Tips for financial freedom
Lifestyle lags income:
Most people prefer the trappings and illusion of wealth over the freedom of actual wealth. They want to look wealthy rather than be wealthy. Don’t believe it? Just look around you and see how many people are in debt compared to how many people are wealthy. Most people choose lifestyle over financial freedom and violate the first principle in the wealth building equation: accumulate assets. They spend instead. The problem is you will never become rich by spending money. You must control your spending so that your lifestyle lags behind your income. This will create available capital for your investment activities.
Invest in your financial education:
The second principle in wealth accumulation is the rate at which your capital grows. This is largely a function of your financial intelligence. You must learn before you can earn. It is possible to profit from any market condition if you know what you are doing (although, admittedly, some market environments are easier than others). Every investment in your financial intelligence will pay dividends for a lifetime.
Don’t procrastinate - start today:
The third variable in the wealth accumulation equation is the amount of time your wealth compounds and grows. If you wait just six years to get started and your assets grow at 12 per cent annually, you will have half as much money when you retire compared to starting today (assuming equal contributions over your working lifetime). If you wait just twelve years you will have only a quarter as much. That’s a life changing difference in net worth for just a little procrastination. Just getting this one idea into your bones early enough can change your financial future. It’s that important.
Put your wealth building on auto-pilot:
The easiest, least painful way to save your way to wealth is automatically. Arrange your finances so that every month certain actions take place that automatically grow your assets without any decisions or extra effort on your part. This creates an enforced discipline to keep you on track.
Take responsibility for all your investment results:
Unless you are a trust fund baby or win the lottery, the way you will become wealthy is by owning full responsibility for every aspect of your wealth. This causes you to get into action and correct and adjust your plans until you reach your goal. You must build your wealth like an entrepreneur builds a business: “if it’s got to be, then it is up to me.” You are solely responsible for organizing your life so that wealth accumulation is a habit. Nobody else will do it for you.
Commit what is necessary to succeed:
Successful retirement planning requires you to provide the necessary resources to reach the goal. Don’t set yourself up for failure by undercommitting.