Today I’m gonna tell you how to gain financial freedom in 7 simple steps from a Book written by Grant Sabatier.
Inspiring Tale About the Author.
Author Grant completed his studies at a very good college and passed with good marks. He had been working continuously for 3 years. It means that he was doing everything that society considers good. But despite doing all these things he was struggling in his life. He was barely surviving every month. Not only this, when he turned 24, he lost his job too.
Now he was unemployed and started living with his parents. It’s not a big deal for us(Indians). But in countries like America, folks begin staying away from their elders as soon as they’re 18. It was quite shameful for him as he was now surviving on his parent’s money. Moreover, his parents also started asking him indirectly – when will he go. But the thing was even after adding all his accounts he had only 2$. And surviving with only 2$ was impossible.
One day he started calculating and noticed that he worked for almost 4,700 hours and by investing this much of his time, his outcome was only 2$. This was quite disappointing for him. At that point of time, he determined that he will now achieve financial freedom and that too before he turns 30. And after his calculation, he found that he’ll have to earn $1.25Million to fulfill his dream of achieving financial freedom.
He started working on his dream. He read several books and guides on how to earn money. After that, he planned that he’ll get his job back and alongside that, he’ll start 2 companies for his side hustle. He will earn a lot of money from that and then will start investing that money. This was his foolproof plan.
He started taking action and worked hard on his plan. This wasn’t easy, he failed many times and faced a lot of difficulties and challenges. But no matter all this, he in no way gave up and eventually fulfilled his dream of turning financially free.
What will You Learn in this Blog?
Today I’ll share a few important lessons from his Book- “Financial Freedom: A Proven Path to All the Money You Will Ever Need” through which he achieved his dream. Realizing his dream, he discovered that a person goes through these 7 stages to achieve financial freedom.
7 Stages a Person Goes Through While Achieving Financial Freedom.
- Clarity – It’s all about analyzing where you stand right now and when you have to reach.
- Self-Sufficiency – When you handle your monthly expenses on your own.
- Breathing Room – When you’re not dependent on your monthly salary. If you do not get a salary for a month, you can still manage to survive.
- Stability – Now you have so many savings from which you can manage the expenses for the next 6 months and there is no big debt on you either.
- Flexibility – When you start investing as much as 2 years of expenses. For example – If $500 is your monthly expense. It will be 24x$500=$12000 for 2 years and you are at that stage when you are investing this amount of money.
- Financial Independence – A phase where you can quit your job and still survive on your passive income. Sounds great, doesn’t it.?
- Abundance of wealth – When you have so much money that neither you nor your next generation has to think about money.
But the query is, how can you get through each stage? To cross these 7 stages you need to follow these 7 steps.
7 Steps to Follow For Financial Freedom.
Evaluate How Much Money You Actually Need
To calculate what quantity of cash you need, you need to follow the author’s method. You ought to multiply your yearly expense by 25. For example: if your yearly expenses are 4 lakh. Now multiply it by 25 which is 1crore. You need 1 crore by the end of your deadline so that you can get 4 lakh for your annual expense which is 4% of your total money. If you invest your 1 crore in stocks you will get at least a 7% return from that (beside inflammation rate). From that 7%, you have to use 4% of that for your survival which should be more than enough (4% of 1 crore is 4lakh, the same amount as your annual expenses) and you need to add that 3% to your 1 crore so that by compounding effect, your amount for expenses will increase continuously.
Calculate Your Total Net Worth
Get an idea of your current financial position. Net worth is evaluated by subtracting total assets from total liabilities. According to the author, assets mean the things from which you’ll get money if you sell them and liabilities are the things that lead to a decrease in your cash. To know how close you are to your financial goal, subtract the present investments to the amount that you need to be financially free i.e., 1crore. (Current investment-1 crore) You should regularly calculate your net worth which will help you know how far you are from your goal and will motivate you.
Know The Value of Your Time
Suppose if a 90-year-old man gives you $90Million and asks you to take each other’s place, will you do it.? Of course not. Because the value of time is a lot more than money. People don’t understand this. They can’t buy the past. Here you need to calculate the worth of your time. For this, you have to divide your working hours by your salary. (include your time spent traveling and each time you spend on your work during your working hour) This will help you know the real value of your time and will help you make further decisions.
It’s important to monitor your expenditure to maintain financial stability. These three things tell you either you’ll become financially free or not- Housing, Traveling, and Food. Most people want to buy a house and then they are stuck in loans which lead all their money to pay loan interest and they are not able to save. The same applies to food and traveling. Raise yourself these questions before buying anything.
- To buy that thing, how many working hours you’ll have to trade-off?
- How much amount you’ll have to spend on it in the future for its maintenance?
- Is that truly useful to you?
- Will you feel long-term happiness or short-term pleasure and forget after buying it?
If you’ll buy things you don’t need soon you’ll have to sell things you need.Warren Buffet
Earn More by Doing Side Hustle
One disadvantage of saving is you can’t save more than your earning, so you should continuously increase your earnings. For that, you can learn new skills and can apply for better jobs or you can earn money via side-hustle. I’ve shared almost “21 ways of making money” in my blog. Check it out by clicking here.
Investing is the biggest secret that allows rich people to become rich. The author says as fast as you’ll develop the habit of investing in yourself the sooner you’ll achieve financial freedom. Stocks are the best way of investment. People find it risky but if you diversify your investment it’ll be beneficial in the long term.
If you don’t find a way to make money while you sleep, you will work until you die.Warren Buffet
After this, you can become financially free and can live your dream life. Retirement doesn’t mean you don’t have to work, you can work till you want and can continuously increase your investment and net worth. But you do this by living your dream life too.
I have shared all this information from the book, Financial Freedom: A Proven Path to All the Money You Will Ever Need by Grant Sabatier. Hope you found it useful.
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