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How to Get Rich and Achieve Financial Independence

How to Get Rich and Achieve Financial Independence

If you’re coming here for another get-rich-quick scheme, this is not the article for you. I’m not about to sell you on a pie-in-the-sky fairytale that will have you driving a Maserati into the driveway of your mansion by next May. But if you’re looking for actionable advice on being smart with money while working hard to achieve financial independence, then let’s explore this concept further together.

First, let’s clarify by what I mean by “rich,” as this is a very nebulous term. The definition of “rich” is as individual as taste preferences of food or fashion. Many times, even when you are considered by others to be rich, you don’t think of yourself that way. After all, it’s all about perspective. In poorer countries, people would consider $20,000 per year to be rich, where in more prosperous countries, it is considered poverty. So, to make this topic much easier to follow, I will leave the number of what you would consider to be rich up to you. Whatever it is, here are some important concepts to ensure success.

Keep Breathing Room in your Budget

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breathing room for wallet

    No matter what your paycheck says, if every bit of that money is allocated to paying someone else, you will never feel rich. Only you can decide what percent of your paycheck you want to live on, but I don’t recommend pushing it to 100%. Keep your expenses down to a level where you aren’t strapped every month. You can have the most amazing home, car, and high-paying job, and still be stressed out and unable to pay your bills. Live within your means and save the rest of your income to build up your long-term economic equity.

    Limit Expenses on Bobbles and Bling

    diamond ring

      Whenever you are about to buy something, consider if that is the best investment for your long-term financial goals. Now, I’m not saying don’t enjoy life, but keep in mind when you buy that boat, that brand-new car, the time-share in Tahiti, the new diamond earrings, or that designer leather jacket, that you are making a purchase where you are most likely losing money. The boat, car, time share, earrings, and leather jacket will not normally gain value over the years. The more you limit these expenses, the more money you can keep for smarter investing.

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      Stop Living to Impress Others

      Sometimes, we can make some very foolish decisions to impress others. The sooner we understand that our self worth is not tied up in our possessions, the more likely we are to achieve financial independence. Keeping up with the Jones’ means a very flashy facade of big-ticket purchases followed by years of financial struggle to pay back the debt with interest accrued. There is no shame in driving a used car with some miles on the engine or finding clothes in thrift stores. You will have much less stress than those working extra hours at jobs that they hate to pay their high credit card payments.

      Avoid Debt, Unless It Makes You Money

      While no debt is necessarily embraceable, there are a few scenarios where debt is often necessary. For example, my husband is in medical school. Since most people right out of college don’t have $250,000 lying around to attend medical school, taking out loans is often the only option. Education loans eventually pay you back much bigger dividends in higher earning potential over the rest of your life. The same goes for real estate. Rather than tie up all of your money by paying off one house, you can use the same amount to put down a deposit to purchase five homes or businesses that you can rehab or rent at a profit, while paying off the remaining loan amount with money from the rent or sale. If the profit gained by utilizing the bank’s money is greater than the interest you are paying to use the money, you come out ahead. You can also utilize credit cards to build up your credit line and get points to reduce other expenses like airline travel. Just make sure you can always pay them off at the end of the month so you don’t waste money on interest.

      Get Out of Bad Debt

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      bad debt

        Think of your financial security like a bucket of water. In order to fill it up, you have to make sure you plug all the holes where it is leaking. Avoid the type of debt that has you paying interest on non-necessary items like the plague. When you carry this debt, you are making someone else richer while you stay poorer. If you already have this debt, make it a priority to pay it off as quickly as possible. Pay the highest-interest balances off first and make minimum payments on the rest of the cards. Then, when the worst offender is paid off, take the exact amount you were paying on the card you have paid off and roll it into the minimum payment of the next card. Continue doing this until you are out of bad debt.

        Revisit the Time = Money Concept

        Most people understand the thought process that when they give their time, they get a certain amount of money back. Unfortunately, there is a limit to this, as there is a limit to how much time you can give. The financially free people often learn to create multiple streams of income and get mailbox money. Think about someone who owns real estate. They do not put any time or effort into your rent check, they just collect the mailbox money every month for allowing you to live there. Or, think about when someone creates a new invention or writes a book. Even if they sell the product to others to market, if they are smart they will set up the contract to continue to collect royalties for the life of the invention. This is mailbox money. After the initial work launching or selling the product, they simply sit back and collect the checks. Or, consider those who invest in the stock market. Once they go through the up-front work to become educated on market trends and how to invest wisely, they put their money in a company and simply ride the market up or short-sell the market and make money as the market goes down. When you realize that you can make money beyond the typical hourly rate, your financial horizons expand exponentially. Most people feel intimidated by this initially. After all, this can push people outside of their comfort zone. But, this is where the truly rich play. They are no different that anyone else, they just learned to invest their time in educating themselves in these concepts.

