Looking for Financial Independence? I have some questions. Why do you want to be Financially Independent? Are you tired of your hectic 9 AM to 5 PM job? Are you tired of daily instructions from your bosses? Do you want to be your own boss? Are you a big dreamer? Are you looking for financial security? Whatever be your reasons, it is important to know, what it means to be Financially Independent. But the knowing about Financial Independence is not just enough to achieve it. To successfully achieve financial Independence, a proper mindset is utterly important. In this article, I am going to reveal some important mindsets required to achieve Financial Independence.
1. There should be a strong reason to achieve Financial Independence.
It is easy to work for money. But it is not an easy task to make money work for you. The goal of financial Independence is not a short-term goal. It is a long-term process and consistent efforts are required to achieve financial independence. So there should be a strong reason, which keeps you focused and motivated from inside to make those consistent efforts. Many times people take some initiations towards financial independence, but leave in between. They don’t have any strong reasons for it. They take those actions either to achieve some short term goal or get de-motivated in between.
2. Choice of finance.
Everyone wants to have choice of freedom. We need freedom of speech, religion, caste, etc. Financially, you have the right to choose the way you spend your money. Each single penny you choose to spend decides whether you are building an asset from it or it just goes for liabilities and luxuries. So, it is completely your choice of expense, which decides whether you are building assets or liabilities from your money.
In order to build assets, you have to make sacrifice in your early stage. You may see your friends living very high, but your focus should be on your dream. It is not an easy task. I understand. Sacrificing your desire of luxuries at the initial stage and focusing on building assets can only lead you to build enough big assets to meet your dream of financial independence.
3. Investment in education is the best investment.
It is uttermost important to first invest in educating yourself about whatever you want to do. Without knowing about the subject, your probability of success is very marginal or by chance. So if you want to do any business, first learn to do the business. If you want to invest in stock market, first focus on learning how to invest in stock market.
You might have heard that if you want to be financially free, start your own business to build your assets. What do you think all businessmen are financially free? If that is the case, you might not have seen the shop owner working till late hours of the night and coming at early hours in the morning to open their shop. Do you know, what could be reasons for that? They may not have learnt the business first. Thus, apparently they don’t own their business. Their business owns them. What do you mean by their business owns them? It means, their business can keep going only when they are working. Once they stop working for their business, their business stops. So their businesses are not generating passive income for them. Thus, it is just a source of income for them, but not an asset.
4. Make your community carefully.
You might have heard the saying that your behaviour gets effected by the community you live in. One reason behind this is that people get influenced by their surroundings.
Similar is the case in finance. You might have friends or family members, whose dream are not to be financially independent. They might advise you that taking some government or high paying job will lead your financial security. In matters of money, play safe! Don’t invest in shares, stocks, businesses, etc. You will lose your money. Don’t take risk. Save it in your savings accounts. Maxima save it in fixed deposit, which will provide better returns. Stay away from these peoples. I am not saying to leave your family members and friends. Of course, we love our family members and friends.
The advice is to don’t take financial tips from these kinds of people. If your goal is to be financially independent, you must invest your income to build assets as per your passion. For better result, it is recommended to make friends from the community, who are already under the way to financial independence or successful in the field. Learn from their experiences. Spend time with them. Ask for help. Many people hesitate to ask for help. Intelligent people always ask for help and make their task easier.
5. Focus on continuous learning.
The best way to succeed in any field is continuous learning. A software engineer always focused on learning new software launched in the market. Similar is the case with mission on Financial Independence and asset building. Just master one formula for building assets and switch to learn some others formula to build some more assets. More is the assets, more is the financial security. Nothing can be taken for granted. Any asset may get affected by downturns leading you to financial challenges. Depending on more than single assets is always an intelligent choice.
