Three Rules for Financial Independence
One of your goals in life should be financial independence. You must aim to reach the point where you have enough money so that you never have to worry about money again. The good news is that financial independence is easier to achieve today than it has ever been before.
Below are a few of the laws for achieving financial success as described by Benjamin Franklin in “The Way to Wealth,” Brian Tracy in “The 21 Absolutely Unbreakable Laws of Financial Success” and others. We will cover more of these laws in future articles.
Rule #1: The Law of Belief
You act in a manner consistent with your beliefs, especially your beliefs about yourself. The best belief that you can develop within yourself is that you are destined to be a big financial success. When you are absolutely convinced that you are a financial success in the making, you will engage in the behaviors that will make it come true.
The worst beliefs you can have are “Self-limiting beliefs.” These exist whenever you believe you are limited in some way. The fact is, if others are doing better than you, it is because they have developed their natural talents and abilities better than you have. You can do the same.
What one great thing would you dare to dream if you knew you could not fail? If you had no limitations, if you had all the time, money, skills and contacts you could ever want, what would you want to accomplish?
Your first step to success is to believe in this dream.
Rule #2: The Law of Exchange
Money is a measure of the value that people place on goods and services. It is only what a person will pay that determines the value of something.
We each have a tendency to look upon the “sweat of our brow” or our work, as something special because it is so intensely personal. It comes from us and is an expression of what we are as a person. However, as far as others are concerned, our labor is just a cost.
To earn more money, you must add more value. You must increase your knowledge, or increase your skill, or improve your work habits, or work longer and harder hours, or work more creatively, or do something that enables you to get greater leverage and results from your efforts.
The highest-paid people in our society are those who are continually improving in one or more of these areas to add greater value to the work that they are doing. You need to do the same.
Rule #3: The Law of Saving
It’s not how much you make, but how much you keep, that determines your financial future.
Successful people are religious about putting away chunks of money regularly, and paying down debt during prosperous times, so they have reserves set aside when the economy or business turns downward.
Calculate your true net worth as of today. Make a list of all your assets and value them at the amounts you could actually get for them if you had to turn them into cash quickly. Add up all your bills, credit card balances and mortgages and then subtract them from your assets to get your net dollar worth.
Now, divide the number of years you have been working into your net worth. The result is the net amount you have actually earned and kept each year.
Are you happy with it? If yes, congratulations! If not, start doing something about it.