my 9-step formula to reach financial freedom
TRANSCRIPT
MY 9-STEP FORMULA TO REACH FINANCIAL FREEDOM
BEFORE WE START DISCLAIMER
• TRACK EXPENSES & INCOME
• KNOW YOUR NET WORTH
• LEARN HOW MONEY WORKS
• SOME FORM OF DEMOCRACY & FREE MARKET ECONOMY (PRIVATE PROPERTY, CAPITALISM, AND INDIVIDUAL RIGHTS)
WEALTH BUILDING PREREQUISITES
• ETHICAL WEALTH CREATION IS POSSIBLE
• CREATING WEALTH IS GOOD
• YOU ARE ABLE TO CREATE WEALTH
MINDSET PREREQUISITES
• MY DESIRED LIFESTYLE’S MONTHLY EXPENSES ARE COVERED BY A SOURCE OF PASSIVE OR SEMI-PASSIVE INCOME.
• I HAVE A CONSTANT FEELING OF SAFETY & EASE, BECAUSE WHATEVER HAPPENS TO ME OR MY FAMILY, I CAN SOLVE IT.
• I WORK BECAUSE I WANT TO, NOT BECAUSE I HAVE TO, ON PROJECTS THAT BRING ME JOY AND/OR ARE A NET-POSITIVE FOR SOCIETY.
• ULTIMATELY, I ENJOY LIFE. I WANT TO CREATE THE BEST POSSIBLE LIFESTYLE FOR MYSELF AND FOR MY FAMILY.
MY DEFINITION OF FINANCIAL FREEDOM
HOW IT STARTED
I COMMITTED TO MAKING IT REAL
IN 10 YEARS OR LESS
FIND YOUR MONTHLY LIFESTYLE FREEDOM NUMBER (VISION OR TARGET)
STEP 1
HABITS
• Track expenses daily & rate them emotionally • Analyse the emotions & drives behind the purchases • Track milestones monthly
LESSONS LEARNED
• Self-awareness & emotional mastery are 80% of the game • The target acts as a decision-making framework • Milestones help with momentum & progress • Knowing what’s ‘enough’ is freeing • Clarity of the target strengthens the motivation
VS
I KNOW MY MONTHLY LIFESTYLE = $ XXX ( MENTALLY & EMOTIONALLY )
I THINK MY MONTHLY LIFESTYLE = $ XXX
BUILD A LIFESTYLE SAVINGS ACCOUNT
STEP 2
HABITS
• Add funds each month. Goal: 6-months of lifestyle needs.
LESSONS LEARNED
• Feeling safe & secure helps with creativity & going outside your comfort zone.
• This helped me ask for raises & quit full-time employment.
BUILD A HEALTH ACCOUNT
STEP 3
HABITS
• Add funds each month. Goal: what you feel safe with. • Do medical & dental checkups yearly.
LESSONS LEARNED
• Investing in my health made me happier & more productive.
• Productivity increases income.
LEARN & MANAGE YOUR MONEY PROPERLY
STEP 4
HABITS
• Extensively read & learn about how money works • Budget & prioritise at the start of the month • Analyse spendings at the end of the month • Redistribute any extra money to my other goals
LESSONS LEARNED
• Money is the greatest story ever told • The road to financial freedom is well known • Budgeting & planing enrich your life • I can have everything that fulfils me. Sequentially.
SAVE AGGRESSIVELY
STEP 5
HABITS
• Save 10-30% or more each month. • Pay myself first at the start of the month. • Store it into an account defined only for investments.
LESSONS LEARNED
• Save in order to invest in cash flow generating assets. • Geographical arbitrage is the ultimate tool if you want to do it fast. • Being focused on the vision & self-awareness are key. • People who live far below their means have a level of security that those
who are constantly busy upgrading their lifestyle cannot understand.
