Here is some straight talk for us all. We will never save enough or make enough to conquer financial freedom. Most of us will make average middle class salaries. Sure, a very small percentage of athletes, movies stars and tech titans will make more money than ever imagined. But most us will need to deploy smart strategies to build enough wealth to be able to achieve financial freedom. The good news is that it is possible, we are not locked into a lifelong sentence of serfdom! So, here are some ideas and strategies to keep in mind for the majority of us:
ONE: SAVINGS RATES
Saving and living below our means is certainly the first and probably most important FIRST step to conquer financial freedom. But if you stop there one may fail. Rates on savings accounts are horrible. It won’t even keep up with inflation. So you may save let’s say $50,000, but each year the buying power of that amount will diminish. In my lifetime, now around 40, I have not seen much go down in price, especially stuff we really need like housing, medical costs, school and food. All this said, even if someone is not comfortable with investing, it is better to save and have something then zero or negative.
TWO: LACK OF FINANCIAL EDUCATION
Our education system kind of sucks if you think about it. This is nothing against teachers most of whom I hold the highest respect. But, our system does not teach high schoolers anything about personal finance, investing, etc. That lack of education traps people in a cycle of poverty that is hard to break. Some are lucky enough to have parents that teach them some of these skills and information, but that is based on the birth lottery. We also teach nothing about relationships, parenting, skills to succeed in the workplace. Instead we make kids memorize the mitosis cell division process, DNA structure, historical figures, calculus, etc. All very interesting stuff that I enjoyed learning about, but was totally useless for surviving and thriving in life. We need to be learning ahout credit scores, building skillsets for work, investment vehicles, risk, compound interest, etc.
THREE: INVESTMENT VEHICLES
One has to find the investment vehicles they want to deploy in order to build wealth. For most of us this is in the form of index funds with low fees, company matches, dividend producing stocks, bonds, rental properties, small businesses, etc. Find what works for you. Read a wide variety of views and opinions on the matter and make your own plan.
FOUR: AUTOMATION TO WEALTH
We must set up automated systems in order to overcome ourselves. We are usually our own worst enemies when it comes to building wealth. We have present moment bias and we always value it over our future selves and families future. See our article about our monkey brains for other tips to overcome the natural wiring of our brains and the way we value the present and deal with financial issues:
FIVE: KNOW THYSELF
Not all of us want to be billionaires or live in mansions. Most of us, including me, can be quite content with a quote “simpler life.” Frankly, watching the Kardashians makes me puke. I am not anti money or anti material things, I just think some weird “stuff” happends to people’s minds and personalities when we have no purpose, work or drive and aimlessly consume the next luxury item. In fact it looks boring to me. There is a point when the finest food, clothes, cars, etc. in the world kind of just becomes normal, so what is then special or unique, nothing! My point here is that we each need to look within ourselves and discover our priorities. I think these probably change over time. I could be quite content living on a small farm in the sticks with my family, working, writing, making things and spending time with family and friends.
SIX: FIGHT THE DEBT DRAGONS
We are constantly being lured into buying shiny new things and paying interest. Remember if you are doing this, you are building someone else’s wealth at the expense of your own families. Keep the debt dragons in check before they torch your wealth. Expensive vacations should not be put on credit. Car debt should be managed wisely.
SEVEN: INVEST IN HEALTH
We will keep saying it. It will not matter how much money or power one has if they are sick. Heart disease, cancer, etc. take down the most powerful among us. Each day make some small investment in your own personal health. This way you are saving your way to a better future.
This is my opinion, this is not advice.