Blog | Personal Finance

How to Achieve Financial Independence

Spoiler: It requires learning your wealth number, discovering the power of cash flow, zeroing in on your why, and building the right support group

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What do Burt Reynolds, Michael Jackson, Walt Disney, MC Hammer, Elton John, Mike Tyson, and Wayne Newton all have in common? They were once incredibly wealthy celebrities worth millions who have since filed for bankruptcy. Lottery winners often suffer the same fate, and are more likely to declare bankruptcy within three to five years than the average American.

As these examples illustrate, having millions of dollars doesn’t equate to financial freedom. Why? Because even if you have a lot of money, if you don’t know what to do with it, it will empty out of your bank account far faster than you can replenish it.

What is financial independence?

Financial independence means so much more than just having money. It’s about more than saving up just enough for retirement. The first concept you need to understand when it comes to financial independence is your wealth number, which is using time (not money!) to calculate how much you actually need to be financially free. After all, if you don’t know how much you need, how do you know when you’ve achieved your goal?

To discover your wealth number, you’ll need to figure out that how long you could survive financially if you stopped working today (that means no more paychecks, whether it’s due to losing your job, retirement, illness, divorce or whatever).

Here’s the simple mathematical equation:

Your available money ÷ Your monthly expenses = Your wealth number

Your wealth number is measured in time, so this calculation determines the number of months you could go without any income coming in. So, for example, if your number is 8, then you could last 8 months before going broke. Is your number scary? Sobering? Upsetting? Far less than the number of years you think you’ll still be living? Then let’s talk about a surefire way to make sure your wealth number stays high: cash flow.

Cash flow is an ongoing stream of income you receive from an investment. For instance, if you own a house or apartment building, collect rent from tenants each month, pay your operating expenses and mortgage, and end up with an overflow of money after all that, then that’s a positive cash flow. Now, let’s say you have $5,000 of cash flow coming in every month from your real estate investments, but your living expenses are only $3,000 — then you are financially free, because your cash flow is paying for all of your expenses and you aren’t dependent on anyone or anything to survive. If you like the sound of this, read more about why cash flow is queen.

Why aren’t more women achieving financial independence?

So many women lose sight of the goal for financial independence (or never believe it’s even possible) — we put others first on our quest to be the best mother, spouse, employee, friend, daughter, and neighbor possible. And where does that leave us? At the bottom of the list of priorities, possibly resentful of our missed potential, and struggling financially.

Now ladies, do any of the following statements sound familiar?

  • I will find a rich man to take care of me.

  • I don’t want to deal with finances, so I’ll just ignore them.

  • I’ll take the easy road today and deal with the consequences in the future.

If so, you are not alone — these are common choices women make. But if you don’t take financial matters into your own hands, your chances of having a secure financial future are slim. The good news is that it’s not rocket science to change your pattern and choose another path.

How can I achieve financial independence?

As you can see, financial independence allows you the freedom to be who you really are and do what you really want in life. If you want to be financially free, then you need to become a different person than you are today. You must let go of whatever has held you back in the past. It’s a process of growth, improvement and gaining spiritual and emotional strength to become the most powerful, happy, and successful “you” possible. That is the true reward of financial independence.

Does this idea seem far-fetched or unattainable? Then you haven’t yet discovered (or admitted to yourself) your why — your motivating, driving force that will push you toward your goal of financial independence.

I can tell you that my “why” absolutely led me to my dream, and I know it can deliver the same results for you. Your why is so important because once you home in on it, you will be acutely aware that every action you take and every decision you make will either get you closer to or farther away from your dreams.

Repeat after me: I will take control of my situation, no matter what it is, and achieve the financial independence I deserve.

The importance of building a support group

Ok, maybe you need a little help taking control of your situation and starting on your new path. Well guess what? That’s not only perfectly normal, it’s actually a key to success. As the famous quote by John Donne goes, “No man [or in this case, woman] is an island, entire of itself.” And as I say in my book, It’s Rising Time!, “for you to get from where you are financially right now to achieving your financial dream, you cannot do it all by yourself. It is impossible.”

Your personal support group is your reliable, go-to place to get moral, mental and emotional encouragement. This is a group made up of people you trust and can turn to, especially when times get tough. They listen, are aligned with you to accomplish your goals, and most important, give you honest feedback — even when you don’t want to hear it!

Face it. We women can make a lot of excuses, especially when it comes to money. But imagine making these excuses out loud to a group of close friends whom you trust and admire. They want you to succeed and will provide the encouragement you need to turn your negative thinking around. Without this ongoing, support group in place, you will probably quit.

Personally, my support group is small, and over time, I’ve found that’s what works best for me. You’ll need to find the right people and group size that work best for your situation.

To start your group, approach your spouse or significant other. This person is usually your number-one supporter. If not, and your partner is more of a liability than an asset, do not let this get in your way. Simply do not include him or her in your support structure at this time. Many women tell me that their husbands are not supportive at first, but they come around once they see the cash flow come in!

Next, look at pulling together two to four women embarking on similar journeys. I’ve found that powerful things happen when women encourage one another to pursue their dreams. And if you study and learn from your experiences together, it becomes a priceless collaboration. You will receive a financial education you cannot get in any other way.

Another vital member of your support structure is a coach and/or mentor. A mentor is someone who can relate to your situation because he or she has already been there. A coach is someone who works with you towards a specific outcome via structured training. Good coaches and mentors have extensive experience and success in the areas you are trying to pursue. They should be people you respect who provide guidance and knowledge and are there when you need help.

My support structure has changed over the years. I’ve had different coaches and mentors in various areas throughout my life. And you will too. As your aspirations and situation changes, so will the people you count on for encouragement, guidance and knowledge.

But no matter where you are, whether you have big dreams of financial freedom or just want to get out of the rat race, my strong advice to you is to create your support structure now. Surround yourself with people who provide trust, knowledge, experience, and encouragement. Without a support system, you are setting yourself up for failure. Instead, I want you to win on your journey to financial freedom!

Make today the day you move forward

Enjoying the rewards financial independence provides is simply a matter of increasing your financial education and determining where you are now compared to where you want to be. To start your journey, check out the Triple A Triangle™ from my book It’s Rising Time! I’ve broken down the process into three, easy-to-understand areas: Aspire to achieve a goal, Acquire knowledge, and Apply what you’ve learned to be successful. This book will give you the tools you need to remove the obstacles that are preventing you from rising up to your financial genius.

I know it can be scary to make change happen, but think about it: If you don’t take action now, what does your financial future really look like?

Original publish date: February 14, 2019

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