Sure, money isn’t everything. But even our relationships — friends, family, coworkers —can be helped or hurt by financial situations. No shocker here, but money disagreements account for a large portion of divorces.
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Screw “Normal”: The Foolproof Formula to Freedom
Real talk: people who say “money can’t buy happiness” are lying.
I’m serious, think about it. If you planned out your financial actions in such a way that at a certain point you no longer had to worry about a steady income, how would that feel? Freaking fantastic!
- I’m not saying you need to become super rich,
- Or that you’d have to quit working,
- Or that you have to give up fun spending in the now.
What I’m saying is, you wouldn’t have to keep working for a paycheck — which is why some people fundamentally hate their jobs but do nothing about. They need the income.
You would have the freedom to do whatever.
You can finally be whatever you want to be “when you grow up” because you aren’t dependent on a job:
- Maybe you want to be a firefighter or a teacher but needed a higher income to support a large family.
- Perhaps you want to start a video travel blog with no guaranteed income.
- Maybe you don’t want to work.
- Or you want to work, but want the freedom to be picky, rather than taking the first job that comes along.
More important than the HOW we achieve financial freedom, is the WHY. Find YOUR reason to be free and wealthy. – Robert Kiyosaki
Financial freedom = freedom of choices.
If you can already pay all the bills without working, what is there left to stress about?
So that leaves us with the how.
Here is the formula to financial freedom that breaks the “normal” work-then-die life scheme:
- Spend far less now so that you can
- Invest early and heavily to
- Turn that into a constant income once you are ready for freedom
Here is just one simplified example of how you could accomplish this (though this isn’t necessarily the best path for everyone):
- Invest $1000 a month into a total stock market fund (Not sure how? Keep reading)
- This money will grow, based on historic averages, 9.5% a year over time
- In 15 years, it grows to about $400,000 (you contributed only $180,000)
This is the growth of $1000 a month over 15 years in an S&P500 Index Fund — This tool is provided in the course I mention later.
- Move that money to a less risky, balanced mutual fund (balanced = mix of stocks and bonds — less flutuations and risk with lower earnings)
- This “freedom fund” earns, based on historic averages, 6.5% a year over time
- Withdraw 6.5% a year as income: about $25,000 a year
$25,000 a year. Without working. Can you say DAYUM?
- If 15 years seems too long, find a way to contribute even more. $1,500 a month would get you to the same income in just 12 years.
- If $25,000 seems too low, just keep going a few more years. Waiting 5 more years would get you to almost $46,000 a year.
- If a stock fund seems too risky, use a balanced fund. It will only take 3 more years to achieve the same $400,000.
If you’re response is: I can’t do $1000 a month, my response is: you can if try.
Want to learn more about managing the money you already make and how to get started investing? Check out my new course. For the cost of two burritos you could set yourself up to financial freedom.
Do you want to work for money forever or do you want to create your own freedom? Join me in this extraordinary challenge!
About the Author
Tony Lawson is an avid investor and peer educator on money concepts missing from education. How to learn more:
- Connect with him on Twitter, Facebook, and Google+
- Join the revolution at mcubed.info and the awesomeness newsletter
Disclaimer: I don’t account for inflation in the calcs above. Those numbers are today’s dollars. The important thing to remember is that even with 2–3% inflation a year (decrease in buying power of the dollar) investing is still a fantastic way to earn money and may be the best way to beat inflation!