The financial independence guide
What if I told you that there is a step by step system that you can follow that will guarantee your financial independence, would you follow it?
This guide is designed to make it as easy as possible for someone who is brand new to the concept of financial time freedom or financial independence to reach their dreams and goals.
In this guide I will go through the steps necessary to take, and live by to reach your financial goals and be able to spend YOUR time on YOUR terms.
This is NOT a one day, one time read. Read it as many times as you need and don’t rush it!
May I introduce the steps to financial independence:
- Start with WHY
- Research and programming
- Continuing motivation
- Re-invest and expand
- Is financial independence a way to happiness?
Start with WHY
“Would you tell me, please, what way I should go from here?”
“That depends a good deal on where you want to get to,” said the Cat.
“I don´t really care about where” said Alice.
“Then it doesn’t matter which way you go” said the Cat.
-Alice’s Adventures in wonderland by Lewis Carroll
So what can we learn from this conversation?
Yes, if we don’t have a goal (destination) with where we want to go, it doesn’t matter what way we choose, because we will never know when we get there anyway.
Think about if you come to a city where you have never been before but you know the place you want to go to. The first thing you could do is go find a map of the city. Once you start walking you know in what direction you should go. But then there might be some buildings and road blocks in the way of your path so you have to take a different way, maybe you get a bit lost but you know what?
Since you know where you’re going, your destination, you can always ask someone in the street for the way. And you can always find a new map. If you have a clear destination that you are going to, it´s just about finding the path there. On the other hand, if it´s not clear where you are going (written down exactly, so you won’t forget it), you might as well just sit down where you are right now because nothing you do can get you any closer to the destination. Just like in Alice’s case.
One thing that many people don’t do, that is at least as important to do as finding your WHY, is the simple thing of writing your Goal/Dream down. When you write it down, make it as clear as possible preferably including pictures. I’m telling you, this is important, just like many others have probably told you before, but you didn’t do it back then, did you?
Now is the time to find your “Dream destination” for your life, and paint it up, with words, pictures maybe even videos.
Have you ever gone out shopping for groceries and forgot some of the things that you should have bought, because you didn´t make a list before you went to the store?
Well, that’s what happens, and the same goes with your destination. If you don’t write down the address and look at it daily, how will you be able to remember it?
Chances are that you will forget and then you’re lost just like Alice.
Finding the right WHY
This part can sometimes be a bit tricky. Most people never think about what they really want out of life because they have already decided unconsciously, that they can never get it. Many people that I talk to have such small “dreams” that they could basically get them in a couple of months if they saved a little. That’s not a dream! That is just some lame ass excuse so that you don’t have to suffer so much in the process of getting it. To find what you really want, you have to be able to believe that it is actually possible for you, because it is.
You might not see it right now, but you will see it eventually. Just imagine a life where time and money didn’t matter, what would you do? Where would you be? Who would you be with? How would you feel? What would your life look like?
Now you should take some time and really think about this, write it down. Write down all the things that you want out of life, everything that you can think of.
Calculating the price of your dreams
Once you know what it is that you really want, it’s time to calculate the price of your dreams. This could be a bit tricky in some cases depending on what your dreams are. To some people the dream might be to travel the world and live life from day to day, to others they might want a private Jet, a yacht and a couple of Ferraris in the garage. Does your dream need you to have a lot of free time, a lot of money to spend or a bit of both? How much money do you need to earn per month to get to your dream goals?
The how, is what kind of vehicle/vehicles you should use to take you from where you are today to your destination/dream/goal.
To get this we first need to know how the money flows in our world, the different ways to get income and what the difference is between an asset and a liability.
If you haven’t downloaded my Free mini-eBook yet, now is the time!
There you will get a more in depth walk-through of this next part.
Active income is what most of the population rely on, about 95% of us. Active incomes are earned from performance or simply exchanging time for money, we have to be active to get paid.
Everyone knows this way of making money because that is what we are taught is the way to make a living. Schools are basically factories that produce workers, we all are in some ways brainwashed or programmed to believe this is the only way to live. Active income always has limits, since we are always exchanging effort or time for money and time is not limited.
I’m not saying that some active income earners don’t make a lot of money, there are those that make insane amounts of money. High active income usually comes with a price like 24 hour on call duty, a lot of responsibilities and huge pressure. A lot of money but no free time to spend it.
Active income is what all jobs bring, including the high paying ones like managers for corporations, Golf pros, athletes etc.
