How to Become Financially Free?
Many people ask me this question. In fact, wherever I go, people ask me this question. Everyone wants to be financially independent and free but no one wants to sacrifice.
Well, I am talking about sacrificing high consumption. People are hyper consumers. If you want to become financially free then you have to plan and sacrifice today. If you Sacrifice today, you will become financially free tomorrow.
Each dollar you spend is furthermore eaten up by a tax man. If you want to purchase a car worth $ 68,000 then you have to earn $ 100,000. That’s because the tax man will eat that major portion of your money first and you have to buy consumer items with the rest of the money.
Rich and wealthy people (Millionaires) tend to think like this and that’s why they buy a second hand car which is 2 – 3 years old so that someone else has already taken a loss. Just tell me this, Is Luxurious Car more important than the Retirement Plan? Are you going to live in a car after your retirement or is your car going to give you dividends and cashflow after your retirement?
Then why not to plan your Retirement and Financial Future First? Smart people plan for their financial future and retirement. First of all, they build sufficient fund to retire and later on they go for luxurious items.
The only way of becoming Financially free is by starting to invest early. The earlier you start, the more wealth you will be able to accumulate and thus you will become more financially free.
Investment Planning and Wealth Accumulation
There is a strong positive correlation between Investment Planning and Wealth Accumulation. Rich and Wealthy people spend more time behind planning their Investments in comparison to everyone else.
Many people argue that the middle class and poor do not have any money to invest and manage and that’s why they don’t give much time to investment planning. But well, this is not true.
People who are Middle class today by Net Worth may allocate more time behind Investment planning if they are on the path of becoming rich. In short people who are rich or on the path of becoming rich allocate more time behind planning their investments than everyone else.
What do most of the people do after going home from their jobs? Well, most of the people will sit in front of their TV and become a couch potato after coming home. They call it relaxation. They argue that they do this because they are tired of a full day of work.
To those people, I want to tell you this, When I am writing this article, a lot of times it is after my actual job, or when I should be relaxing or going out. Yet, I am still writing this article to educate you.
Now I hope you can understand the importance of what I am saying. There should be no excuses when it comes to planning your investments. When the time comes, you cannot tell yourself that you are not wealthy because you had to attend social events and parties during your younger life and that’s why you could not plan any Investments.
When it comes to Money, Either you can be Rich or Poor. There is no excuse for this. So Plan your Investments right now.
Small Expenses Become Big Expenses Over the Time
Do You know that small daily expenses can become huge expenses over a period of long time. If you smoke 2 packs of cigarettes daily for 40 years and invest the same amount of money in the stock market Index fund than after 40 years this amount would be $ 100,000.
And what if you use your cigarette money to purchase the shares of Tobacco Company? Say for Example, Philip Morris. Rather than consuming the tobacco products of Philip Morris, what happens if you buy shares of this company from the same amount of money?
And what if you re-invest the dividends for years? Well, at the end of 30-35 years, your tobacco portfolio would have become over $ 2 Million.
This is just an example to show you that a small change in your spending habits can transform into huge wealth over the time.
This is just the one example. There are several examples like this. We don’t give a lot of importance to these small daily expenses. But these small daily expenses can eat a huge portion of your wealth in the long run.
When it comes to cutting down these expenses, most of the people only focus on big expenses. That’s because they think that they don’t need to take care of small daily expenses. But in reality, these daily small expenses are more dangerous to your long term financial health than those one time big expenses.