Developing a Mindset for Financial Freedom
The last few years I have begun studying the concept of financial independence. At risk of oversimplifying it, it is the idea of not being beholden to an employer for your financial well-being. Becoming financially independent entails living off the cash flow from one, all, or a combination of a stock portfolio, real estate, a small business, or other forms of passive income.
It does not mean that you will necessarily quit your job or end your career and retire. It is all about options. If you decide you love your career, you can keep working and have more leverage in future employment negotiations. If you don't, you can quit and retire or take a few months off and switch careers.
Some people assume that financial independence is all about people who love money and are obsessed with it. I have found that it is actually the opposite. It is people who are committed to making decisions now that allow them to live free of financial fear in the future.
After listening, reading, and having many conversations about financial independence. I am convinced that the single most important thing you can do to increase your chances of achieving financial independence is developing the right mindset.
The mindset to achieve financial independence requires two traits.
A steady, long-term perspective
An unrelenting desire for immediate action
These may seem contradictory, but let me explain. First, to achieve your goals, you must keep the end in mind. Cutting back on current expenses is not fun. It is hard to stop your Starbucks, Netflix, or golf habit, but it may be necessary to experience financial freedom. Short-term sacrifice can lead to compounding returns for years to come. You must have a long-term mindset to find the motivation to make these difficult decisions.
Second, you must be obsessed with immediate action. It benefits your financial independence journey greatly if you are continually finding ways to optimize your lifestyle and income-generation. You might begin cooking more meals at home, read a book on the basics of real estate investing, or start an e-commerce store. You might even begin to see your actions and optimization efforts as a sort of game.
It is not necessary to love everything about budgeting, life hacking, and income optimization to become financially independent, but it does require a shift in mindset. You must plan for the future by acting today in order to become financially free.
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