Financial freedom is made up of 9 fundamental rules, rules that you will need to create a well-defined and above all effective plan to achieve your financial freedom.
They are psychological rules, of behaviour and some are about yourself and your relationship with other people.
Here are my 9 rules for achieving your financial freedom.
- 1 1) Find the underlying reasons why you want to be financially free
- 2 2) Find some “financial heroes” to emulate
- 3 3) Decide every day to be financially free
- 4 4) Choose your friends carefully
- 5 5) Pay your consultants well
- 6 6) Try to get something as a gift
- 7 7) Become an expert in one formula and then move on to the next
- 8 8) Don’t buy toys on credit
- 9 9) Pay yourself first
1) Find the underlying reasons why you want to be financially free
It is essential that you have at least one good reason for wanting it. A desire to be rich or not to work is not enough.
It takes a strong and profound reason otherwise you will not be able to defeat all the habits that, up to now, have prevented you from being so.
Can you identify the reasons why you want to achieve financial freedom? Are these reasons strong enough to support you on the bumpy path that awaits you?
2) Find some “financial heroes” to emulate
Emulating the best is an excellent way to become like them. If a person can do something, you can copy it and do it too, it is well established.
So, look for someone who is financially free or rich and find out as much about them as possible: how they behave, what they say, what they think.
If I do it, you can too.
3) Decide every day to be financially free
Believe me, it’s not easy to be focused on financial freedom. Freedom is not comfortable, even if it offers all the comforts in the world.
Following middle-class financial behaviour is much more comfortable, but it will never give you the financial freedom you want.
For this reason, it is important that every day, you choose this difficult path, but full of enormous satisfaction.
And that means that whatever you do, ask yourself if it gets you into or away from financial freedom and, depending on the answer, act accordingly.
4) Choose your friends carefully
This is a rule that many find difficult to digest. Friends or – better – the group of peers (friends, relatives, acquaintances, fellow citizens) is a very powerful influence on our behaviour.
If your friends don’t share your financial freedom goals, as is very likely, don’t let the narrowness of their views undermine your plans.
Change friends, change peer groups, find people who share your way of thinking.
5) Pay your consultants well
A wrong mentality is to find consultants who are cheap and still pay as little as possible. But that’s a fatal mistake if you want to create your own financial freedom.
Save on other things (read ahead), not on the help you need to achieve your financial freedom.
It is important to surround yourself with a team of consultants and specialists who are the best in their respective fields. In this way, you will have the best possible help for your investments and what you invest in there you will get back a hundredfold with your business
6) Try to get something as a gift
This rule seems to disprove the previous one, but this is not the case. In this case, I am referring to your investments.
When making an investment, always try to get something more than what is offered to you.
Consider it a gift of financial intelligence. If you make an excerpt and the bank asks you for $ 70,000, try to sign up for $ 60,000.
If you buy advertising space to promote your business, always ask for extra releases or an additional discount. It seems a cliche, but the rich are also rich because they ask for a discount, when it is smart to ask for it.
7) Become an expert in one formula and then move on to the next
Wealth is learned, I always say that. Making money is like preparing a cake: there are the ingredients and there is the recipe. The first few times it will suck, then you will start to get carried away, to know how to mix the ingredients, maybe you will add some personal touches and you will become good.
You will have acquired a formula that you can replicate to multiply your income.
At that point, you can learn a new formula, in a different market, with different methods. Growing up and becoming a person financially, not only free but also stronger and stronger.
8) Don’t buy toys on credit
As you probably know, I call toys all those expenses that do not increase your cash flow, but rather lower it and gratify you temporarily and emotionally. Sometimes it’s okay to indulge in a few toys and I’m the first to do it.
But not on credit. When I want a new sports car, I don’t buy it in installments or on a lease. I wait until I have created the money I need to buy it – with a new business or investment – and then I buy it for cash.
It is a toy, but it must never, I repeat never, add bad debt to my income statement. As a millionaire friend of mine says, “the real status symbol is not platinum credit cards, it is cash”.
9) Pay yourself first
I have left this rule for last which is primary to your behavior with money: pay yourself first.
First means first of all: before suppliers, before taxes, before VAT.
Decide what percentage of each income is reserved for you (ex: 20%) and set it aside, for example in a deposit account, ready to be used as an investment or as a reserve depending on the amount and your financial situation.
This rule is important for two reasons: it gets you used to looking after your money and it gets you used to being disciplined with money.
There may be times when you will need all the money you earn and it will be difficult to pay yourself – those are the times that will build your character with respect to money and lay a solid foundation for your financial freedom. Pay yourself first.
As you can see, these are simple rules, but they often go against current behavior. Or, at least, the behaviors of people who are not financially free, too bad for them.