Are You Financially Secure?

Why job security does not equal financial security

A lot of people are trapped by debt and taxes in life. Because of these things, they never feel truly financially secure or achieve a path to financial freedom. The path to true security or freedom is found on the right-hand side of the CASHFLOW Quadrant—the Business (B) and Investor (I) side. Unfortunately, most people look to the left side of the CASHFLOW Quadrant for security—the Employee (E) and Self-Employed (S) side.

My natural father was highly educated. He was also fixated on job security. The most important thing to him was having a good job. It was a value most of his generation shared, and one that he instilled into his kids from a young age. He assumed that job security meant financial security—that is until he lost his job and couldn't find another.

On the other hand, my rich dad never talked about job security. Instead, he always talked about financial freedom. He showed me the patterns for different kinds of security and freedom found in the CASHFLOW Quadrant.

The pattern for job security

Pattern for job security image

People who follow this pattern are good at their jobs. They are highly educated and have a lot of experience. The problem is they know little-to-nothing about the B and I quadrants. They feel financially insecure because they have only trained for a job and rely on others for their living.

Often, people in this pattern will put money into a retirement account. But even then, they still feel insecure because they don't actually know what is happening with their money. They hope the manager of the account will do a good job. But, for the most part, it's money that just disappears from their paycheck each month. And when they get their retirement statement each quarter, they don't know how to read it.

In order for those in the pattern of job security to feel financially secure, they must increase their financial education and learn how to invest.

The pattern for financial security

This is the pattern for financial security for an E:

Pattern for financial freedom image

Instead of putting money into a retirement account and hoping for the best, this loop is for people who feel confident in their education as both an investor and an employee. Just as you study at school to learn a job, I suggest you study to become a professional investor.

Pattern for financial security image

The image on the right shows the pattern for financial security for an S:

The average American millionaire is self-employed, lives frugally, and invests for the long term. The pattern above reflects that financial life path.

Additionally, both E's and S's can move into the B side of the quadrant. For instance, great entrepreneurs like Steve Jobs took that route. It's not the easiest but, in my mind, it's one of the best.

The pattern for financial freedom

Most people are concerned with financial security, and there's nothing wrong with that. Personally, however, I don't want to be just secure, I also want to be financially free. Because of this, I operate entirely on the right-hand side of the CASHFLOW Quadrant.

The following is the pattern for financial freedom:

Pattern for financial freedom image

This is the pattern my rich dad recommended, but it is not for everyone. It is, however, the pattern for true financial freedom because in the B quadrant people are working for you and in the I quadrant your money is working for you. You are free to work, or not. If you look at the ultra-rich, this is their pattern.

Choose your path

Today, you can choose which financial path you want to take. Will it be job security? Financial security? Or Financial freedom?

Unfortunately, most people choose job security, especially in tough economic times. I'm of the opinion that's actually the lease secure of all the positions because you rely entirely on someone else for your livelihood. And in times of economic trouble, jobs come and go.

At a minimum, I recommend becoming educated in financial security, which is feeling confident about your job and also confident about your ability to invest in both good and bad times.

But, if you have it in you, the best path, and one of the hardest, is choosing financial freedom. It takes a high level of financial education to succeed in the B and I quadrants. It also takes a lot of passion, commitment, and vision. But the payoff is worth it.

I encourage you to choose your path today. And also, choose wisely.

 

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