        Follow a Budget and Set Aside Money for Saving and Investing

        Most people are shocked when they document where their money goes each month. There are so many online tools now that link with your bank account and help with budgeting. It makes it very easy to analyze your spending habits. Try to limit your purchases on frivolous items and learn to set aside a certain percent of your income for saving and investing. Take advantage of company-sponsored 401Ks, set up tax-sheltered retirement accounts, and learn about investing in the stock market or real estate. All of this can be done while still working your day job.

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        Budget Your Time Wisely

        Many people in America watch four or more hours of television per day. Now, if you’re watching the latest investment news, I will give you a pass. But, if your filling up that time with Honey Boo Boo episodes, then it’s time to revisit your priorities. I would challenge you to take just one hour per day you normally watch T. V. and read a book on investing. Or, start a business out of your home in the evening and enjoy additional tax breaks offered to business owners while making money on the side. Or, find other people who are financially free and ask them their advice. If you follow people who are successful, you find they are always learning and broadening their minds on new ways to improve their financial status. And, in my experience, they don’t mind giving advice or helping others along the way. Being rich is not a golden ticket only offered to the fortunate. While some wealth is certainly inherited, there are enough rags-to-riches stories out there to inspire us. It’s simply that few people are willing to change their lifestyle and achieve their financial dreams, because, frankly, it takes hard work and reality shows are just so much more intriguing.

        While this is not a get-rich-quick article, if you apply all of these concepts, you will find that you are well on your way to financial success, whatever your definition. With the right amount of passion, education, and hard work, anyone can achieve their financial dreams. Like most adventures, the length of time to get to the finish is different for everyone. But, like all great journeys, with each step taken, you are that much closer to freedom.

        More by this author

        Sarah Hansen

        A corporate-sales professional turned entrepreneur

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        Published on November 8, 2018

        How to Answer the Tough Question: What are Your Salary Requirements?

        How to Answer the Tough Question: What are Your Salary Requirements?

        After a few months of hard work and dozens of phone calls later, you finally land a job opportunity.

        But then, you’re asked about your salary requirements and your mind goes blank. So, you offer a lower salary believing this will increase your odds at getting hired.

        Unfortunately, this is the wrong approach.

        Your salary requirements can make or break your odds at getting hired. But only if you’re not prepared.

        Ask for a salary too high with no room for negotiation and your potential employer will not be able to afford you. Aim too low and employers will perceive as you offering low value. The trick is to aim as high as possible while keeping both parties feel happy.

        Of course, you can’t command a high price without bringing value.

        The good news is that learning how to be a high-value employee is possible. You have to work on the right tasks to grow in the right areas. Here are a few tactics to negotiate your salary requirements with confidence.

        1. Hack time to accomplish more than most

        Do you want to get paid well for your hard work? Of course you do. I hate to break it to you, but so do most people.

        With so much competition, this won’t be an easy task to achieve. That’s why you need to become a pro at time management.

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        Do you know how much free time you have? Not the free time during your lunch break or after you’ve finished working at your day job. Rather, the free time when you’re looking at your phone or watching your favorite TV show.

        Data from 2017 shows that Americans spend roughly 3 hours watching TV. This is time poorly spent if you’re not happy with your current lifestyle. Instead, focus on working on your goals whenever you have free time.

        For example, if your commute to/from work is 1 hour, listen to an educational Podcast. If your lunch break is 30 minutes, read for 10 to 15 minutes. And if you have a busy life with only 30–60 minutes to spare after work, use this time to work on your personal goals.

        Create a morning routine that will set you up for success every day. Start waking up 1 to 2 hours earlier to have more time to work on your most important tasks. Use tools like ATracker to break down which activities you’re spending the most time in.

        It won’t be easy to analyze your entire day, so set boundaries. For example, if you have 4 hours of free time each day, spend at least 2 of these hours working on important tasks.

        2. Set your own boundaries

        Having a successful career isn’t always about the money. According to Gallup, about 70% of employees aren’t satisfied with their current jobs.[1]

        Earning more money isn’t a bad thing, but choosing a higher salary over the traits that are the most important to you is. For example, if you enjoy spending time with your family, reject job offers requiring a lot of travel.

