Welcome! Do you have dreams? No! You never think of dreams because of the burden of life! Life is hard! You have no time, no energy, and no money! I felt the same before I found the way to Financial Freedom. In this article I introduce “Financial Freedom” to you, how it relates to your dreams, how it makes your dreams come true!
Let’s check out what Financial Freedom is:
Financial Freedom does not only mean you’re free of debt. It’s also about lacking the stress that’s caused by financial worry. It means living the lifestyle and doing the work that you want to. It’s how you regain the power to choose! Here is an example from Tom:
Tom is on vacation on the beach side. He receives a message from the bank that $8,000 has been deposited into his account. After the beach, he plays golf the remainder of the day. Tomorrow, he will fly to San Francisco to attend an investor summit then will fly to Kenya to volunteer for a month.
You may wonder if Tom is retired. No! He’s in his 40s but not yet retired as he continues to work on his “projects”! Tom has full control of what he does for work, who he works with, when he goes to work, and where he goes to work.
He need not to worry about paychecks or money. No more of the rat race! He already has built a “nest egg” of assets to support his lifestyle.
Tom chooses the lifestyle he desires: no worry, no stress, and no need to work for money. Money works for him!
Ah! Tom is the Master of Financial Freedom (MFF)!
3. Financial Independence vs Financial Freedom
Financial Independence is a financial condition where you have achieved quite a lot of investment that is relatively safe, and the results are sufficient for us to live exactly within our present lifestyle.
Financial Freedom is a financial condition where you have achieved quite a lot of investment that is relatively safe. With your investments, you are confident you can make whatever you want, whenever you want, wherever you want, with anyone you want, as much and as long as you want forever.
For example, say your annual expenses are about $35,000 annually. If you have income or assets that generate up to $35,000 (after tax) annually, you can achieve financial independence. If you earn more, you are on the road to Financial Freedom.
Some will say they are interchangeable, but I suggest don’t bother arguing with those people. You will know the difference once you get there!
4. Why You Care about Financial Freedom?
Americans have freedom of thought, speech, expression, and religion! How about freedom of finance?
When you look into why you should care about Financial Freedom, you come back to basic human needs as detailed in Maslow’s Hierarchy of Needs. Abraham Maslow was a renowned psychologist who in 1943 put forward a “theory of human motivation.”
His work suggests our needs in a kind of hierarchy. At the bottom are our most immediate yet unfulfilling needs while at the top are our most important needs. Happiness comes from fulfilling those top, crucial needs, but we need to satisfy our lower hierarchy first to get to this point.
Maslow described the 5 levels of needs as the following:
- Physiological (food, water, air)
- Love and Belongingness
The first two levels are our basic needs. Our priority must always be to satisfy those first two physical needs because without them we cannot survive.
The third and fourth levels are about our psychological needs. The third level corresponds to the need for love, community and belonging. Next comes esteem, which is having a sense of self-worth and self-affection. This comes from liking who you are and understanding yourself with confidence.
The top or the fifth level is the fulfilment of all your needs. Here you find your calling, your innermost desires and then you work towards all that.
Once you achieve it, you become happy. You feel life has meaning, purpose, and direction or simply put, you can experience dreams!
Whether you are rich or poor, you only have 24 hours in a day. Sleep occupies 7 to 8 hours. You then spend time earning your living (as an employee or a freelancer). If you work 9 to 5 plus spend two hours in traffic, that means 10 out of 24 hours or about 40% of your day (some even spend 12 hours – 50%) gone!
It is not right! You have two days off in a weekend! Every weekend, you prepare for your next week work by shopping, washing, ironing your shirts, socializing, relaxing and recharging (if you can). Simple to say you use 5 days to trade for 2 days of “freedom”! Can’t escape the 40% rule!
Are you tiring of the everyday rat race?
Are you hating your job?
Are you working with people you don’t like?
Are you serving with people you don’t like?
