Everyone wants to be free. We want to be free to pursue the things we love, use our time for whatever means we deem worthy and basically do fuck all to get there or take shortcuts, sounds correct.
Being rich & being wealthy are two entirely different states of being, let me explain.
Being rich is the consumption & consumer based ideals that surround having an abundance of crap that you probably don’t need, just so you can show off and claim the title of being one rich motherfucker. Yet if anyone who is the slightest bit financially literate was to look at your books, they’d show an entirely different story of multiple debts, maxed out credit cards & and barely any net-worth accumulated unless you’re a celebrity or have a six figure job.
See, being rich is what the average consumer wants to be because it would allow them to consume more products, not build they’re finances. God no, that’s what losers do right?
Being wealthy is the idea of having financial control and freedom to do as you please whilst amassing multiple streams of finance and having plans in place for when shit does hit the fan, think losing a job or your car blowing up.
Being wealthy and having wealth is the result of planning and preparation for the things that will eventually come. Coupled with a solid financial knowledge base and willpower to not go and buy that new T.V that you don’t need but just want because your neighbor Greg got the smaller one and you want to show him up.
To be wealthy requires planning for the long-term & the unknown, so how do we do that?
An emergency fund is an account with 2-5 thousand dollars in it that is never touched unless it’s a dire emergency. This gives you padding to fall on when things really go wrong and you need to pay the vet to get a golf ball out of your dogs stomach.
Pay off all debts:
The fact that 80% of western living individuals have a form of debt is a show of the sheer stupidity that runs through our society. Debt is the number 1 cause of financial ruin within the household so having the goal of paying off your debts as quick as possible is advisable.
The concept of the debt snowball comes in as a way to build momentum. You pay off the smallest debts first and then move onto the larger ones, this alleviates stress and aids in peace of mind so you can think freely about how you’re going to tackle the big boys (debts)
Take your monthly & yearly expenses at this very moment, remove all the junk that isn’t essential for you to live and then multiple that by 12. That’s now your target goal for your runway fund.
A runway fund is a fund that gives you the freedom to leave situations that you don’t want to be in aka a shit job and still lead a relatively normal life without the burden of financial struggle looming. The goal for building up your runaway fund is to do it as quickly as possible after you’ve paid your debts and/or started your investment portfolio. You gain true freedom and leverage through this strategy as it’s the equivalent of having “fuck you money”
Long-term investment portfolios & retirement funds:
Yeah, yeah. No one likes stocks or the markets but they’re an important and vital piece of your long-term wealth creation game-plan. The use of dividends & bonds is a must within your portfolio along with ETF’s and other funds within various sectors that offer a quarterly, bi-annual or annual payment for being an investor in their company. The idea behind this is playing the long game and not getting caught up in the market fluctuations as the market is bound is correct itself at any given time. Allowing your investments to compound over time is the real winner here. We’re in this for the long haul, we’re not day trading to get some short-term success. We want the end result that comes from the 20-50+ years of building your individual empire.