        Here are some important traits to consider:

        • Work and life balance – The last thing you’d want is a job that forces you to work 60+ hours each week. Unless this is the type of environment you’d want. Understand how your potential employer emphasizes work/life balance.
        • Self-development opportunities – Having the option to grow within your company is important. Once you learn how to do your tasks well, you’ll start becoming less engaged. Choose a company that encourages employee growth.
        • Company culture – The stereotypical cubicle job where one feels miserable doesn’t have to be your fate. Not all companies are equal in culture. Take, for example, Google, who invests heavily in keeping their employees happy.[2]

        These are some of the most important traits to look for in a company, but there are others. Make it your mission to rank which traits are important to you. This way you’ll stop applying to the wrong companies and stay focused on what matters to you more.

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        3. Continuously invest in yourself

        Investing in yourself is the best investment you can make. Cliche I know, but true nonetheless.

        You’ll grow as a person and gain confidence with the value you’ll be able to bring to others. Investing in yourself doesn’t have to be expensive. For example, you can read books to expand your knowledge in different fields.

        Don’t get stuck into the habit of reading without a purpose. Instead, choose books that will help you expand in a field you’re looking to grow. At the same time, don’t limit yourself to reading books in one subject–create a healthy balance.

        Podcasts are also a great medium to learn new subjects from experts in different fields. The best part is they’re free and you can consume them on your commute to/from work.

        Paid education makes sense if you have little to no debt. If you decide to go back to school, be sure to apply for scholarships and grants to have the least amount of debt. Regardless of which route you take to make it a habit to grow every day.

        It won’t be easy, but this will work to your advantage. Most people won’t spend most of their free time investing in themselves. This will allow you to grow faster than most, and stand out from your competition.

        4. Document the value you bring

        Resumes are a common way companies filter employees through the hiring process. Here’s the big secret: It’s not the only way you can showcase your skills.

        To request for a higher salary than most, you have to do what most are unwilling to do. Since you’re already investing in yourself, make it a habit to showcase your skills online.

        A great way to do this is to create your own website. Pick your first and last name as your domain name. If this domain is already taken, get creative and choose one that makes sense.

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        Here are some ideas:

        • joesmith.com
        • joeasmith.com
        • joesmithprojects.com

        Nowadays, building a website is easy. Once you have your website setup, begin producing content. For example, if you a developer you can post the applications you’re building.

        During your interviews, you’ll have an online reference to showcase your accomplishments. You can use your accomplishments to justify your salary requirements. Since most people don’t do this, you’ll have a higher chance of employers accepting your offer

        5. Hide your salary requirements

        Avoid giving you salary requirements early in the interview process.

        But if you get asked early, deflect this question in a non-defensive manner. Explain to the employer that you’d like to understand your role better first. They’ll most likely agree with you; but if they don’t, give them a range.

        The truth is great employers are more concerned about your skills and the value you bring to the company. They understand that a great employee is an investment, able to earn them more than their salary.

        Remember that a job interview isn’t only for the employer, it’s also for you. If the employer is more interested in your salary requirements, this may not be a good sign. Use this question to gauge if the company you’re interviewing is worth working for.

        6. Do just enough research

        Research average salary compensation in your industry, then wing it.

        Use tools like Glassdoor to research the average salary compensation for your industry. Then leverage LinkedIn’s company data that’s provided with its Pro membership. You can view a company’s employee growth and the total number of job openings.

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        Use this information to make informed decisions when deciding on your salary requirements. But don’t limit yourself to the average salary range. Companies will usually pay you more for the value you have.

        Big companies will often pay more than smaller ones.[3] Whatever your desired salary amount is, always ask for a higher amount. Employers will often reject your initial offer. In fact, offer a salary range that’ll give you and your employer enough room to negotiate.

        7. Get compensated by your value

        Asking for the salary you deserve is an art. On one end, you have to constantly invest in yourself to offer massive value. But this isn’t enough. You also have to become a great negotiator.

        Imagine requesting a high salary and because you bring a lot of value, employers are willing to pay you this. Wouldn’t this be amazing?

        Most settle for average because they’re not confident with what they have to offer. Most don’t invest in themselves because they’re not dedicated enough. But not you.

        You know you deserve to get paid well, and you’re willing to put in the work. Yet, you won’t sacrifice your most important values over a higher salary.

        The bottom line

        You’ve got what it takes to succeed in your career. Invest in yourself, learn how to negotiate, and do research. The next time you’re asked about your salary requirements, you won’t fumble.

        You’ll showcase your skills with confidence and get the salary you deserve. What’s holding you back now?

        Featured photo credit: LinkedIn Sales Navigator via unsplash.com

        Reference

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