Are you wearing clothes/uniforms you don’t want to wear every day?
Are you happy?
At 65, you can sit back and enjoy your retirement. When you retire, your body will be like a car with 150,000 miles (most cars finish around 200,000 miles). Statistically, our average lifespan goes into the 80s, so you may only have fifteen years to enjoy your life post-retirement!
More bad news comes from a survey stating 42% of American will be retire broke. I hope you are not one of them.
Financial Freedom will help you retire early without being broke! Escape the 40% rule to gain more time for building relationships and increasing your esteem. Then you can work towards your dreams with energy!
Yes! It is about your dreams! Now you can shout to the world “I do what I love to do because I want to!”
5. American Dream is Financial Freedom?
What is the relationship between the American Dream and Financial Freedom?
What is the American Dream?
The American Dream was first named in 1931 by James Truslow Adams in his book Epic of America. He describes “The American Dream” as a dream of a land in which life would be better, richer and fuller for everyone with opportunity for each individual according to his or her ability or achievement.
It is not a dream of motor cars and high wages merely but instead a dream of social order in which each man and each woman shall be able to attain the fullest stature of which they are innately capable. A dream in which others recognize them for what they are, regardless of the fortuitous circumstances of birth or position.
In 1963, Dr. Martin Luther King’s “I Have a Dream” speech also spoke of the American Dream of equal opportunity.
Forty years later, in 2003, President George W. Bush signed the American Dream Down Payment Act. This is the first time American Dream was linked to the opportunity of buying your own home!
Although each person has a different interpretation of American Dream, overall it is about having a better life and the opportunity for achievement, social order, and equality.
American Dream is dead?
In last few years, many people have seen no improvement in their life! They believe the American Dream no longer exists or is dead. If you want to have a better life, you may need better income.
Do we earn more than the previous generation or our parents? Research conducted by Opportunity Insights shows that it depends on when you born. If you born in the 1980s, your chance of achieving the American Dream is only 50%!
The New American Dream
As pointed out, achieving the American Dream gets more difficult depending on your circumstance. But research from Pew shows that 82% of Americans either achieve it or are on the way! We examine the top five “essentials”:
- Freedom of choice in how to live–77%
- Have a good family life–70%
- Retire comfortably–60%
- Make valuable contributions to community–48%
- Own a home / Have a successful career–43%
Now the American Dream gets a new context! Let’s check each out one-by-one:
Freedom of choice in how to live. Freedom means you have the choice of how to spend your time between work and other aspects of your life. To do this, more and more people don’t take a full time or 9 to 5 job but instead freelance or self-employ. They upgrade their quality of life with less money (assuming full-time jobs earn more).
Have a good family life. “Family comes first” is the new message.
Retire comfortably. From having the “choice in how to live” to retirement, you’ve completed the endgame of life! However, retiring may be a pipe dream for most Americans!
Make valuable contributions to community. I love this! Make your life better. Make other people’s life also better.
Own a home. At last, we come to your home! People now feel owning a home is not that essential because of the high price (Seattle house meridian price over $60,000!). A home may not be a good investment or become a bad debt; people want more mobility to find opportunity, etc.
From these essentials, the American Dream is shifting from materialism to quality of life, better living and equal opportunity.
American Dream is not given. You need to make it happen. Without money and time, it will not happen. Financial Freedom gives you both and makes your dreams come true!
6. Why you don’t Feel Good with Financial Freedom?
The context of Financial Freedom is about money. If you don’t feel good with money, it will not come to you and stay with you. You may have certain beliefs about money:
- Money is the root of all evil.
- Money can’t buy happiness.
- I can get by just fine without money.
- I can’t handle money.
- Success is a matter of luck, and I’m not lucky.
- I can’t make more than my parents did.
- If I were wealthy, I would always worry about people stealing from me.
