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How to become financially free? Find out the first and most valuable Wealth Principle that you can use to gain financial independence
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EXPOSED: THE TRUTH ON WHY THE WEALTHY GET RICHER AND THE POOR GET POORER Can you show me how you became Financially Free? This is probably the most common question that I am asked by my friends, family and clients. As such I thought I would share my views which aided my family to achieve financial Independence. Let me first start with the first and most valuable Wealth Principle: Respect Every Dollar You Acquire You must value every dollar that comes into your life. Every dollar you make is a potential seed. If you care for it and plant it wisely, it will grow and produce millions of seeds. This was one of the first lessons I learnt. Every Wealthy person thinks of a dollar like this. Poor people think of it as a small piece of metal which cannot buy very much. Let me ask you a question. What do you do when you receive your weekly or monthly pay cheque? What is your next step? Do you have any current wealth strategy in mind? How much would you need to save each month to become financially free? Let me provide some interesting statistics for you. If you were to invest your $1 coin in a Bank at the current interest rate, it is going to take a very very long time to become a millionaire. In fact, something close to 475 years! What would happen if we planted more seeds…. If I invested $1 per day, I would reach my target of $1 million in about 150 years… shaved off 325 years but still too long. What if I found a slightly better vehicle to invest in? What if I was able to invest in an asset that was able to obtain 10% interest per year? This sounds more interesting! Well…. the same investment of $1 per day would grow into $1million in 56 years. That’s much less than the average life time and achieved with saving less than 1/5 of a coffee a day! Imagine what you could do for your child’s life if you invested $1 or $2 each day for their future? What would that do for their future? Lets take this a step further. If you were to put aside 20% of your savings each month and were able to afford a deposit to purchase a $1 million dollar investment property (in an advised future growth area of Melbourne). Based on current statistics, you would make your next $1 million in 7 years!
What if after year 3, you decided to pull some capital from the current investment to buy your next $1million home? In 10 years, you would have made more than $2.2 million. Wealth is created through leverage of assets – not the job you do! It is what you do with your money – not how much you receive each week in your pay. Lets use an example: If you are a CEO earning $300k – firstly, you would be giving a lot of your time away for your job! Next you are paying almost 50c in the dollar for tax – or working almost 2.5 days out of 5 per week for the tax department. After tax you pull back $150k, spend 60k a year on kids and family and are left in hand with 90k a year. Not bad! So, after 10 years you have acquired 900k – if you saved it – which 90%+ of Australians do not. That’s still a long way short of our Wise Investor example …. Whom invested in a home and then let the leverage of his/her asset make $2.2 million in the same time. Oh… and they are still pocketing all their wage to do as they please (or hopefully look to invest in more assets). No question whom is doing better! Now Real Estate is my asset of choice. However, there is many options which you can choose in this space. By far, the greatest majority of Australians spend more than they receive. 97% of us are broke by the time we retire. This is across the board – no matter whether you are a doctor or a labourer. This could all change tomorrow for you. Let me share with you my morning ritual which I used to gain my financial independence – which took me a little under 8 years to achieve. This is what I did: Earning Capacity — How much do I want to earn in the next 12 months and what steps can I take to get there? Saving — What is my saving goals over the next 12 months and what plan must I take to reach them? Create a budget and strategise to identify opportunities. Investing — What future investment assets will I acquire to grow my wealth exponentially over time? I prefer Property but you may like other options. Mentor – Find a Mentor to invest in – whom has done it before and can accelerate my progress x5 or x10. Other — What are other money-related accomplishments that I want to make this year? Some popular ones include updating an estate plan, reviewing insurance for coverage and cost, and checking credit reports. Once you grasp this simple concept, you are well on your way to being financially free. To most people it seems unobtainable, but nothing could be further from the truth. If you enjoyed this article and would like to have a little extra advice or nudge in the right direction, I would be very happy to have a chat and get you in the right direction – without it costing you that ‘extra’ dollar.