INCREASE YOUR INCOME
STEP 6
HABITS • Work daily on an item that brings or can generate income • Consistently search for ways to increase income • Track income sources • Look at my bank account weekly • Talk to people who make money Talk to people who make money.•
LESSONS LEARNED
• Value creation is the key to all major income increases • There is no limit to how much I can earn • Sell results not your time • Ask for what you think you are worth • Rejection is the starting point for improvements
CUT NON-ESSENTIAL SPENDING & OPTIMIZE FOR FULFILMENT
STEP 7
HABITS
• Save 60% or more of earned income • Optimize spendings for what fulfils you
LESSONS LEARNED
• Don’t grow lifestyle at the same rate with earned income • Play wealth games not status games • If you cannot afford to lose it you cannot afford it • I can spend guilt-free on the things that fulfil me • Always negotiate on the big items
INVEST IN ASSETS THAT GENERATE CASH FLOW
STEP 8
HABITS
• Learn constantly about assets • Invest most of the earned income into assets that
generate cash flow
LESSONS LEARNED
• Earned income = Life exchanged for it • Cash flow generating assets vs liabilities • Knowledge reduces risks but certainty is impossible • Aim to reduce the obvious mistakes • Create assets that buy other cash flow generating assets
CONTINUOUS ITERATION
STEP 9
PERSONAL GOLDEN RULE: MAKE + KEEP + INVEST IN ASSETS REPEAT UNTIL YOUR REACH YOUR TARGET
1. Find Your Monthly Lifestyle Freedom Number 2. Build A Lifestyle Savings Account 3. Build A Health Account 4. Learn & Manage Your Money Properly 5. Save Aggressively 6. Increase Your Income 7. Cut Non-Essential Spending & Optimize For Fulfilment 8. Invest In Assets That Generate Cash Flow 9. Continuous Iteration
ITERATIVE PROCESS
TRIAL & ERROR | LEARN & IMPROVE | REAL-WORLD RESULTS
HABITS
• Consistently work on the action plan. • Impatient with actions. Patient with results.
LESSONS LEARNED
• Expand your time horizon. Don't expect it to happen overnight, but have a sense of urgency.
• At first you earn gradually, then exponentially. • Living by example influences others.
SUPER SIMPLE STRATEGY EXAMPLE
• Your monthly lifestyle number = $1000. • No bad dept to pay off. • Add 20% buffer for unforeseen events. • Main Target = $1200/mo. • Strategy. You need an asset that generates this passively or
semi-passively and you are financially free.
Asset Income > Monthly Lifestyle
Being financially free means having options & control over your time
REAL ESTATE EXAMPLE
• Your target is $1200/mo. You learn that a rental property generates $400/mo pure profit and costs ~$50k to buy.
• You need 3 properties. Total: $150k
• Target is $1200/mo. Yearly: ~$14k • You need $350K invested in an Index Fund. Average returns: 7-10%/
year. You can withdraw ~4% and never run out.
INDEX FUND EXAMPLE
BUSINESS EXAMPLE • Target is $1200/mo. You are an owner & built an automated business. • You pay yourself 10% monthly dividends. • You need a business that generates 12K/mo in revenue.
THE PERSON WHO FIRST WROTE DOWN THIS PLAN IS NOT THE SAME PERSON WHO ACHIEVED IT
MAIN LESSON LEARNED
“WHAT YOU GET BY ACHIEVING YOUR GOALS IS NOT AS IMPORTANT AS WHAT
YOU BECOME BY ACHIEVING YOUR GOALS.”
~ HENRY DAVID THOREAU
THERE’S NO SECRET
ACHIEVEMENT = CLARITY OF AIM x CONSISTENCY x PATIENCE
LITTLE BY LITTLE OVER TIME IT TURNS INTO A MOUNTAIN
RESOURCES
• Money by Yuval Noah Harari • Secrets Of The Millionaire Mind by T. Harv Eker • Rich Dad Poor Dad by Robert T. Kiyosaki • The Psychology of Money by Morgan Housel • The Richest Man in Babylon by George Clason • The Millionaire Next Door by Thomas J. Stanley • Your Money or Your Life by Vicki Robin • Early Retirement Extreme by Jacob Lund Fisker • Money Master the Game by Tony Robbins • I Will Teach You to Be Rich by Ramit Sethi • The Simple Path to Wealth by J L Collins