Why do you feel so negative about money! Let’s dig in:
Money is the root of all evil. So it is bad! In our daily life, how do you use money? Shopping and paying the bills. Is money evil? When you rethink your position, “bad” is a result of how you use the money. If the money is used in a “bad” way, it is bad. If the money is used in the “good” way, it is good! Money is just a medium of exchange! That simple!
Money can’t buy happiness. Yes, I agree because you don’t need money to buy happiness! Referring to Marlow’s Pyramid, if the first two level are not fulfilled, how can you improve your quality of life? Money can solve certain problems that can cause stress and suck the joy out of your life.
When you find yourself achieving certain Financial Freedom, you can help your friends in need or donate to a charitable organization of your choice… It makes no difference who you give to. Now money is not evil. The act of giving will bring you a sense of great joy/happiness! Money is good and now can “buy” happiness!
For those of you with the negative thinking, it is not your fault! The negative “can’t and don’t” mind is your default protection mechanism!
If you seriously want to achieve Financial Freedom, you must first eliminate all subconscious blocks you have towards money. Can you change from “I can’t” to “I can”? The effect of doing so is tremendous! As you tell your mind you can, you make what you think can happen.
You must free your mind to create the wealth you deserve! Free your mind first!
Feel better now?
7. How to Achieve Financial Freedom
Let Dave, Tony and Robert show you how to achieve Financial Freedom:
Dave Ramsey’s Seven Steps to Achieve Financial Peace
He’s already educated 5 million people! They are…
- $1,000 cash in a beginner emergency fund
- Use the debt snowball to pay off all your debt but the house
- A fully funded emergency fund of 3 to 6 months of expenses
- Invest 15% of your household income into retirement
- Save for college
- Pay off your home early
- Build wealth and give generously
Dave hates debt. He suggests to audiences to focus on debt-free living, investments, and savings.
Tony Robbins’ Seven Steps to Achieve Financial Freedom
- Make the most important financial decision of your life.
- Become the insider: Know the rules before you get in the game.
- Make the game winnable
- Make the most important investment decision of your life
- Create a lifetime income plan
- Invest like the 1%
- Just Do It, enjoy It, and share It!
Tony is a great teacher! He teaches audiences the right mindset for money and how to create a “Money Machine” through investment.
Rich Dad Robert’s Three Kinds of Leverages to Achieve Financial Freedom
Make up a plan and use different leverages to build your wealth. Make money work harder!
Robert never suggests that people save for an investment! Instead he suggests people start a business and use “leverage” to gain Financial Freedom.
Master of Financial Freedom’s Three-Legged Stool
If you like to sit comfortably on a three-legged stool without wobbling, you need to make sure the 3 legs are a 100% match thus meaning they balance.
Likewise, if Financial Freedom is a 3 legs stool, you need to make sure the 3 legs – making money, managing money, and investing money — are a 100% match and thus balance.
You may start at saving (managing money), but without making money (input), how much can you save?
If you start from making money without properly managing money, just like water out of a leaking bucket your money will drain away!
If you start at investing money, how would you secure enough money/capital (making money) to fund the investment continously?
If you want to become a Master of Financial Freedom (MFF), you must first understand how the 3 legs interact.
What set of suggestions work best for you?
8. How Your Neighbors become Masters of Financial Freedom
In the 1996 book The Millionaire Next Door by Thomas Stanley and William Danko, there was a national scale research conducted from 1982 to 1996 about the size, geographic distribution, and financial lifestyles of millionaires in America.
Stanley travelled to each state to conduct focus group interviews and met over 500 millionaires face to face. What inspired his passion to conduct the research that he did was the enlightenment of “those who are confused and misinformed about what it means to be rich”?
During his research, Stanley found out that the studied millionaires did not live like millionaires! He said, “they don’t look like millionaires; they don’t dress like millionaires; they don’t eat like millionaires; they don’t act like millionaires—they don’t even have millionaire names!” Most Americans did and do not understand how millionaires live except in media and film.