Active income also includes small business owners that sell their effort/time for money in different ways.
Passive income or residual income is the hidden little gem that most people never learned or think about. Passive income is not so commonly known because it often comes with something called delayed gratification, and we humans really hate that. Everything in today’s society is so speeded up and people don’t have patience for anything anymore. We can see this everywhere! 24 hour delivery when you order stuff, express mail, fast food, credit cards that allow us to buy things right now and pay for them later, borrowing money from the bank to buy a car instead of saving up for one, some people even buy vacations on credit, and the list goes on. We are so used to not having to wait for things that it’s hard to be patient enough to wait for delayed gratification.
Passive income is another word for automated income, which means that there is an automated process that brings the income for you. Sometimes the process might stop for a little while and you maybe have to fix some problem that occurred but passive income is most times totally effortless once the process of creating them are in place.
Passive income is the cornerstone of getting financially independent because once your passive incomes gets higher than your active incomes you don’t have to work for active incomes anymore, if you don’t want to. Then you have an automated system that allows you to get your salary’s worth (or more), while doing everything that you love to do.
What’s your vehicle?
There are thousands of ways to create passive income. And I have written about some of them right here:
What way/ways you choose is up to you but you should know this. There are no such thing as a free lunch, nothing will come by magic. There will be struggles, mistakes, loses, critics, problems and you will have to be okay with delayed gratification. Financial independence is not a sprint, it’s a marathon. What you can do is to choose if you want to invest with your time, you money or a bit of both. But just have in mind that the important thing is that you want to get paid many times for the work that you do or asset that you invest in.
And when it comes to investing, the best investment that you can make is in your own education. Invest time and money to learn new things that will develop your brain into thinking in different ways.
I would recommend to start using the several thousand year old methods of “Paying yourself first”, as I wrote about in the article pay yourself first.
When I’m talking about education, it’s not about going to school or a university. That kind of education won’t take you very far when it comes to financial independence. What I mean is the education that you need to be successful in reaching your goals and dreams. The kind of education that you need to get your brain to start working out ways to create passive income for you. The more you learn, and the more stories you hear, the more productive will your brain becomes in finding solutions to this.
Therefor it is important that you constantly feed yourself with new knowledge so that your brain has enough fuel and tools to figure out ways you can use to get where you want to go. Reading every day, going to seminars, watching educational videos, playing the Cash Flow game (Free online game) or other activities that help us grow our financial/entrepreneurial knowledge. We need to grow into the person we want to become, that’s the thing. Lisa at the supermarket might not own a yacht and her dream home right now BUT, Lisa can always develop into a person that owns a yacht and her dream home. Just like all of us can, despite what most people might think, very few people are born rich and successful. If you want to become successful in reaching your dreams, you have to grow into that person. That will be done with education, action and a never giving up attitude.
So I would suggest making a plan for your education and sticking to it. Reading personal development or financial books, attending investment seminars, spending time with people that are more successful than yourself, reading financial independence blogs etc. are all ways to educate yourself.
Committing to your education is important. Making it a habit to do a minimum every day is a good way to start.
Research shows that a habit can be developed in about 3 weeks, so if you force yourself for the first 21 days, it will be much easier to keep going after that.
Everything depends on how important your dreams are to you but committing to reading 30 min per day is a great start. Think about how much new knowledge you could get in 180 hours of constant reading, over one year. Never underestimate what you can do with new knowledge and a winning attitude.
Research and programming
Just like all the other steps this is really important because every day we get programmed in different ways whether we like it or not. The programming is an ongoing process from the day we are born until the day we die. We get programmed from experiences, the people around us, what we see and feel, basically everything around us programs us in some way. So with this knowledge, we can change some of the things that program us and develop new skills, change mindset and make it a guarantee that we will reach our goals.
In the post – How to program yourself for success I go through how this process works and the easiest, most powerful ways to do it.
Short explanation: Since everything around us programs us and changes us over time, we can use this to our advantage. Let’s say that you want to be successful in something, maybe real estate investing. Then the best thing you can do to learn how to do it successfully is the spend time with successful real estate investors. That way you will be programmed by the behavior of the people you want to be like. The tricky thing is that you might not know any people in the field that you want to be successful in. That’s where the habit research comes in. We can always do research, read books and learn what the successful people in every field are doing, how they are doing, what skills that are necessary and other important ingredients that they used to get to where they are today.
