share in the past year. The dividend is paid every month and the last ex-dividend date was May 22, 2024.

This means SPYI pays 0.49 dollars per share per month. Because the $5.88 number is per year it had to be divided by 12. And it does pay its dividend monthly so that is nice. Not all stocks do, many pay quarterly.

So now if you invested 20,000 dollars into SPYI and bought it at a price of say $49 per share then you would own 20000/49 = 408.16 shares of it. Now multiply this number of shares by $0.49.

408.16 * 0.49 = that should give $200.

So, in other words, if you invest $20,000 into this stock at the price mentioned here then you could have this stock pay this utility bill cost with its dividend every month. Now I know SPYI is a bit higher than $49 per share price at the time of writing, but you can buy it a little bit at a time over time. Sometimes it will be lower, then you get the lower price, sometimes it will be higher, then you get the higher price. Over time, it will average to something hopefully lower rather than higher.

So the exact price of SPYI at this moment is not the important thing, what this investment can do for you in the long run is the most important. But that also takes patience and when you don’t think tangibly about the issue like I have described here one might not see the opportunity in it.

One might think rather I can use my $20k to buy a car instead or put the down payment on a car and that is tangible. So now this conversation is about the mindset of financial freedom. If you don’t connect your investing action with some tangible part of your life then you won’t think about it as a worthwhile enough action to take. So this is why I suggested this approach of thinking about it as a bill that the stock can pay if you invested that amount of money in it. And it also involves sacrificing some other purchase and using that $20k towards this goal.

Consumer mindset vs financial freedom

Generally, people think of their money as something they can do something or buy something with. But if you rewire your brain to think of money as a tool to make yourself more money with and motivate that action with something tangible like financial freedom, starting with partial financial freedom, like one bill, then you will get in the mode of thinking of it that way.

Then you will see any income you receive as a way to buy assets that can then work to make money for you and that can pay bills for you eventually. Now because more money is needed to achieve total financial freedom that is why I encourage thinking about it as partial financial freedom first so that you can achieve these intermediate milestones.

So first achieve the gas bill, then the electric bill, then the water bill, take small steps to achieve the ability to pay all your basic bills one by one with money coming in from assets. Once you get into this mode, everything will start to change. You will see your money differently. Your spending will be different. And what matters and what doesn’t will become more clear.

You might have certain costs now that you start to rethink as it doesn’t matter to you anymore. How you view your income source, what its function is, etc.. all starts to change when you think about financial freedom. It is not about what you have to do but rather what you want to do when you have financial freedom.

Partial financial freedom will unlock a new mindset

The next level of living is unlocked when you have financial freedom. No more jobs that you hate, no more things you have to do. But as we talked about here, that takes a certain level of sacrifice in the meantime and steps away from the consumer mindset.

Most people have a consumer relationship with money rather than a buying assets relationship… to a great extent, your brain needs rewiring to get financial freedom.

But also,  financial freedom doesn’t have to be about not working ever again, but choosing what type of work or how often you want to work and in what setting. It is about having more choices. If you get into the mode of buying assets, then that lifestyle alone will show you more ways to live and work even along the way.

Financial freedom, in other words, is a journey. Once you get a taste of it with partial financial freedom (even with one bill), you will chart your course of it. I am excited to see what you will do next, so let me know in the comments how your journey is going. Approach partial financial freedom rather than try to go for full financial freedom, because the latter might seem too daunting and not as enjoyable of a process. So go for partial financial freedom, and see where you end up.

3 example stocks that pay dividends

If you do not want to put your money in the stock market which is understandable but want a higher yield or interest payment on your money, then you can keep extra cash or savings in a high-yield savings account.

Below is a referral link to the type I use. No need to get this one if you do not want to, it is just one example. There are promotional higher interest rates that you or I might get if someone does utilize this referral.

Link to a high-yield savings account: https://www.marcus.com/share/OIN-MIJ-PMH7