Stanley’s findings countered the traditional image of millionaires. The interesting part is not that they are high income, well-educated and smart! No! The interesting part is that they may be one of your neighbors!
Thomas summarized six reasons why your neighbors may become millionaires:
- They live below their means. Being wealthy is less about how much you make and more about what you do with what you make. For example, if Tom spends $35,000 (in Section 2) and he doubles the income but keeps his current spending habits, he can save and grow his wealth faster!
- They spend a lot of time for financial budget and planning. To live below your means, you need do budgeting and manage expenses. Make it once, and stick to it.
- They don’t care to show off their wealth. Most Americans do not understand how millionaires live except in media and film. This leads to people spending “like a millionaire” and becoming poorer. Your millionaire neighbor doesn’t impulse buy. They always find the inexpensive option and never “act rich.”
- They know how to identify promising opportunities. They conduct thorough research into investment opportunities and pay for quality advice. They focus on long-term investments (six years or more).
- They choose occupations with growth opportunities. They are self-made business owners, but you don’t have to start a business to become a millionaire. The most important thing is choosing the right career—regardless of whether that means you work for yourself or someone else.
- They didn’t get financial help from their parents and they don’t provide financial help to their children. They are self-made millionaires and educate their kids in financial literacy.
Are you surprised by the facts that millionaires live not like millionaires but just like your neighbors? The above six reasons are why they became Masters of Financial Freedom (MFF). If your neighbors can, why cannot you?
9. What Hold You Back to Achieve Financial Freedom?
Save and invest! Simple and easy! But according to the 2016 survey from The Federal Reserve Board, only about 11% of households have the net worth (Asset–liability) of over 1 million.
Why only 11% not 50%!? If you earn $50,000 (before taxes), then how much and how long do you need to become a millionaire? If you invest $800 per month with an interest rate 5%, it’ll take about 30 years to reach $1.1 million. Can you invest $800 per month for 30 years?
If you search for personal finance or Financial Freedom related books, most just suggest you X steps to save and invest for 30 years or until you retire — same as the pieces of advice we mention in a previous section. Seems easy, but why do most people fail?
You may wonder how those people do it. This is the same question I asked when I started my Financial Freedom journey while in deep debt. I tried saving money, but after a few months, I gave up!
If you are starting from zero or even negative (with debt), how can you start this 30 years’ journey and hope you can achieve your Financial Freedom goal? Like with fitness and losing weight, most give up within 3 months! 30 years is 3,600 months! 1200 times more!
That is why only 11% people can achieve Financial Freedom. It is hard, so not everyone can get it, but it is also possible and easier if you choose the right path (not a shortcut).
Why do people give up? Tony Robbin has some clues:
“I always say 80% of success in life is psychology and 20% is mechanics,” Tony Robbins
Yes! Saving and investments are the actions (mechanics). Your mind (psychology) drive those actions! That is the MOST difficult part!
Here are the top 5 reasons for failures:
- Meaningless and unrealistic goal
You may hear “think big.” Say you want to become a billionaire in 5 years and get Financial Freedom? What does that mean for you and is it achievable? Your goal should be meaningful, motivational, and S.M.A.R.T (Specific, Measurable, Attainable, Relevant, Time-Based).
- No plan no commitment
Once you set the goal, do you have a plan to achieve the goal? Or just hope it will happen? Without a plan, you don’t know what resources to commit to making it happen.
- No timeline and checkpoints
Now you have a plan. Do you know when and what should happen at certain times (a timeline and checkpoint)? Like with a project, if you have no timeline, you cannot measure the progress, and then you’ll never be able to achieve the goal.
- No priorities and excuses
I understand that daily living may hold you back. You are tired and don’t have time. But not even 30 minutes of your day? No! You don’t set the right priorities. People will squeeze time out of their day to Facebook, watch television, etc.! Rethink your priorities!
- Give-up early
In the journey to Financial Freedom, you may experience setbacks, feel frustrated, and give up. The wall that protects us from disappointment also separates us from our dreams.
