For the past 13 years of being an entrepreneur, I’ve been working hard to keep a balance between having no stable income and still being able to grow my assets to reach financial stability, towards financial freedom.
What about you?
When was the last time you did something to be closer to your financial goals? Found an app that helped you save? Budget your expenses? Or checked the management fees for the asset you bought last year (And not even sure what exactly that was…)
Yes, I know what the answer is and I’m no different than you. But I did make huge steps in the past 13 years I’m investing, optimizing and learning new ways to reach my financial goals faster and cheaper, on my way to controlling my finance and freedom.
Here we go!
So, here are the things I did that you can do as well to reach your financial goals and live a happier life.
5 Things You Need to Reach Your Financial Freedom Faster:
1. I learned to invest in the stock market – The stock market is one of those places people are deeply afraid of. I agree it’s scary. Lot’s of unknowns and the worst thing it’s “risky”. Well, after really understanding how economics work, I can now say that if you are NOT in the stock market you are being very risky (When you’re actually trying to play it safe, right?)
Here’s an example: As a rule of thumb the stock market on average goes up 10% every year. And you can gain this if you invest for the long term. If you are parking your money on your savings account, you’re probably not gaining even more than the inflation rate. This means you’re actually losing money.
2. I invested in several real estate projects – Real estate counts as a safer way to invest. It’s true but it’s much more work. Still, it’s important to diversify your investments. I started investing through other funds and groups I joined which were relatively easy to join, and now I’m looking at other deals to buy property and rent it out on Airbnb. Good real estate deals don’t have to be around where you live or even at the same country you live. It’s a matter of finding the right opportunity at the right place.
3. I opened an IRA – Just like everyone else I had different types of funds and benefits, I got from previous employers. I realized that the people who manage that money for me don’t care about me as much as I care about myself (Surprise). Also, they are more expensive and perform worse on those investments than what I gain. So, I decided I’m consolidating it all (Whatever I could) into a single IRA fund that I manage myself. I know exactly what fees I’m paying, what’s my exact portfolio and I gain much more than the benchmarks. Oh, did I mention that that are great tax benefits to that?
4. I understand the value of compound interest
Albert Einstein – Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it. Compound interest is the most powerful force in the universe.
Albert here even agrees with me! Compound interest is indeed very very powerful. The earlier you start using it, the more powerful it is. Here is an example of what compound interest can do for you.
Related read: This $1 Can Change Your Life; Personal Finance 101 for Entrepreneurs
This also means you not only need to start saving and investing as soon as possible but also that every $1 you save is actually worth much more than you think. Think about this next time you buy your Starbucks coffee, or a branded product when you have an equivalent which is cheaper.
5. I optimize my financial life (Always!) – There are always things that can be improved. You can always do better budgeting, save more, find cheaper products or make more money on the side. As an example: we are renting our place out on Airbnb whenever we are out of the house. It’s not a huge amount of money but when you use #4 here…We are talking about nice sums here!
The bottom line is this, we all leave our finances to “when we will have time” and “be ready”. But we never have time and we are never ready.
So, stop ignoring this. Stop outsourcing your financials completely (as they are expensive and think that it’s only for experts.It’s really not). All banks and other kinds of advisors would like you to think it’s complex. So, You should learn every day what you can do better in your finances.
Image by Joe Wolf
This post was first published in Startup Noodle