6. Pay yourself first.
Hey! I have a question to ask. Do you pay your bills on the first day or the last day to expire? I guess most of the people pay first their bills and EMI once the salary gets credited to their accounts. I also used to do the same initially, but now I don’t. First pay yourself. First invest your income in building your assets and then pay your bills in the last. Many of you might be wondering about the benefits of doing that. So, what happen when you pay your bills first and then invest for your asset at end of the month. Firstly maximum portions of your income go about paying bills and meeting your daily needs. At last, you don’t remain with enough cash to invest in. You might have heard peoples saying – I don’t have enough money to invest in. These types of people will never have enough cash to invest in. Once you have decided to invest in your assets first and pay your bills in last, you will be able to reduce your expenses, to save for bill payment in the last. If you started lacking cash in between, the threat of not able to pay your bill at the end will force you to look for some extra income. Paying yourself first is the strategy to keep you away from your comfort zone.
By paying yourself first you will be able to develop following three skills:-
a) Cash flow Management – You need to manage your cash flow in order to have cash at the end of the month to pay your bills.
b) Management of personal time – Since the time to expire your bill period is fixed you have to maintain that enough cash within the fixed time period.
c) Management of People – When you delay your payment at the end, the service provider will certainly come to you following up for the payment. You have to manage them properly.
7. Pay and respect your stakeholders well.
It is your stakeholders who make your work easier and help you to enhance your income. Thus, pay and respect them well. It is very difficult to find the right and productive stakeholders. Since you cannot do everything alone, it is your stakeholders who are going to take care of all these. So it is utterly important to take care of your stakeholders well.
8. Always ready to give first.
If you want to get anything, you need to be ready to give first. Have you received anything in your life without giving something? Do you remember last thing you have got without giving something? I do not remember anything I have received in my life without giving something. May be you have not given directly, your parents or someone else have given for that. But nothing can be received without giving something for that.
This philosophy is equally applicable in case of money. But interestingly in case of money, you get in manifold than you invest. How much money has you spent in your education? How much are you going to earn from this education? Can you ever determine? No, you cannot determine how much you are going to earn. I have one more question. Were you confident at the initial that you will get the job certainly after the education? I wasn’t. Were you? You can never be fully sure that a particular investment will definitely give you a profit.
In case of money, there will always be a risk of losing the money. One who takes the risk, wins the game. One who is afraid to take the risk loses before the game begins. Also, if investment is made properly with calculated risk, returns will be in manifold. Now, it’s your choice, whether you want to take risk or not.
9. Let assets buy your luxuries.
Everyone wants to have some luxuries in their life. There is nothing wrong in it. But how you buy your luxuries decides whether your method is financially correct or not. Generally people burn their hard earned saving in buying luxuries like a new house, a new car, etc. But the financially intelligent people do not use their saving directly in buying luxuries. They first invest their part of income in building assets, and their assets buy luxuries in returns.
For example, if you want to buy a new car worth Rs 2000000. Where will you get that amount of money? Will you use your saving directly? If you will do that, you will exhaust your entire saving. Where will you get the money required to maintain that car? Always remember, a luxury always needs some maintenance charges. Where will you get that? The intelligent way is to wait and invest first a part of your income to build some assets which generates that passive income to buy that luxury.
10. Always have a role model.
Since childhood, there had been some persons whom you had admired. They may be your parents, some celebrities, etc. You always wanted to be like them. You always want to know everything about them. Your mind used to copy them, whenever you do something in that field. Like when you dance; your mind always tries to copy the steps of dance of a particular dancer you admire most. This is a natural human tendency.
Similar, in case of money and investment, you should have a role model who is leader in the particular field. You should follow their steps. Their life story will always let you learn many things in that field.
11. Always ready to teach and help others.
We all know the power of giving. In India, it is our traditional saying that education and skills enhance while sharing with others. If you have mastered a formula for financial success, it is recommended to share the formula you have mastered, and trust me doing that you will learn many creative ways from others to enhance your ideas to make money. But many people are of a narrow mindset. They think sharing his or her ideas will create competition for them. They keep using their personal formula. While some involve in sharing their views with others and keep improving and growing their business using others people creativity.
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