How do you become Financially independent in a lifetime? Do you have what it takes to become really wealthy? In this article we have in five points gathered some of the most important things in order to create the right conditions to get wealthy. Wealth is of course a relative concept, with as many interpretations as there are people in this world. According to our simple definitions, being rich/wealthy is being able to cope with the daily expenditures from one’s passive income and investments.
One of the biggest obstacles we have in our pursuit of financial independence is the lack of knowledge when it comes to personal finance. The other problem, maybe as a consequence of the first problem, is that we nowadays have a lack of patience with our daily decisions in our day-to-day living. Nowadays we are so used to getting everything we want at once, often with expensive credits, that we are not willing to save for the things that we are buying. If we look back a couple decades, we see big changes in the purchasing behavior of people comparing to how people lived then.
A couple of decades ago people saved for the things that they wanted and then bought the things with real money. Nowadays it’s more a rule the exception that bigger purchases are done on credit. People buy before their private economy allows them to do so. A kind of early reward, that is so normal that nobody even thinks about it anymore.
If you think about it, this is actually quite a destructive attitude towards money if you seriously consider becoming Financially Independent. The only time when it makes sense to borrow is when what you buy can generate cash flow over a longer time period. Examples of such investments could be housing or starting your own business. And even in these areas, investments need to be done with great care. Unlike what many seem to think, there are many pitfalls in the housing market nowadays. The quantitive easing that central banks all over the world have practiced over the past ten years have created bubbles in both the real estate and the stock market.
This is, however, a topic for a later occasion. As follows, we list the five points that we consider to be the most important for creating a good future and the possibility to become financially independent:
1. Learn to love money to become financially independent
Unlike with most of the other things in life, your relationship with money is lifelong. During your lifetime people will come and go. Your dear ones will disappear from your life at some point, whether you want it or not. The love for other people will in some cases wane over time. One thing that you, however, never can escape from is money. Money will always be a part of your life, whether you want it or not.
As with people, the best thing you can do with your money is to learn to love them. If you don’t care about people, they will become less present in your life, until they one day disappear forever. It’s the same with money. If you are disrespectful with money and don’t give them the right conditions to grow, there will always be a shortage of them in your life.
All people have their own problems with money, as with all relationships. Either the problem is too much money to handle, or too little. But by taking care of the money and learning how to love them, the probability for the first of the two options will increase significantly.
2. Recognize that money is important
We often hear people say that money is not important, it is much more important to be healthy and happy. In my opinion, this is only an excuse used by people who lack the basic knowledge of money management. It’s also a way of justifying their lack of money. Having money does not rule out happiness and health, furthermore, studies have shown that lack of money is one of the biggest sources of argues in a relationship and also one of the causes of health problems. Anyone that has had problems in their personal finance know that the stress that it causes isn’t of a constructive nature.
To have a well organized personal finance is very important and will be even more important in the future. It isn’t at all sure that the society will look the same over the coming decades. We have an aging population with obvious problems finding ways to finance the pensions. All this will require even more responsibility from the individual in order to maintain the same standard of living under the changing circumstances.
3. Take control of your life
Almost every day nowadays, we read about people who feel unfairly treated and offended. It has become a part of the daily journalism to bring forward people that feel unfairly treated by something bigger and more powerful than themselves. At the times of the last financial crisis, we often read about people accusing banks for their problems. Why did the banks lend me money if they knew that I couldn’t possibly pay it back?
We have also seen people accuse McDonald’s for making them fat. All this has become a normal part of our society – to find problems in the society rather than in our own ability to make decisions. As more and more articles about offended people are published, it seems as if the younger generations nowadays actively are seeking for reasons for their shortcomings outside themselves. There are always someone else to blame as long as we don’t see our own part of the responsibility.
To take control of your own life is the most important thing in order to be able to create a future as financially independent. You have to take responsibility for your own decisions in your life and always assume that you are the master of your own life. Unless you do anything to improve your own life, someone else will do it. This significantly reduces the chances of shaping your own life in accordance with your own interests.
4. Set goals and plan your life
In order to be able to create the right conditions for living a life according to it’s potential, you have set goals in your life. Think of it as a road map. Without knowing the end station, you can’t possibly set out a direction for your journey. Temporary set-backs are also easier to handle if you have a clear image of the goals that you want to achieve.
This has a lot with psychology to do. A person that knows what he or she wants will absorb all the information in connection with the subject of interest. We live in a world of information overload. A world in which the biggest obstacles often are related with how to handle the information available. Therefore it is much easier handle the valuable information if you both consciously and on a more unconscious level learn how to sort among the information.
We all know how it works when we get interested in something. Before this insight, everything concerning a certain object was uninteresting and you didn’t even register the information available. Take investments in the stock market as an example. Before we take action and make the decision to buy shares in a company in the stock market things as indexes, rates or the general economy seem quite dull for most of us. But after the decision to engage, it becomes a natural part of the everyday routine to follow the development of both the own portfolio and maybe even the whole economy. Engagement alway makes the energy grow and creates the conditions for personal development.
The best thing you can do for your personal development and your life is to plan it with care. Write down what kind of life you would like to have ten years from now. Allow yourself to dream and use your imagination. How do you live? How does your financial situation look like? Where do you work? How does your private life look like, do you have a family? Don’t be critical and too realistic at this stage. It’s easy to lose hope if you listen to all the critical voices inside yourself. Another important thing is to keep your dreams to yourself. Then it is easier to avoid all the condescending comments that could affect your judgement.
Instead you should let your dreams and your goals be a source of inspiration in your life, a way of getting things done in your everyday life.
As the following step, you should look for strategies to achieve your goals. Even if goals and dreams are the basis for everything, they are just wishes if you don’t act upon them. There has to be a clear strategy for how to reach the stated goals. What do you need to improve in order to reach your goals? What’s the first step to take?
A part of the work with developing a strategy is mapping your strengths and weaknesses and in which phases these should be improved. Should you, for example, get an exam in order to get the competence that you need?
To sum this up; life is too important to be left to chance. No-one will take care of you and your dreams if don’t do it yourself. No-one else knows as well as you what you really are interested in and what you are passionate about. Write down what you want from every part of your life and it will become much easier to remember it and implement it in your life.
5. Become a problem solver
Nobody really likes problems. Everyday we are surrounded with problems of different severity and in some cases it’s hard to see how there could be a positive side of it. Despite this, we often have the wrong attitude when it comes to how we handle problems. To become successful, you need to learn to expect problems and be better at solving these.
This is an important feature that I’ve noticed some of the most successful people embrace. They are proactive in their approach to problems and prepare as well as possible instead of just reacting to the problems. You have to learn to become a problem solver and learn to love challenges in order to reach your potential, regardless of profession.
Successful people look for solutions to big problems, while the mediocre takes the easy way and looks for easy solutions. When the mediocre person encounter problems, he lacks the energi to deal with the problem and looks for easy ways to get out of the situation. Successful people love their ability to solve difficult problems and always look for even more challenging tasks.
This is one of the biggest differences between successful and less successful people. Successful people are prepared to do the little extra needed in order to succeed. Successful people carefully study situations and look at different scenarios and then come up with thoughtful solutions. Successful people are stubborn and persistent. Make it a daily routine to repeat this simple phrase:
I love challenges, no matter what, I’ll find a solution. I am an excellent problem solver and today I will develop my ability to solve problems in my work.
Read the text every day before going to work or before starting your daily routines. All of these tips will