It is miserable not to have money, and I have been there. Sharing a room of 100 square feet with a roommate and counting every penny to make sure I can make it before the end of the month has taught me a great deal.
I am always very vigilant about finances and at the end of the month, I know what it means to cut back on your meals to make the bill.
I didn’t care about making a lot of money back when I was a freshman, so I wanted to get out of that desperate financial situation, so I had to make a lot of sacrifices. I did not concentrate on my college and every day I had to work for hours to be able to pay the rent. So, my only dream was that after I graduate, I would have the skills necessary to find a career that would give me the luxury of free time.
I am going to use the opportunity to build a company or expertise that will improve my profits more. It seemed like a rational plan; it wasn’t long enough, though, that I knew it wasn’t as good as I thought it was and I wasn’t prepared to wait a few years to graduate and then find out what to do. I agreed, however, to do everything I could. I’ve been trying to start an online company, moving into real estate, joining a little startup. And I’ve done it after years of determination and hard work.
Trust me if you don’t have to think about finances! Changes of life. You should not base your every decision on how much it costs anymore. Suddenly, you’re going to have the ability to do things that matter to you, that is important to you. You’re going to have the liberty to take a break from anything and not think about the rent. To do so, you don’t have to be a billionaire.
This needs even less than that. Whether you are just starting out or even on the road to doing that, I want to share with you some simple steps to achieving financial independence.
Number 1 – Keep confident about cashflow How effective are you at handling the cashflow? Ultimately, what dictates how financially efficient you are going to be? You would definitely know what cash flow is if you have taken accounting courses.
But they teach that in college, companies have cash flow; but in life, we struggle with the same problem. We need to control currency inflows and outflows. You have to make sure that there is more money coming in than going out to keep the company solvent, or at least the amount of money that leaves the business is equal to the amount it earns.
No matter how much debt or expenditures the corporation has, it does not matter. It’s a healthy company as long as it makes more revenue than it spends. Personal finance functions in precisely the same manner. It doesn’t matter how much debt you have, mortgage, student loans, car rental, as long as you’re optimistic about your cash flow.
Number 2. This error is basically one of the key reasons that many persons are failing financially. Do not take undue obligations. They may be positive about cash flow, but then they take on a financial burden that they can’t afford.
Not only am I talking about getting a brand new car rental or credit card debt, but maybe they’re getting into an extravagant relationship or beginning a family. And don’t get me wrong! I am not suggesting that it is a bad thing to start a family. So here’s the equation.
Let’s just assume that the cash flow is balanced. You start a family, raise a child, increase your expenses, get a second job or get a promotion, and you also increase your profits. Not bad, right? But your costs often escalate as you start becoming older, and at some point outweigh your revenue, so you become negative in cash flow, and for the remainder of your life, you can work hard to make up with your negative cash flow, and that’s known as generational poverty.
You’re getting to the point where you don’t have the resources to create the money that’s going to get you out of poverty.
Most people will not become financially stable nowadays, not because they don’t work hard, but rather because they put themselves in a position where they have no other choice but to spend every penny they receive. So, to still keep your cash flow positive, you need to do.
Number 3. Constructing an investment portfolio Around 4K years ago in an ancient Mesopotamian kingdom. There was a man called Arkad who was poor as if he were very poor.
He worked hard to put food on the table to avoid poverty; but when he got the reward for his service, he put only a little food on the table and borrowed the remainder of the money to a shield manufacturer, who then paid interest on the loan.
He lent it to another shield builder instead of investing the interest to increase his quality of life, thereby rising his fortune even further. His fortune became so great after repeating this method for several years that he did not have to work again, and the richest man in that city, Babylon, ended up there. To lend him your capital, you can not find a shield marker today, but there are obviously other instruments that you can use to develop wealth.
Only remember this. The S&p500 is a benchmark tracking the output of the top 500 firms in the US. It has traditionally had an overall return rate of about 10 percent. This means that if you set away and spend just $1K in the SP500 per month when you are 20, you will have almost $2 million ($1,991,377) by the time you get 50. And it was just a thousand bucks.
Imagine that if you raise that amount to 2Kor 3K or even 5K a year as your salary increases, you would end up with tenths of millions of dollars. That’s how you keep the cash flow strong at all times.
But before we go forward, there’s a little disclaimer here — we’re not financial advisors, and we shouldn’t consider something we say on this channel as financial advice. Before making some investment, you can do your own analysis.
Number 4. Do not go ahead and put all your money into the stock market because trading is not all sunshine and rainbows. Be liquid. In June 2007, if you were to bring in a thousand dollars in the S&P500 and plan to pull it a year later because you had an emergency.
How much do you think you would have made for a thousand dollars like that? I’m sorry to say this, but I’m 50 percent cynical. Only to win your money back, you’d have to wait a further five years (2013). And that is how it operates in the business. Every day, it jumps up and down.
A disaster hits occasionally, and it might take a couple of years to heal. That’s why you should be in business for the long term to rip the money if you are concerned about the stock market. But you need to be liquid to really believe that you are financially independent.
You’re not concerned when something goes wrong. You got shot, the market is turning south, there’s a slump around the corner, no problem, you’ve got yourself secured, you’ve got enough cash for at least six months to not think about the bills.
Number 5. Have a plan All the stuff we talked about financial freedom sounds great, so how do you get the capital on earth to do all that? The only possible solution appears to be winning the lottery.
You should try it, of course, and good luck! However you have another option, schedule your spendings! In one single month, you’re not going to create a six-month cash buffer. In a couple of months, you’re not going to be developing a million-dollar investment portfolio. And guess what?! What?! You don’t have to do that! The real destination isn’t financial freedom.
The purpose is not simply to make enough money and to retire for good. Instead, you’re not going to focus your every decision on how much it costs to put yourself in a position. Only because it pays marginally more, you are not going to consider the new job.
You will probably continue to work, but now, you will work on topics that matter most to you. Hopefully, with fewer money concerns, your life is going to get a bit more colorful. I hope this post has been appreciated by you guys. If you did, give your thumbs up for it.
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