How to Climb Your Way to Financial Independence

If you’re there below struggling to make both ends meet, or are making the same money mistakes, you must be hoping that one day you’re already at the top of the ladder.

The 5-Rung Wealth Ladder

Rung 1: Help yourself Financially

The first step you need to do is to figure out how you can support yourself as well as your family financially. You have to assure that you can consistently pay your bills in a timely manner. However, most people are having a hard time in doing it correctly.

There are certainly two aspects you should consider as far as this first step is concerned. The first aspect is for you to be employed. The second aspect is to become an entrepreneur, or to do business. Based on my experience, being an entrepreneur is more fulfilling than being an employee. But based on statistical data, more people are into employment. There’s nothing wrong with this. You can be employed anytime you want, but you can also do both. You can do a part-time business while working full-time.

Be reminded that whether you’re working or doing business, the level of your financial security depends on the value you can add to the so-called “marketplace.” The most important thing in this first step or ladder is to invest much on your own self. What does it mean? You have to make sure that you are investing in education. Don’t be content with what you already have or where you are right now.

You should be optimistic.  Always think that you can do everything. Avoid complaining and making any excuses.

Rung 2: Learn to Save

Let’s say you earn $500,000 yearly.   If you don’t know how to save money, that big earning will dwindle over time. After 5 – 10 years, for example, you will regret that you haven’t kept anything for yourself and for your family. The very basic but often overlooked is learning how to save. According to experts, saving is the primary requirement to attain an increased level of financial independence.

The time you can reach such financial independence is correlated to your savings. It means the higher you save, the faster you’ll become financially free. The less you save, the less chance of achieving it.

Perhaps you love your current job or business. However, you need to realize that you cannot work or do business all throughout your life. You have the option to work less or to stop working 10-15 years from now if you’re serious about saving a percentage from your monthly income.

For me, the saving process must be based on these categories:

  • Reserve funds for personal use
  • Funds for business or real estate
  • Funds for travel and fun
  • Account savings for retirement
  • Savings for non-retirement matters

Keep in mind that those categories are all important. They must be considered as they serve as your guide to achieving financial success.

Rung 3: Invest on Assets to Enjoy a Residual Income

invest to make more income

After you consider your personal reserve funds and you do a regular saving process, you have to think of where you’re going to put your money. What to do next? You have to let your money work for you. The very best thing to do is to look for things that send profits back to you. This could be done in the form of equity growth and income.

Investing on a real estate is one of the best things to do. Below are some of the specific strategies that are related to investing for real assets:

  • Choose a specific to achieving your main financial goal.
  • Estimate the time you can have the amount of equity to produce a residual income (i.e. $1 Million at 6% is equivalent to $6,000 every year).
  • Always accumulate assets.
  • Look for a compounding growth.
  • Take it easy as you can reach your goal in a gradual manner.

It’s best to own a portfolio of income properties and bank notes. They are my real estate assets. A lot of people, particularly those who are financially successful, like this idea. This is how you’ll assure a continuing stream of income in the future.

With your regular overheads to be covered by your assets, you’re now ready to learn and apply the next step.

Rung 4: Always calculate risks

After you’ve successfully learned the third step, you now have a residual income that comes from your purchased or invested assets. Congratulations! But it’s not over yet. There’s more…

If you’re imprudent, you can still return to your previous financial status.

You have to calculate the financial risks that you will experience along the way. How? Below are some of the proven techniques relevant to risk calculation.

  •  Pay Off Debt

 You have to be free from any financial risk. If you want your portfolio to be free from risks, you have to avoid losing your assets to the lender. The main key here is leveraging. This is the greatest financial tool. Avoid debts as much as possible. This is one of the hidden secrets among wealthy people.

  • Sell Properties that are Financially Weak

In the previous explanation, it’s encouraged that you invest on assets. Yes, it’s true. However, you have to be very careful. If the assets you bought are not performing well, you have to sell them. Why? Those properties always incur taxes and charges. To avoid a monetary backslide, you have to sell those dormant properties.

  • Sell Properties that are in Toxic Locations

It’s easy to understand. If you have low-cost properties, you probably may have a waning cash flow.  You have to sell your real estate assets that are located in non-performing locations. Doing so is like leaving an unnecessary baggage in one location. Instead of struggling more, you must leave the baggage there.

  • Always Consider Asset Protection

 This is one of the very basic principles you need to do perfectly. You need to have an asset protection by separating your assets in categories. The categories you may have to consider are location, price range, as well as the type of property. It’s also advised that you consult an insurance agent to ensure you have a sufficient insurance protection program term mortgages to adjust the interest rates are also significant.

  • Hedge to Provide Flexibility

Nobody knows when those unpredictable things will happen. It’s always wise to make sure that you’re always flexible with things that may occur. Always remember that if time requires you to sell properties that can easily convert cash, then do it. This process may include accounts on checking and savings, market-based money, gold/silver, stocks, and highly low-priced real estate assets.

 Why Achieving Financial Independence Is Important

You already have known the 5 steps to achieving financial success. You need to aspire for more!

Always think that a job security is just an illusion. There’s a financial weakness when you rely only on your 9-5 job. If you’re going to choose between a job and a business, always go for the latter if you can. The risks are always there but the gains will be better than the being an employee forever.

Regardless of your financial source — job or business — you’re still into doing business in general. The only difference is your clients or customers. Who are they? For a typical worker, your client is your boss, of course. But if you’re a business owner, you’re the client for yourself.

Do you get the point? If you’re an employee, your boss buys your time for you to execute the services he needs. If you’re a business person, on the other hand, you’re not trading your time. Instead, you can get a lot of customers who can give you an unlimited income in return.

Escape the Rat Race

 be financially freeHave you ever imagined how it feels retiring early? Most financial gurus always tell us about “rat race.” Rat race means being trapped in the cycle of debts just to survive. What if you’re given an opportunity to retire early? That means you can enjoy yourself in the high-end vacation places with your loved ones.  What’s more fulfilling than allowing your money to work for you.

According to Stephen Covey, all people always want to “live, love, learn things, and leave a legacy.” Do you want to enjoy those things?

Don’t stop chasing that dream of being financially free. Don’t let other people steal your dreams, too. Aspire to become financially free because this is better than being trapped in a rat race always. You have to avoid debts and living in a cycle of debts. If you have a 9-5 job, that’s not a problem at all. But make sure that you have other methods to accumulate financial assets.

You Can Help Others When You’re Financially Free

Do you like helping other people? If yes, then look for ways to become financially free. Remember that you cannot help other people if you’re broke.

Helping others is like living an extraordinary life. We’re serving other people and this can be really fascinating. Don’t stop helping many needy individuals. You have to widen and deepen your vision. It’s fulfilling to see other people smile because you’ve helped them. But again, you have to be financially free for you to do this.

Fun Is Amplified When You’re Financially Free

 Happiness can’t be bought. Yes, it’s true. But money can buy things that give you fun while living in this world. For instance, a luxury vehicle and a multi-million dollar luxurious and spacious mansion can give you fun. If you’re wealthy, you can absolutely buy anything you want, without worrying about your budget.

In a nutshell, you need to stop living in a rat race. Instead, apply the effective steps presented above for you to become financially successful. There’s no problem with having a 9-5 job, but always consider that doing an extra business can help you attain your financial goals more easily. Remember that when you’re financially free, fun is always amplified.


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