Simply Becoming Financially Independent
“Being independently wealthy is every bit as much about limiting needs as it is about how much money you have. It has less to do with how much you earn—high-income earners often go broke while low-income earners get there—than what you value. Money can buy many things, none of which is more important than your financial independence.”
-“The Simple Path To Wealth” by JL Collins
It’s much easier to make lifestyle changes when We’re young and don’t have as many responsibilities.
When We’re young, don’t have bills to pay, and don’t have a family We need to provide for We have the opportunity to change Our financial situation pretty easily and quickly.
When We have a significant other and children to think about it’s much harder to start steering the boat in another direction.
A whole lot more planning and, most importantly, respectful communication is needed.
Everyone in the family must be on board. It can be a tough sell to tell Our families that in order to save money for investing money can’t be spent on unnecessary stuff.
“To build Wealth We must Decrease expenses and increase the acquisition of assets that increase income and assets that gain in value over time.”
-“Becoming Financially Independent” by Ted Wind
We are notoriously bad at forgoing instant gratification for a future that is much more gratifying. It doesn’t always help to say that our future selves and even possibly grandchildren and great grandchildren will thank us, even if it’s completely true.
In order to get Our families singing the same financial tune as Us a little preparation will probably be needed. If everyone is rowing in different directions it’s really difficult to reach a specific goal.
“Intelligence has nothing to do with IQ or SAT scores. It simply means being patient, disciplined, and eager to learn.”
-“The Intelligent Investor” by Benjamin Graham
When I had, had enough of living paycheck to paycheck I scheduled a “family meeting” with my Wife and Our Daughter to have a real discussion about our financial future.
“We buy things we don't need with money we don't have to impress people we don't like.”
-“The Total Money Makeover” by Dave Ramsey
I had been reading a whole lot of books about financial literacy and had been taking notes. I decided that my ultimate goal should be to decrease money spent on expenses so We could acquire income producing assets and assets that increased in value over time until We were financially independent.
I started by clearly writing down my goal in a financial planning notebook. Then I wrote down everything I learned about investing and growing wealth and made it as simple and as clear as possible. Then I made a preliminary budget using our bank statements from several months to get a general idea about where Our money was going. I then made a list of essential expenses and nonessential expenses to get an idea about where the savings could come from. Deciding what habits I felt We could and couldn’t change to create an investment account based on Our present situation.
After writing all of this down in my financial planning notebook I felt more prepared to talk with my Wife and Daughter, keeping in mind that some compromises and slight deviations to the plan would take place.
Now We have these family meetings once a month on a specific day, to make slight adjustments and reaffirm Our Ultimate Goal.
We allow everyone, especially Our Daughter, to ask questions and have a say. We discuss Our intentions and plans until they become simple, clear, and to the point. We don’t blame or “point fingers.” We are All willing to listen and compromise if needs be. I decided to be the one that makes the coffee in the morning, so my Wife and I aren’t tempted to go out for coffee.
We also decided to schedule a reward every once in a while, like eating out or getting a toy for Our Daughter, so We didn’t feel too deprived. You don’t want to lessen your quality of life too much, just change some bad financial habits in order to start investing.
It’s also a good idea to make lists. Lists help you get some of the chaos under control and they make it possible for you to think about your goal and not all the little things.
“The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small, manageable tasks, and then starting on the first one.”
-“Getting Things Done” by David Allen
Decision fatigue is a real motivation killer, lists help because all you have to do is act and you don’t need to expend your energy “reinventing the wheel.” Our family makes lists for everything from daily, weekly, monthly, and yearly “to do lists” to a “base grocery list” so We can stick to Our food budget easier.
If it takes three minutes or less to do a thing I just do it. If I can’t do a thing I delegate it.
If I can do a thing, but not right away I put it on my “honey do list.” If I can automate a thing, like paying the mortgage or bills, I automate it. This way things get done without too much decision fatigue.
It’s also a good idea to make a plan with Your family in case You and Your family get a “windfall,” like an inheritance.
If a plan is already set up it’s a lot less likely that the extra income will be squandered.
Usually, it doesn’t take too much to convince your family that investing and building wealth is a good idea.
When my Wife and I discussed Our financial future She was actually really happy that I was ready to make the necessary changes to ensure a healthy financial future for Our family.
It’s great to All be on the same page and rowing in the same direction.
We can’t build wealth by spending all Our money!
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