The 5 Steps to Financial Freedom
And Why Most People Get Stuck at Step 1
Let’s clear something up:
Financial freedom isn’t about luck, inheritance, or overnight success. It’s a system. One that anyone can follow — but very few do. It is boring, it takes effort and time. It is not a getting rich quick scheme.
Why?
Because the system is simple, but not easy. Especially Step 1, let's be really honest about this. This is the step most 'This is how I got rich and you can do it, too' people conveniently leave out. Sure, if you worked for Goldman Sachs for 5 years and made shit tons of money, it is easy to make more money with that money. But most people don't see that. And most people don't have that (yet).
If you'd like to read my rant about all the folks that sell you the secret to success, read my article about it here, but I digress. Let's talk about Step 1.
1. Earn More Than You Spend
This is the non-negotiable starting point.
You need an income that’s higher than your expenses. Without that gap, there’s nothing to save, nothing to invest, nothing to grow.
Budgeting is great, but there’s a limit to how much you can cut. There’s no limit to how much you can earn.
If you’re stuck at Step 1, you don’t need better spreadsheets, you need higher income.
That means:
- Asking for more
- Switching roles or industries
- Building a skill stack that commands higher pay
- Starting something on the side to create additional income streams
- Having better, higher paying offers
- Or simply work more if that is helping you to make more money
This is the step that breaks most people.
Not because they can’t do it, but because it’s uncomfortable. It forces you to grow, do things that are maybe not coming naturally to you, doing a 'not so much your dream job' job and believe me, I've been there. Asking for a raise can be scary (although your boss literally expects that, it is part of every annual review). Negotiating prices can be scary. Saying a high number not knowing if people will say yes to it. Because we attach meaning to it. Our own 'value'.
Every business owner has been there at some point, afraid to increase prices, making a new offer, not sure if it would work until it does (or doesn't). But there's only one way to find out.
2. Build an Emergency Fund
Freedom starts with not being afraid of surprises. A broken laptop, a missed paycheck, a client not paying or an unexpected bill shouldn’t derail your life. At one point, I had outstanding invoices of more than € 15,000 in my first year of self-employment which shrank the financial runway of my firm to two months give or take. It all went well after all and I got my money. But it also went well, because I did indeed have an emergency fund!
Aim for 3–6 months of living expenses, held in cash or a high-interest savings account.
This is not an investment, it's your personal insurance for when things go sideways.
It gives you the confidence to make bold moves later, like quitting a toxic job or seizing an opportunity.
Without it, every crisis becomes a setback.
With it, you stay in control and - believe me - you'll be able to sleep much better.
3. Buy Appreciating Assets
Here’s where your money starts working for you.
You take the surplus from Step 1 and instead of parking it in a dead savings account or filling your apartment with more stuff, you buy assets that grow.
Stocks and ETFs
Bitcoin (yes, really)
Real estate, gold
A business
Or even your own education, if it increases future earnings
The key: Stop buying things that go down in value the moment you buy them (clothes, cars, gadgets) and start buying things that go up.
4. Let Compound Interest Work Its Magic
You’ve heard the quote:
“Compound interest is the eighth wonder of the world.” – Albert Einstein
But most people still don’t understand it.
€10,000 invested with 7% returns grows to ca. €80,000 in 30 years
If you wait 10 years to start, you lose more than half of that growth
The earlier you start, the more time works in your favor
The real secret is also not a real secret. Automate it, set up your investment account, commit to a monthly savings plan that is realistic for your situation (and that you can adjust anytime with most brokers, it's not a decision for life) so that money gets transferred at the beginning of the month and starts working for you in the background.
5. Live Off the Yield (True Freedom)
This is what financial freedom actually means:
Your money makes enough to cover your life, i.e. you no longer need to sell your time.
Maybe it’s dividends
Maybe it’s rental income
Maybe it’s selling a little Bitcoin in a bull market
Maybe it’s interest from low-risk bonds
Whatever the vehicle, the principle is the same:
Your assets are working. And you are free.
Final Thoughts
Most people never reach financial freedom because they never fix Step 1.
They stay underpaid, overextended and exhausted, hoping budgeting will save them.
But budgeting isn’t enough.
You need leverage. You need income. And you need the courage to play a bigger game.
Once you do, the rest is really just execution and a smart setup. None of this is rocket science.
And - as always - if you’d like to learn how to actually make your money work for you, you came to the right place. Learn everything you need to know about finance, investing and money, in plain English (and German), join the waitlist for “Mystery Money” - my video-based, self-study online course where you challenge your mindset about money, learn the basics and gain the confidence to start your investment journey in just one month.
✅ No credit card needed.
✨ Signing up locks in your 20% discount.
📥 Be the first to know when the course goes live.
