14562 days ago
Once you’ve decided you want to be financially wealthy, you are going to want to form a plan. I want you to understand this, because this is going to be a key driver in how successful you will be in accomplishing your goals.
To start, lets ask ourselves 3 questions…
- Why do you want to to focus on financial wealth?
- How much income do you need to be financially free?
- What is your plan?
I call this the surprise me plan, because essentially investors have left their fate in Wall Streets hands and have no idea where they will be when the time comes to lean on their savings or cash flow later in life. Lets go over each question so that you can develop your own guaranteed plan for a life of financial freedom.
1. Why do you want to focus on financial wealth?
There are no two answers alike. For myself, it was because I didn’t want to have 9-5 job and I hated the idea of missing out on raising my children. I also despised structured hours, limited pay, and being told what to do. I’ve never had a problem with authority, but I just don’t like people telling me what to do.
You have to answer this honestly, the answer to this question will be your drive. It will be what keeps you focused on keeping up with your plan. Millions of people fear losing their job, my fear was having one, and that became part of my drive to free myself from the normal way of doing things.
2. How much income do you need to be financially free?
For my wife and I, it was as easy as, these are our basic bills, if we can cover them, then mission accomplished. Once this level of passive income was achieved, we upped the ante with a new goal, being able to have enough free cash flow to travel first class for 2 to 3 months a year with our children.
You need to find out what that number is, the exact amount of income you will need to be happy. Don’t just say 10 million dollars, really think about how much you need, because you probably need a lot less than you think. Debt free, I am sure a lot of people could be happy with an income level of less than $100,000 a year.
3. What is your plan?
Okay so by now you know why you want financial freedom and exactly how much money you need each year to achieve this goal.
Now lets fast forward to us having that ideal income, what will it take to crank that out every year? Will it take a 4 plex, a million in bonds? Or do we need some solid dividend paying stocks? A great place to start a savings account is a specialized whole life policy, where you get a contractual guarantee of over 4% tax free, compounding your savings without interuption.
The answer to question 2 should have given you a target, now you need to take the time to scructure what that will look like. What do you need to own, to make enough money to be financially free. Every time you buy a business, real estate, or any investment, think of it as buying income.
You need to buy income, and just keep buying income until you accomplish your goal. Some of the income may be 5%, 10% or upwards of 25%, but you will have to focus on income, NOT capital appreciation.
Action to Take:
Grab a pen or a tablet, and write these dates down, 2050, 2040, 2030, and 2020. Now next to each date, calculate how much money you will have with your current savings rate, use a compounding calculator and be conservative. This will be your base line, now you know what you WILL have, if this line falls below what you need to be financially free, then look to fill that gap.
Two more actions to take, stop your money leaks, right now stop what you are doing and go through your last two bank and credit card statements and treat your accounts like a CEO looking to cut the fat.
Lastly, you have to increase your income, I am sorry, you just can’t cut your way to prosperity. Making $50,000 year can make you rich in 40 years, but I doubt you want to do that, so look for ways to start bumping up your income. Start a business, sell things online, turn your hobby into a part time gig, do whatever it takes to grow your income.
Wealth can mean a lot of things, your health, family, and the choices money can give you. For me, that’s what financial wealth is all about, its choices, the choice between doing what you want, and doing what your told. The choice between staying in a rat hole, or at the JW Marriot, how do you want to live your life, because it really is a choice.