We can basically just find the right drivers, then download them and install them into ourselves.
Most people only read this part, say that they understand it, then don’t do it (Maybe think that it’s bullshit?). I’m telling you now, this is one of the most important parts, this is something that you need to look into and use if you want to become successful. DO NOT look away from this part!
This is the part where you take your new knowledge, use your programming and affirmations, decide what vehicle/vehicles you want to use and START working against your goals.
Most people never get to this step because they jump ahead on the steps before this. That sentence may sound a bit strange but of course I’m not talking about reading this guide. What I mean is that most people don’t DO the steps before this one and because of that they don’t have the fuel to ignite the engine. What we want to create is the eternity (money) machine and the process of building it is kind of like baking a cake, if you forget some ingredients there will be no cake. Of course, some ingredients won’t make as huge difference as others but if we follow the receipt, we can be sure to get it right and delicious.
Over the past ten years I have heard countless stories from people I’ve met that say things like “I should have bought an apartment building” or “I should have started that business”. So many people are saying things, and have good ideas but then they never START, they never get to that point. Now we can ask ourselves the question, why is that?
I live in the full belief that they have missed out on some of the ingredients here, so they never get to the point where they believe that they can do the things that they want to do. You see, YOU have to believe that YOU can do it. If you don’t believe you can do it, then you can’t. AND the belief that you can do it comes from following the steps. When you can see it for yourself you will start to believe it and when you believe it, you can do it. Financial independence is not so hard, tens of millions of people are there today and have gotten there in different ways. YOU deserve to get financially independent!
Bad ingredients – Re-start
Sometimes when we are baking a cake, we might get some bad ingredients, shit happens. The exact same thing might happens on the journey financial independence and your dreams as well. So what can we do when things like this happens?
The answer is simple: LEARN and move on.
It’s from mistakes that we learn, just like a baby starting to walk for the first time it falls many times before it can walk properly. We shall not be afraid to fall, that’s part of the process.
Some people start their journey to financial independence then when they make their first mistake, they just give up and say it doesn’t work. What do you mean it doesn’t work? Other people are financially independent, and successful in all different fields. You can do it to, everyone makes mistakes when they are starting to learn something new.
To keep yourself fired up about your dreams and that you really can reach them we need some tools to keep ourselves motivated, and here I just need to quote Zig Ziglar.
Motivation won’t last forever but neither does bathing, that’s why we recommend it daily
Just like all the other steps, motivation sure is important on your journey towards financial independence. For us to be able to do something extra, learn something new or invest our money instead of spending it right away, we need to be motivated.
So what motivates you?
What makes your brain start working, your heart start pounding and your energy levels to rise?
What motivates us is different for everyone but one thing is sure, we all have things that motivate us. Try with pictures, poems, audio tapes, music, videos or reminders of experiences that you are emotionally attached to.
I love listening to motivational speakers and watching recordings of motivational seminars. I also get motivated just by looking through weekly passive incomes that where created years ago but are still coming today, even if they are just 10 € some weeks it’s still very motivating that we can do something today that will bring income for years and years.
Find what motivates you and use it every day!
Re-invest and expand
This will be the accelerator on your way to financial Independence. Once you start to create some extra income streams, don’t just spend the money. The extra income can and should be used to invest in yourself, income producing assets, education and other things that will move you closer to your dreams and goals.
It is very important to always have a destination clear for your incomes and capital. If you don’t have that, temptations will swoop in and you end up buying a new car, some new cool gadgets or something else (been there done that). If you have a goal with your savings account, like investing in a rental unit or buying an education that you want to go, your unconscious mind will help to stop you from spending it on stuff that you don’t really need.
Later on you can let the passive income from your assets buy your new car, vacations, house, gadgets, fancy dinner or whatever it is that you like to spend money on.
Learn how you can use financial leverage to multiply your investment income
So, are you ready to start your journey towards financial independence?
Is financial independence a way to happiness?
I just want to end this all up with one thing. This guide will help you to reach financial independence if YOU want to get it. But what is the bottom line for everything in human life really?
We just want to be HAPPY, right?
Everything we do comes back to this point in some way, we just want to be happy and live a happy life. We strive for something better because we believe that it will make us happier. Financial independence might make you happier and i sure hope it will 🙂
But before you do anything else I would like for you to read this article about how to get more happiness in life, believe me, it’s really great!
If you have any questions please comment below.
If you like this guide, please share it with others 🙂