Failing is easy. It doesn’t take much to fail. It is even easier to blame it on other people instead of owning up to our own mistakes. The best part is, failing may be the easiest way out of anything. That is if we are looking to escape from our own responsibilities.
Unfortunately, we are often responsible for people other than ourselves. Dependence on those who can help should never be the only option. In fact, it should never be an option at all. We must learn to stand on our feet and carry those whose lives depend on us.
How can we achieve financial independence then?
Tony Robbins Says...
There are actually practical ways to achieve financial independence. But success also requires a positive attitude, patience, commitment, and faith in ourselves. Multi-millionaire self-help guru Tony Robbins has been teaching others these through the years.
"Tony Robbins is an entrepreneur, best-selling author, philanthropist and the nation’s #1 Life and Business Strategist. A recognized authority on the psychology of leadership, negotiations and organizational turnaround, he has served as an advisor to leaders around the world for more than 40 years...Mr. Robbins has empowered more than 50 million people from 100 countries through his audio, video and life training programs." (TonyRobbins.com)
The statistics alone speak for him. He has been there, done that, and was able to rise out of poverty. More important, he has found effective ways to avoid going back to having nothing.
Tony Robbins knows what he is talking about. What he teaches is not only about how to gain wealth. He teaches us how to keep it so that we never go hungry and be dirt-poor ever again.
The Ways to Achieve Financial Independence
We must not be afraid of changes.
In his site, Tony Robbins talks about creating a financial blueprint. “There is no one magic number for everyone.” That means that as people are not the same, what may work for me may not work for others. Thus, planning my financial freedom will depend on my own circumstances, not on anybody else’s.
I need to examine and determine where I am at the moment so that I can plan where I need to go and how to get there. The plan should be able to meet my needs and goals no matter how big or small they may be. It should bring me to a stable place where the money works for me and not the opposite.
It is not a get-rich-quick kind of change either. Taylor R. Schulte is a Certified Financial Planner and Founder & CEO of Definefinancial.com, a fee-only financial planning firm. He stresses the relevance of waiting and not relying on overnight success.
“...it’s important to remember you don’t need to go from zero to sixty overnight...I wouldn’t expect someone to start implementing advanced planning techniques in the first week. Pick a reasonable and attainable goal, and get used to achieving small wins on your track to financial independence.” (Forbes.com)
The keyword then is patience, patience, and more patience.
How to Gain Financial Independence
These are essential tips in creating a financial blueprint and using proven strategies. The first three focus on the planning aspect. The rest discuss the strategies that should make things happen.
1. Be Honest. Honesty is the best policy, right? That includes self-honesty. There is no use pretending that we are doing well or that we are happy and contented when we are not. That is not going to solve anything. Self-denial never does. All it does is suppress us. If there’s anything that history has taught us, it’s that freedom is never gained through suppression. It only makes us fall victims to our own neglect and ignorance.
We must do something for ourselves once in a while. A much-needed vacation would be nice. How about an annual out-of-the-country get-away? Or we can take art lessons from known instructors to enhance talent. Or find a new hobby that is not related to work.
Enjoy. To emphasize another famous saying, we should “Never put off for tomorrow what we can do today.” Indulge. Do something different or crazy when we still can. Putting off our desires may someday cause us to “explode” when we least expect it. We’ll cave in and then spend more than what we intend to, putting our finances and well-being more at risk. Either that or the opportunity will pass and we’ll be spending our later years with regrets.
2. Determine the Target Number. This is very important because reaching this number is going to be the main goal. How much is it going to take before we find ourselves secure? When can we say that we are finally out of our financial burdens? The financial future is better planned if we already have a set number in mind. Once set, we can then proceed towards attaining the target.
Numbers depend on the individuals. Each of us determines the target number that will liberate us. Our approaches to deciding on it will vary but, as Tony suggests, we must trust our guts. Go with our instincts! It won’t matter if it seems too large right now. If we’re dreaming big, then why not aim high? Besides, analyses will help us decide on our planning tools. Those should aid us in reaching the ultimate goal.
3. Assess the Present Situation. How secure are we in our finances right now? “Secure enough” does not make anyone secure at all. Again, we must aim for money to work for us; let’s not be content with working for the money. The very essence of being secure is being free from any risk, danger, doubt, anxiety, or fear. Having only enough will not protect us from those worries.