Everyone fails! When toddlers learn to walk, they keep trying after they fall down until they’re able to walk or even run! You will too! No one can stop you. It’s within you. Do you have the desire to make it happen? Don’t give up!
10. Think to Become a Master of Financial Freedom
One day you meet a genie. The genie offers to you the fulfillment of ten dreams if you retire now! What will you tell genie?
Napoleon Hill’s 1937 Think and Grow Rich inspired me. Your dreams start from your thoughts. If you never think of it, it never will happen. Write your list of 10 dreams now!
According to research, people who just think about their goals have a 43% probability of achieving them. People who not only think about their goals but also write their goals down have a 61% probability of achieving them. Finally, people who wrote their goals, create action plans and check their progress weekly increase their chances of success to 76%!
The ten-dream list should become your goal, your vision, and your lighthouse. Visualize how your dream list can come true. Keep motivated. Your action plan is to make money, manage money, and invest money and that will lead you to the dreamland!
Let’s do a quick test! If I ask “Are you able to become Master of Financial Freedom?,” what’s your answer?
- I can’t, I don’t; I wish I could…
- I should be able to…
- I am…
If your answer is from either item 1 or 2, this means you have not made up your mine yet! Why has this happened? It your subconscious mind.
You have not properly programmed your subconscious mind by telling it what you want to achieve. Starting today, say a few times per day to yourself “I am a Master of Financial Freedom and able to make my dreams come true.” Visualize and feel your dreams come true to keep motivated.
Through this process, your subconscious mind will believe you can and align with your intentions instead of counter it.
Then set your S.M.A.R.T. goals (refer to previous section) and track your progress to make your dreams happen!
11. My Top Ten Financial Freedom Quotes
Robert named the “three essential processes” that are driven by your mentality when you have the right mindset. “Emotional” refers to the passion and desire you have to achieve your financial goals. “Educational process” refers to your need to keep learning.
Robert suggests the three-legs method to achieving Financial Freedom: earning income (make money), convert income (mange money), and then receiving passive income (invest money). The “ability or skill” to do so comes from the “educational process” mentioned in quote 1.
Dave suggests aligning with Robert’s educational process to gain the know-how and then taking action where persistence is key.
This is the mindset you need to be a Master of Financial Freedom. You can gain the power to choose your perspective.
Most of us are slaves to money, but you can become a Master of Financial Freedom.
Same as Tony’s suggestion: you either become a master or slave.
Robert addresses money management. The gold nugget here is “how much money you keep” and then can invest.
Warren suggests you pay yourself first (manage money) and then invest the money.
Manage your money by knowing where it comes from (make money), how to spend it (mange money), and how much you can use for investing (invest money).
Most of us depend on the single income in the form of a paycheck. Warren suggests creating multiple streams of incomes. One way is through investment to build a passive portfolio income.
Ah! These 10 quotes already spill out the secrets to achieve Financial Freedom. The remaining parts are learning and taking action…
12. Staring your Financial Freedom Journey
Financial Freedom does not only mean you are free of debt. It about lessening the stress that is caused by worry, living a lifestyle, working the you want to, retiring early without being broke, and gaining the power to choose.
Whether you have the American Dream or your own dream list, Financial Fdoreedom gives you the ability to make your dreams come true!
Gurus like Dave, Robert and Tony Robbins, advice like my three-legged stools approach, and the insight from Millionaires Next Door are your ticket to Financial Freedom.
In your journey to Financial Freedom, you may experience setback, feel frustrated, and give up. The wall that protects us from a disappointment also separates us from our dreams. Starting today, say a few times per day to yourself “I am a Master of Financial Freedom and able to make my dreams come true”.
Now you have learned the secrets to becoming a millionaire. You know why people succeed and fail, what holds you back, and how to get started. It’s now your turn. Make your dreams come true. Become a Master of Financial Freedom (MFF)!