I always ask this question of my audience during my talks and trainings: “Which one of you is financially free?” ... And usually people in corporate jobs with a steady monthly salary raise their hands. And then I ask the second question: “ If you stop working today, will you have enough income to cover all your expenses?” And hands go down, one by one …
I’d like to think that you know me well enough by now to know that “Freedom” is one of my top 5 values and being financially free is a goal and vision that I have for myself, my kids and our community, including you.
But before even talking about financial freedom, investment and passive income, I’d like to start by talking about Money and the role it plays in our lives in my opinion. As the first step, I want you to identify your relationship with money according to your past experiences and beliefs.
Be honest with yourself and answer these questions: Do you believe that money is the root of all evil? Is it dirty? Does it change people’s personality?
Or do you perhaps believe that our happiness only depends on having more money? That dream car, house, trips, bags and shoes?
To me, none of the above is accurate. Money is nothing but a useful resource. It has no power on its own. It is us and us alone, that gives it all the power, positive or negative… Money is a means to an end, but not the final goal.
Have you watched the movie ‘The Mask’, played by Jim Carrey? Well, if you are in your 20s then probably you haven’t watched it! but I don’t want to feel that old and I’m gonna assume that you have already watched it!!
In the movie, the Mask, magnifies the wearer’s character. When Stanley Ipkiss, played by Jim Carrey, wore the mask, his funny, romantic character got magnified and when gangster Dorian Tyrell wore the mask, his evil behavior got multiplied by 1000.
Money, fame and power are exactly like that mask, they only make us more of who we already are. They can’t make us happy on their own, but if we are already happy, then they can provide us with experiences to make us happier. If we are healthy, we will have various ways to be healthier and vice versa. Money only magnifies our deepest values and desires. It’s important to see it that way and to not label it as good or bad, it’s just a resource, a very useful one.
Now let’s talk about the definition of financial freedom and what it means. This requires a mindset shift if you are used to paying the bills every month from the monthly salary or the income that you earn. Being financially free means that you have enough ‘passive’ income from your investments to cover all of your expenses, or you have enough wealth to live on without working for the rest of your life.
Let me give you an example: when you own a vending machine, it generates money for you everyday without requiring any effort from you while making money. You could be asleep at night, and somebody buys a packet of crisps, making you money.
Another example is owning an apartment and receiving rents every month. Any idea that does not require your personal intervention to generate money, and any systems that makes your money work for you and not other way round, is a source of passive income.
I love Robert Kiyosaki’s CashFlow Quadrants that he describes in his books, including Rich Dad, Poor Dad.