Chapter 6 | Achieving Financial Independence
(Part 1 out of 2)
In this chapter I'll discuss:
* The difference between greed and ambition.
* What is financial independence?
* Recommendation to a good economic plan.
* Are taxes good or bad?
* Is there such thing as a bad investment?
Achieving financial independence:
Those who live an exceptional life achieved economic independence.
This independence allows them to focus on their priorities, to design their own unique lifestyle and to boost the goals that interest them.
Do what you have to now, in order for you to do what you want to in the future.
Everyone should define to himself the term "financial independence" and what that means to him.
Some people feel uncomfortable when talking about wealth, money, desire to get rich and it’s understandable when you have sentences like: "money corrupts ...".
Money does not corrupt - there are corrupt ways to obtain money.
That's the difference between greed and ambition.
Greed wants everything in return for nothing, wants more than it can give, and wants something at the expense of something or someone.
Ambition wants something in return for something and not at the expense of something.
Being of service to others leads to great abundance, acknowledgment, and immense satisfaction.
Zig Ziglar once said: "If you'd help enough people get what they want - you could get what you want".
Here’s the definition of financial independence: the ability to live off your personal income, that’s not a result of employment.
I think that’s a suitable and legitimate goal to set for yourself and it’s one that’s easy to live with.
For example, to provide good service by developing your skills in the market to make them more valuable, so that eventually you’ll have enough resources that will be invested properly and will provide you financial independence in the form of personal income.
What you do with what you have, is more important than what you have.
What you do with what you get, is more important than what you get.
What you do with what you have says a lot about you, reveals your life philosophy, your attitude, your knowledge and your values.
What you do with your money, says something about you.
I recommend you look inside yourself and think if you like what you see.
Here's a narration from the New Testament, as quoted by Jim Rohn:
One day Jesus and a number of his followers stood outside the church, near the charity box while people made their donations.
Some donated large sums of money, some smaller amounts.
Then came an old woman and put two pennies in the charity box...
Jesus said: "Look how beautiful". His followers answered him: "What's so beautiful? It's only two pennies".
Jesus replied: "She donated more than anybody else", his followers answered him: "How can two pennies be more than what everyone else put in?"
Jesus replied: "Because I'm sure these two pennies were most of what she had,and if you give the majority of what you have, then you gave far more than the majority of people...".
Think for a moment about the important lesson that can be learned from this story, about the human being.
The amount is not what’s important, but what this amount represents...
Recommendation to a good economic plan:
1. Learn to live off 70% of your income: the reason for that is because you are going to do special things with the remaining 30%.
Before I move on, I'll quote a conversation held between Jim Rohn and his mentor Earl Shoaff, in which Rohn said: "If I had more money, I would probably have a good plan”.
Mr. Shoaff replied:" I think that if you had a good plan, you would probably have more money...”.
If so, quantity doesn’t count – the plan is what counts. It's not how many resources you have – it’s how you allocate them.
Now I’ll detail how to allocate the remaining 30%...
2. Donate 10% of your income to charity: It's your way of giving back to society and help those who can’t help themselves.
You can change, of course, this donating percentage – after all, this is your life (and your plan).
Remember: the time to start with this self-discipline is when the amounts are small, I’m sure you’ll agree it's easier to donate a dime out of one dollar than it is a hundred thousand out of a million dollars (same percentage, smaller amount).
Some might say: "If I had a million dollars I'd donate a hundred thousand”.
I'm not so sure about that... It’s better to start as soon as possible, that way it will become a habit by the time you have the big bucks.
The best time to assimilate this self-discipline to your children, is the first time he\she receives an allowance – it’s an excellent value to bestow those around you.
3. Invest 10% of your income in yourself: meaning the capital you’ll manage and benefit from.
Buy and sell – for instance, buy a broken appliance you’re able to repair and sell it for a higher price, buy something you’re able to improve or upgrade and sell it for a higher price, buy / create something unique and sell it for a higher price.
You don’t have to make this a "full-time job", but there were cases this became a full-time job due to its success...
What could be more beautiful than a child finding an abandoned wagon, bringing it home, removing the rust and painting it with the help of his allowance, until it’s shining and glowing?
He then straightens the wheels – and sells it for a high sum...
Why don't you try to find something, and “return it to society" in a better and more excellent state - create a value.
Remember that anyone can create value to the market.
We can all be students of capital, profit, assets and value.
If you think you now lack the ability to develop this issue, it's time to refer to the second meaning of “invest in yourself " – invest the money in developing the skills and abilities, that will assist you to develop in this area. You’ve certainly heard of people who developed and invested in their “part time” hobby, and turned it into a full-time job due to its success.
4. Invest 10% of your income in others: meaning capital you give the market as a loan or a partnership.
There are projects in our society that the capital of an individual or a single company is not enough to finance them.
Therefore, there is a system (like the stock exchange or the bank, for example) that enables us to invest or lend our capital, so that factories, companies, and other projects will provide additional workplaces and different products, thus creating an even more dynamic society.
Invest 10% of your income in savings (or the more appropriate terminology in my opinion - investment account), because you get paid for the use of your money, and investment requires more activity than savings.
Remember what was written at the beginning of the chapter: Start as soon as possible in order to do what you want in your life instead of doing all your life what you should do.
Make your money productive, let it be your most diligent employee.
Anyone can create himself deeds of self-discipline that will bring him wealth.
We have all the necessary tools – we lack only the willpower.
Prepare yourself a business philosophy and develop it – set in motion the procedure to financial independence.