What I’m going to share is about a realistic approach to financial freedom. You don’t have to be a genius or be Bill Gates to do it.
Chasing money forever is a form of mental illness. We want clear thoughts to experience freedom … and thinking about money and how to make it is how we muddy the mind.
As Darius Foroux says, “Peace of mind is priceless.”
The point of financial freedom isn’t to show off or buy a Big Man’s Willy (BMW). It’s to have enough income to cover your desired expenses.
This is the method I used to achieve early financial freedom and quit my soul-sucking job.
The cornerstone of new wealth
If you study young money you’ll notice one common trait: digital skills.
The skills you have determine your income. If your income isn’t enough to be free then the answer is to get new skills. I prefer digital skills because they have built-in leverage.
All that means is for the same amount of effort the results become far greater over time.
You don’t need to trade time for money in the digital world. You need to trade time for money to pay for new skills, then put those skills to work building digital real estate that pays you — websites, books, templates, software, etc.
Use digital skills to unlock leverage. Join the new wealthy.
Quiet passive income streams
Active income requires you to always work to earn it.
Passive income requires active work to get started, but then some or all of the work happens on auto-pilot down the track.
The oldest version of passive income is being a landlord. This can be a good path for some but it requires a lot of money and debt upfront.
Passive income from owning some (or all) of a business, dividend stocks, or digital token assets that have a yield are more modern ways to do it.
If you’ve never had passive income and don’t believe in it, you’ll likely never achieve financial freedom.
That means you’ll have to trade time for money and worship long hours and hard work. This approach breaks down if you get laid off. And the hidden trick of inflation devalues your money that steals your time.
Start one passive income stream. Get hooked.
A portfolio of (smart) financial assets
There is no financial freedom without financial assets.
Read that sentence a few times if need be. Financial assets are how we store bundles of time that we can unlock later. If the storage unit you pick is bad, then you’ll lose some or all of your time.
If your storage vehicle is a dinosaur, like silver bars, you’ll likely go backward financially.
What you want is a portfolio of financial assets of all different types.
Some will have more risk than others. The low risk assets will provide a foundation (bonds, real estate), the higher risk assets like Bitcoin & Ethereum will provide growth. Together you’ll have a financial freedom vehicle.
Get a financial education. Use it to pick your portfolio of financial assets.
Implementation over information
Financial freedom sounds like a fantasy.
For the average person it is. They’ll never be free because they prioritize information over implementation. They love to get excited by ideas or say they read 204 books this year. But they never take action.
Action is hard and so we do anything to avoid it.
Those who take action have an unfair advantage. They get to experiment. They get to see what works. They have data to make decisions.
The information-lovers have none of that. All they have are dreams, fantasies of overnight success, and the misfortune of relying on luck and being chosen by those in power. Yuck.
Become an action taker. Use habits backed by systems and realistic financial goals.
The technology trend to create generational wealth
Ty Warner created Beanie Babies.
They were these soft plush toys that kids got in their McDonald’s Happy Meal or bought at the local toy store.
Parents began to hoard them too. Secondary markets formed. People began to speculate and eventually gamble on them.
A huge Beanie Baby bubble formed.
All America could talk about were these stupid stuffed toys. Ty Warner got rich and became a billionaire. Then the bubble popped due to oversupply and a lack of scarcity caused by Ty’s greed.
Moms and dads went to the wall. They lost everything.
Many skeptics think what happened with Beanie Babies applies to new technology trends. “It’s tulip mania” THEY say. They’re duds. And I’m seeing this misunderstanding with the artificial intelligence trend right now.
AI isn’t about ChatGPT or the death of writers.
AI is a technological revolution the same as the internet was in the 90s. It’s not going away. It’s a tool that will amplify human productivity.
When productivity goes up more wealth can be created and we will all have access to that. AI is a once in a lifetime trend that is already creating millionaires and will continue to.
Have a look at the Nasdaq index of stocks or companies like Tesla. Their prices aren’t booming because of a Beanie Baby bubble. No.
Prices of AI-related tech are booming because of its usefulness. This stuff works and it’s transformative.
So the dumbest strategy in history is to have some money invested in these new technologies to profit from them. I’ve been doing it for years and I’m not that smart.
Follow the smart money. Stop following the dumb money off a cliff.
A relaxed approach to debt
I could have got a big fat mortgage years ago on a giant home with a man cave. I didn’t. Why?
Too much debt gets in the way. The money used to pay off all the debt is the same money that can buy your freedom and enable you to work less. Or to work on passion projects that have no financial outcome.
If you want to reach financial freedom then don’t binge on debt. And don’t borrow money to buy dumb consumer stuff. Borrow money, if you have to, to purchase stuff like real estate or stocks.
This use of debt helps you unlock the magic of leverage, where price appreciation of the asset is applied to both the money you put in and the money you borrowed.
Mortgages. They have 5X leverage. 20% deposit, 80% debt.
My filter for whether I have too much debt is this question: Can I sleep at night?
Rich is not the goal. Financial freedom and a life full of options are the ultimate goals — Accent Investing
Multiple naughty income streams
One income stream is how you become poor.
Why? Because any income stream can get cut off at any time — especially if your one income stream comes from an employer. Financial freedom is built on multiple income streams.
If one income source dries up it’s okay. Another one can take its place.
Or the other income streams can buy you enough time to create a new income stream. This approach helps relieve stress and that makes life even more relaxing.
A lot of financial freedom just comes down to how you feel.
Owning your future over renting it out
Most people don’t own what they do.
Someone else pulls the strings and, therefore, you have to follow their ever-changing rules and get thrown around like a rag doll.
I’ve always hated this servitude way of life … but I had no choice. I had to live this way until I could figure out a better way. And I did.
The goal in life should be to own as much of what you do. Often that means operating as a business instead of an employee — even if the business is a one-person business.
If you’re not a business or don’t at least own parts of other people’s businesses, you’ll likely never reach financial freedom.
The trouble with the traditional employee approach is, inevitably, along the way you’ll face financial setbacks — layoffs, demotions, recessions, employer bankruptcies, medical tragedies like cancer.
When these common events happen they set you back.
Much of your financial progress is lost. Then you have to start again. It becomes a form of hamster wheel.
The solution is ownership.
Content creators own their content and email lists. Average people try to own their homes as soon as possible. Creative people seek to own a business. Non-business-minded people seek to own other people’s businesses.
Own or be owned. Own or get rented out for the rest of your life.
Financial freedom can feel like it’s decades away.
I’ve learned it isn’t. Financial freedom is a few smart decisions away that are guided by a basic financial education. Learn about money, then use it to buy your time back and become free.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.