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.
He basically divides people into 4 categories:
Employees: They work for others and they have a job. They receive a salary at the end of the month.
Self-Employed or Small Businesses: They work for themselves but their businesses would not function without them being there, including coaches, doctors, lawyers and solopreneurs.
Business Owners: They have a large company, with teams and systems in place that generates income without their full involvement.
Investors: These people are not working for money, instead their money works for them. They usually invest in several businesses, real estate and the stock market.
A majority of the people are in the first and second quadrant (Employees and Self-Employed) and their lives depends on them working on a daily basis. They might save for retirement or the education of their kids but they have to work to pay the bills basically.
Robert Kiyosaki calls this the rat race. You work everyday to pay off the bills that you generate everyday. An the sad truth is that as your income rises… so do your expenses.He encourages everyone to make it their mission to get out of the rat race by creating passive income that exceeds their expenses.
This is a total mindset shift which I wish I had when I was still single working in corporate 10 years ago, it was the best time to start investing as my expenses were very low and I was earning a decent salary. If the mindset is not there, there is always the next Car, Watch, Trip, and a ‘good to have’ item to spend our money on … In the Financial Freedom mission, the goal is to spend on ‘good to have’ or ‘luxury’ items from the Profit of your investment and not your hard earned cash.
I am personally shifting to “Business Owner” at the time of writing this article. We have created multiple passive income streams including our digital course last year and my mission is to create a system that does not depend on me at all in the next 2 years. If you are an entrepreneur, you need to create a mindset and have a vision to not be attached to your business. Otherwise, we all have met super successful business owners who are still attached to their businesses even with their hundreds of employees.
Being financially free doesn’t mean that you would stop working all together ( I would certainly continue doing what I am doing,) but you will have a lot more freedom to choose your activities, projects, and clients when you are financially free. It creates space that helps you think bigger and have a bigger impact on the world. I was really inspired by Bill and Melinda Gates’ 2018 Annual Letter. This truly shows the power of money when its in the hands of a force for good. Here is the letter in case you haven’t read it: https://www.gatesnotes.com/2018-Annual-Letter
As the next step, it’s important to learn various investment opportunities including real estate, the stock market, cryptocurrency and more. Make it your mission to build passive income before spending on things which are not necessities. When you have a clear goal and you set Financial Freedom as one of your top values, then it’s much easier to save and say No to the many many temptations which are in our way.
I am happy to see various groups and discussions around this topic recently. There are many ways to educate yourself and get out of the rat race. I am also super excited to be speaking at Cha-Ching organized by Najahi, about Financial Freedom. There are many world class speakers who will talk about various ways to be financially free, including property investment, building a business, stock market, cryptocurrency and more.
I want you to think about various ways to welcome more money to your lives, and create passive income for yourself to be financially free. Remember that being financially free might be a 5 – 10 year plan depending on your current situation, it’s not an over-night change. The mindset shift and taking daily actions towards that goal makes all the difference. Time will pass anyway and patience is a virtue, every small step counts.