Comfort + Independence = Financial Freedom by Kim Kiyosaki

Comfort + Independence = Financial Freedom

What does the current financial situation mean for your future?

For the last handful of years or more, the economy has been booming. It was almost as if nobody had a care in the world — even those who were living paycheck to paycheck still felt pretty secure they’d always have a job, given the low unemployment rate. But all of that changed the moment the coronavirus (Covid-19) became a worldwide pandemic, wreaking havoc not only on people’s health and well-being, but their jobs, savings and futures.

According to a CNN article, more than half of American jobs are at risk because of coronavirus — that’s nearly 80 million. From layoffs and furloughs to fewer hours and wage cuts, people across every industry are feeling the effects on their pocketbooks. CNN is also predicting that up to 3 million jobs could be lost until summer.

No doubt you’re also watching the stock market plummet in light of this global pandemic. As I write this, the Dow closed below 20,000 total points for the first time since February 2017 — in fact, it fell so much today that it erased all of the gains accumulated under the Trump administration. Not to mention, trading has been halted several times this week due to losses that trigger the New York Stock Exchange’s circuit breaker.

And anyone who’s been watching their retirement accounts (I know many people aren’t even brave enough to look right now) know they’ve taken a massive hit the past couple weeks as well. Portfolios are crashing so hard, there are comparisons being made to the big crash of 1929. On Monday of this week, the 13% crash was the second-worst in history. And it’s happening across the board, from large U.S. company stocks to high-yielding bonds.

I’m not telling you all of this to cause further anxiety and stress over coronavirus — I’m reminding you just how precarious your financial situation is if you’re dependent on an employer for your income and your savings for a sound financial future. In fact, there’s a lot of risk involved when you’re dependent and —rightfully so — it’s bound to make you feel very uncomfortable. On the flip side, don’t you think you’d feel much more comfortable if you knew how to achieve financial independence? Yes, of course!

Defining financial comfort and independence

I know the answer may have been slightly different a month ago, but please answer these questions with the current economic decline in mind: When it comes to finances, would you describe yourself as comfortable or uncomfortable? Now, as it still relates to finances, would you describe yourself as dependent or independent?

First, let’s look at the definitions of each:

  • Comfortable. When your financial life is working. When you can sleep through the night without worrying about bills to pay.

  • Uncomfortable. When you are stressed out, a lot, about your money situation. You lose sleep over it. You fight with your partner about it. You are not where you want to be.

  • Dependent. When someone is providing for you financially. This may be your husband or partner, your parents, the government through social and medical programs, or the company you work for. Here’s the litmus test: If this person or organization disappeared, would you find yourself in a financial struggle?

  • Independent. You are in total control of your financial life. It doesn’t matter, financially (emotionally is a whole other thing), if your partner, family, government programs, or your job or business disappeared, because you would be financially fine.

Now, think about those two opening questions again. Has your answer changed or remained the same?

Women are more likely to be uncomfortable and dependent As we all know — now more than ever — comfort can change without even a moment’s notice. Problems, changes and unforeseen incidents (global pandemics) can happen without warning. So even though you may have been comfortable a month or so ago, it’s drastically changed overnight.

That’s why it’s important to ask yourself, “Am I prepared in case one of these events happens?” For many people over the last few weeks, the clear answer is, “no.” Trust me, you’re not alone.

According to Bankrate’s October 2019 Financial Security Poll, 40 percent of Americans weren’t ready for an economic downturn if it happened in the next six to 12 months. And that’s exactly what’s happened with the coronavirus — too many people weren’t financially prepared.

If you’ve never read The Cashflow Quadrant, written by my husband, Robert, then here’s a brief synopsis: The CASHFLOW® Quadrant defines how different people generate their income or money. On the left side, the E (Employee) and S (Self-employed or Specialist) focus on earning income and greatly value a safe, secure job or career. On the right side, the B (Business owner) and I (Investor) focus on creating assets to provide their income source using other people's time and money. Above all, they value financial freedom. The whole concept is about moving from the left-side to the right-side, in order to achieve financial independence.

The same “quadrant” concept can be applied to the comfort and independence conversation (although they get trickier to organize into left and right sides). In talking with women all over the world, there seems to be four categories that we fall into when it comes to money:

  1. Comfortable and Dependent

  2. Comfortable and Independent

  3. Uncomfortable and Dependent

  4. Uncomfortable and Independent

Obviously, the quadrant for me is Comfortable and Independent, but I know that may differ for each woman. That being said, I know many women who are Comfortable and Dependent who don’t want to be in that situation any longer — however, they often don’t do anything to change their position on the quadrant.

According to this CNBC article: “For many women, financial security is one of the biggest considerations that factor in when deciding whether to stay in an unhappy marriage or divorce. As a result, a significantly large number of women stay in marriages that are unhealthy and even border on dysfunctional.”

It saddens me to say that some of these Comfortable women must subscribe to the theory of “Don’t fix what ain’t broke.” It takes a self-aware woman, and one with a bit of ambition and self-confidence, to go from living a Comfortable existence to wanting more.

If you were feeling Comfortable and sitting pretty over the last decade, my guess is the coronavirus pandemic has opened your eyes to how quickly that can all change. Unfortunately, you’re probably feeling pretty Uncomfortable right now.

I made the shift and you can too Until I realized how dependent I was on Robert, even though we were financially equal partners in the business, I was Comfortable and I didn’t think I needed to change anything. You see, The Rich Dad Company was built around Robert’s story — as we planned — yet if for some reason we were to go our separate ways, the value of the company was much, much smaller without Robert. So I really was dependent upon Robert at that point for my financial well-being. Upon making that realization, I became very Uncomfortable, and that’s when I really took action.

I think there are a lot of women today who are Comfortable and Dependent and who don’t realize they are a one small step away from being very Uncomfortable if their husband leaves or loses his job. Or if the global economy goes down the drain.

Which quadrant are you in?

Are you Comfortable and Dependent or Comfortable and Independent? Are you Uncomfortable and Dependent or Uncomfortable and Independent? Once you identify where you stand, ask yourself, “Which quadrant do I want to be in?”

If your answer is anything other than the quadrant you are currently in, then it’s time to start taking action. Here’s some suggested reading:

  1. Start with these three tips for moving past the fear! Once you can move beyond your comfort zone, you’ll be that much closer to reaching your financial dreams. But first you must face your fears.

  2. Next, you need to determine your why — as in, the crystal clear answer as to why you’re making a change. Your why must be a strong motivator, something that will inspire you to keep moving forward when things start to get scary or rough.

  3. Now, it’s time to explore how entrepreneurship is the key to your secure future. You’ve recently learned that employment can’t be counted on because it’s entirely out of your control — on the other hand, entrepreneurship offers many perks, including unlimited income potential, a diversified client base, and flexibility. Plus, it puts you in the driver seat to control your own destiny.

  4. If you’re still in the fortunate position of having a job, here are 5 side hustle ideas you can do in your spare time. And even if you aren’t currently working, these gig ideas will get you one step closer to financial freedom. Many of them are great options no matter how the economy is doing. Of course, real estate investing is my personal favorite on this list — no matter how the economy is doing, people will always need rental properties, which means you’ll always have cash flow.

I hope all of you are staying safe and healthy during this coronavirus crisis. But please know that your financial future doesn’t have to suffer as a result — now is the ideal time to start educating yourself and looking for ways to ensure you’re Comfortable and Independent from this day forward.

Original publish date: December 06, 2018