Success platitudes aside, we need to look into the practical methods of achieving success. As we live in a commercialized world, this involves setting our finances up to provide us the financial freedom required to pursue our life's goals. The key to financial freedom is to make one choice, once, and let the numbers do the rest.
What does this mean? It means automating where your money goes, and ensuring part of that automation involves putting some aside for your future. These future funds should be invested in some capacity, as Jim Rohn puts it,
“The key is to engage in commerce, even if only on a part-time basis."
By investing money, either in your own commercial activities, or by allowing others to use the funds to grow businesses (stocks, bonds, real estate, etc), your returns increase. Year over year, these funds can build into quite the foundation for financial freedom over the course of your life.
Of course, the question often arises: how much should I save? Unfortunately, the correct answer to this is almost always “more”. And with that disheartening statement, often times people put off the investment decision until sometime in the future when their financial circumstances are better. But a dollar invested now is worth more than a dollar in the future.
Let’s look at two friends aged 25, Francis and Jenny. Francis decides to put away $500 / month right now. He is afraid he can’t afford it, but as a Business Minded reader, also knows he cannot afford not to invest in his future. Jenny, on the other hand, says money is just too tight right now, and she’ll make up for it in the future. Starting when she is 35, she needs to invest $ 1,157.45 every month to have the same amount at age 60.
By the time they plan to retire with their million dollars, Jenny will have had to invest $137,235 more than Francis. That is 165% more over the course of their lives. If the salaries of the two friends stayed the same throughout their lives, Francis would have had a far higher quality of life. Think of the extra vacations with his family, the extra date nights with his wife, the additional experiences he would have had with extra money to spend throughout his entire life to arrive at the same place financially at the age of 60.
Financial Freedom is attainable for you, for everyone. And the cost is lowest when you start now, today.
The trick to Financial Freedom is to start putting aside money. Think of the maximum amount you could afford to invest. Then increase that amount slightly. Invest that. You might feel the pinch that first month, but by the second month you will have adjusted slightly to accommodate to your new means of living.
I gave this advice to one young mother recently. She assured me that there was no way that she could afford to put money aside for the future. I then presented her a situation, her child needed a couple hundred a month for a recurring doctors bill. How would she be able to afford that? She simply replied (rather indignantly), “easily, I just won’t go out for lunch as often. He’s my son, of course I’m going to provide for him.” Needless to say, we are all capable of living off just a little less, and saving just a little more for that future we dream of.
So do this today, open a (low fee) investment account, and start putting a little aside every month. Your future self will be really glad you did. And that future self? That isn’t you at 60. That’s you every year until then, when you can spoil yourself a little knowing that your future is taken care of, by you. That is what it means to achieve financial freedom.