Financial freedom is a term which can be defined pretty broadly, seeing as it means different things to different people. For some, it means not having to work for a living and relying on your savings for the rest of your life. For others, it’s passive income, running your own company, not having any debt, or not having to sacrifice your free time in order to make a few extra bucks every day. However, there is one thing in common for all of these cases: not having to worry about your finances. That’s what financial freedom boils down to.
But, the statistics regarding financial freedom are pretty alarming, because over 40% of Americans have less than $10,000 in savings after they retire, which is pretty much nothing. That means that even though you are retired, you will have to keep on working because you are virtually broke. In order to prevent that from happening, let’s a look at six financial freedom tips and lessons from some of the most successful entrepreneurs of today.
1. Not All Debt Is Bad Debt
One of the most common problems all entrepreneurs face early on are cash flow issues. In that case, you need to start understanding that good debt is helpful if you’re starting a company. This is a tip you will often hear from Robert Kiyosaki, whose books on personal finance are among the best-selling titles in the niche. For example, getting a loan for your company puts you in debt, but you will be using that money to expand and hire more staff, which will enable you to go after bigger clients and deals. Or you may take out a mortgage to buy a house which you will start renting out.
2. Work Twice as Hard
In order to reach financial freedom, you need to be willing to make sacrifices early on, which means working overtime all the time, until your business is successful enough. Only then can you take a step back and enjoy the fruits of your labour. Take a look at Elon Musk, and his achievements, for which he was dubbed the “real life Tony Stark”. According to Musk, in order to change the world, you need to put in between 80 and 100 hours per week instead of the usual 40. Now, that approach has worked for Tesla, because it was the only possible way to keep the company afloat.
You may not have to work as much, but you still need to push the envelope and make sacrifices today, so that you can reach financial independence in the future.
3. Read. A Lot
One of the reasons why you should be reading is because today’s world is developing at an incredibly fast rate, and if you are complacent about changes in your industry for a even a week, you will begin to fall behind your competitors. Warren Buffett, who is the largest shareholder of Coca Cola, reads over 500 pages every day. Granted, a lot of those pages are financial reports, but Buffett also devours books on finance, investment, as well as business magazines and newspapers. He is still as driven and as hungry as he always was, which means that you cannot afford to rest on your laurels until you are absolutely sure that you’ve obtained financial independence.
4. Start Saving for the Future
According to Philip Taylor from FinCon, you should start saving today and focus on your personal finances, regardless of how well your company is doing. He maintains that investing and saving up for your retirement is simple. It’s just a matter of spending less than you earn, and then automating your savings effort, so that you stick to it every month or so. That way, you are getting paid early on and investing into your 401K.
5. Don’t Spend Big in the Beginning
If you are starting a company, you need to make sure that it’s stable first, before making investments which may or may not be necessary right away. For instance, while your startup could certainly benefit from better office space or faster computers, think about whether or not that kind of investment is absolutely essential. Would you and your staff be able to do the job without those purchases? If the answer is yes, then refrain from spending your money where it is not needed, and channel it towards your cash flow supply, hiring additional staff, or creating a better product.
6. Adapt to Changes Quickly
We have already touched on this, but adjusting is not just important when it comes to your industry, but payment as well. Making sure that your customers can buy your product without any hassle is essential, and for that, you need to adopt new payment methods. We aren’t just talking about cash, credit cards, and invoices, but also methods like PayPal and cryptocurrencies, which are definitely here to stay. History is full of companies which have stubbornly refused to keep up with all the latest developments. Don’t let yours join the list and focus on developing the skills needed to adapt well.
The Bottom Line
While all these lessons are incredibly useful, you will notice that there are no silver bullets nor shortcuts when it comes to financial independence. It is all about hard work, and making the right choices as a result of your focus and dedication.