Forbes suggests clearing our heads first. Before proceeding on anything, we must have:
a clear definition of what financial independence means to us
a complete idea of what we must give up to achieve the dream
a good understanding and acceptance of our situation
an idea and expectation of the possible hindrances to our success
a series of goals (and sub-goals) that should push us towards financial freedom
Once our minds are clear, we must start the assessment of our current situation. To map out a plan, consider the five categories below. They make up about 65% of our expenses:
The Home (mortgage or rent)
Step #1 of the financial planning is easy. We list down how much each category costs per month, compute the sum and multiply by 12. The total amount is the required income that should provide annual financial security. That should pay for the basics.
Step #2 includes clothing and dining expenses as well as those for recreation and leisure. Follow Step #1’s computation formula. Then add the new amount to that of the basics’. This is THE NUMBER that will ensure financial security.
Retirement is another matter. With advanced and proper planning, it is possible for us to retire.
4. Save Parts of the Income. It is good to have the right annual income or the target number for security. But life brings unexpected future expenses. Or there are more things that we’d like to be able to do that are currently not workable. A future trip around the world in six months, why not? The answer to that is to save up!
Tony suggests that we allocate certain percentages of the money we earn for the future. Let us make it a habit to do it every payday, every week, or on scheduled days, whichever that is most convenient for us. Assign amounts that we'll be willing to save. Avoid touching money meant for the basic necessities.
Saving up saves us from the rainy days and allows us to enjoy the fruits of our labor later. Commit to specific amounts and create safety nets. Why not automate the percentages? Savings will grow without us noticing and then surprise us with how much we already have.
There are also some ways to do this more effectively:
Commit to living beneath our means, always. Take care of the needs, but sacrifice the wants as those can wait.
Keep away from people who love to spend money. Avoid, block or reduce contact with them if personal discipline isn’t strong. Don’t get pulled into the same bad behavior.
Improve career and increase the income. That should already make sense.
Stay out of debt. Debts keep the finances unstable.
5. Believe in the Power of Compounding. Take away a cent from a million dollars -- would that still be a million? No. That is the importance of even the smallest of amounts. Everything starts out small.
The same principle is true when building a money machine. Every cent counts. So if we can only afford a dollar to spare for saving, or even something smaller, it doesn’t matter. Over time, deposits will become worth a whole lot more without us even being aware of it. The power of compounding will manifest in the long run.
“It might seem easier to make a larger, riskier decision right off the bat, but the fact is, the power of compound interest can be one of the most transformative ways to grow your wealth.”
6. Follow the Four Fundamental Principles of Personal Financial Planning. As said, size doesn’t matter. Big or small, any amount carries the power to lead us to the path towards financial independence. That is, as long as we follow The Core 4, which help maximize savings.
They are the following:
Core Principle #1: Do Not Lose Money
Protect the principal interest as much as possible.
Do asset allocation. Separate funds in investment buckets:
Security bucket - funds for things needed
Risk/growth bucket - funds for things that may pan out, but the rewards may be worth the risk
Dream bucket - funds reserved for more fun things and activities
Core Principle #2: Asymmetric Risk & Reward
Take only asymmetric risks -- the least amount of risk possible may result to the highest level of upside.
Use the 5-to-1 Rule: For every dollar you risk, you have the potential to make five. Make sure to at least get the fifth time right for a break-even.
Follow the general rule of thumb, which is everything returns to the mean. Take advantage of stocks on the decline.
Core Principle #3: Tax Efficiency.
Be tax-efficient for not being so could mean the loss of money.
Shield income from taxes whenever and in whatever way possible.
Structuring portfolios could reduce tax bills.
Core Principle #4: Diversify! Diversify! Diversify!
Be a successful investor by being well-diversified.
This reduces financial risks and maximizes returns.
Diversify each investment bucket.
Diversify income sources as well.
7. Diversify Investments. To re-emphasize, diversifying investments decreases risks and increases the returns. Be wise then: use money to earn money.
Now, besides the seven tips, there is an eighth that is very necessary and important…
8. Want Financial Freedom and Don’t be Afraid to Achieve It. Everything starts in believing in the possibility of getting financial freedom. We must never be afraid of change. We must have goals, stick to them, and refocus them on a regular basis.
Attitude of Gratitude
Have an “attitude of gratitude”.
"When you focus on gratitude and what's possible, you are much more likely to see things in your environment that will help you reach new levels. When you focus on the negative, guess what you see?" (Dave Gambrill of Gambrill Communications on building wealth, Business Insider)
Financial independence may not be easy, but it is never impossible. What is important is the positive attitude, patience, commitment, and faith in ourselves.
That is how to find success and real financial freedom.