Most people think “budget” is a dirty word.

It sounds restrictive… like a process that will take away all the money earmarked for fun and enjoyment.

In reality, it’s the opposite… And if you want to become financially free this year, it’s a skill you need to learn.

Once you understand how much money you’re spending – and where – you can streamline your life and place greater focus on the activities and goals that matter the most.

More than that, when you earmark a specific amount of money for the things you truly love, you can enjoy them guilt-free.

How to Find Freedom Through Budgeting

Start with your necessary fixed costs – housing, utilities, car payments, insurance, etc.

From there, tally up the more discretionary categories – clothing, restaurants, golfing, and so forth.

Be as granular as possible, using actual bills, receipts, and invoices. Look back a full year or two to get an accurate long-term picture of your outlays and spending habits.

Now create an accurate picture of your income from all the possible sources – regular employment, side hustles, investments, retirement plans, etc.

Once you have that, start asking some questions:

  • How much of your earned money is going to necessities versus discretionary items?

  • Are there changes you could make without real consequences?

  • And are there different priorities you should emphasize going forward?

You also might find some easy adjustments can be made, including recurring items like:

  • Memberships and subscriptions you aren’t using all that much or could easily be downgraded.

  • Landline or cable bills that are redundant with other services you now have.

  • And regular indulgences that don’t meaningfully improve your life or create lasting memories.

You might also start contemplating bigger changes that could seriously alter the equation going forward – even things like switching up where you live.

The critical part is having a complete inventory of your past habits so you can tweak them.

Make sure your necessary expenses are covered. From there, allocate money to the discretionary items and pursuits that really give you the most pleasure.

And try to carve out as much money as possible for positive financial maneuvers like debt reduction or increased savings.

Going forward, monitor your progress regularly. Monthly or quarterly would be great. But at the very least, revisit your budget once a year.

You can do this whatever way suits you best – pen and paper, spreadsheet, or an app on your phone.

The key is consistency.

And even if your current life is still far away from that future ideal, don’t get discouraged.

The sheer act of defining your goals and honestly evaluating your finances already puts you way ahead of most people.

Once you do those things, it’s time to start making more of your money work for you.

Make Sure You Prepare for Emergencies

You’ll hear experts talk about different approaches, and a lot depends on individual circumstances.

But it’s critical to have a solid emergency fund set aside – anywhere from a couple of months of expenses all the way up to a year or more.

This money gets put into something very liquid and conservative – cash, a savings account, a money market, or something similar.

Your goal isn’t earning a return on investment. It’s making sure you’re ready for any curveball that life throws your way.

After all, if you go ahead and put your extra money into a more volatile investment only to be forced to pull it out at a moment’s notice, you might find doing so either unprofitable or downright impossible.

Reducing high-interest debt should also be high on the list – especially credit card balances.

The reason is simple: Paying down debt with an interest rate of 15% or 20% is equivalent to investing your money and earning the same type of return. The only difference is paying down the debt is risk-free.

Now, assuming you’ve tackled – or are actively tackling – the other two, it’s time to start putting more money into ideas that can rapidly move you toward true financial independence.

Growing Your Wealth

At Palm Beach Research Group, we call this strategy “asymmetric” investing.

Symmetric risk is when you invest $100 for a chance to make $100. That’s a 100% return. But triple-digit returns are rare in the stock market…

That’s why typical investors end up making a very unfair negative asymmetric bet.

They often can’t bank more than the average annual return on the S&P 500, which is about 7%. So they’ll put up $100 for the chance to make just $6–7 per year.

When you make a negative asymmetric bet like this, you’re risking way more than what you’re potentially getting in return.

What we use is positive asymmetric risk.

When you use positive asymmetric risk… You’re putting $100 at risk to make $1,000, $10,000, or even $100,000 in value.

Using positive asymmetric risk is how you turn $1,000 into $151,550 on bitcoin or $1,000 into $1.5 million on a crypto like NEO – without putting your current lifestyle at risk.

Even if you lose $1,000… It won’t be the end of the world. Of course, it’s not fun. But it won’t put you in the poorhouse.

So you can completely tame risk by reducing your position size. And if you use uniform position sizes, you can put $500–1,000 across a handful of ideas.

Of course, some may go to zero. Some may only go up a little. But you only need a few to become the next NEO to achieve financial freedom.

Following this method of investing is the best way we know of to build a wealthy lifestyle without putting your current lifestyle at risk.

Palm Beach Research Group