We’re living longer nowadays and our standard of living is increasing.
As has our desire to live better lives – ones where we’re not tied to a job for 40 or 50 years!
One of the greatest freedoms that we enjoy today is the ability to add value to society and collect wealth as a result.
If one of your goals is to achieve financial freedom let’s look at some of its facts.
Fact 1: Spend less than you earn
This may sound simple, but don’t underestimate its importance, because if you don’t spend less than you earn you’ll always owe other people money.
Fact 2. You need to save to invest
When you spend less than you earn, you should save the difference.
However most Australians who save, save to consume, not to invest.
You know…once they’ve accumulated a tidy sum they spend it.
Of course, no one ever saved their way to true wealth – it’s just too hard with today’s low interest rates and then tax eating away at the little interest you receive.
The only way to take advantage of true money-growing opportunities is to invest in assets that grow in value and to recognise that becoming financially independent takes time – so be patient.
If you continue to funnel money into your investment accounts, you’ll grow your wealth on a larger scale through the magic of compounding.
You can’t get much compounding if you’re saving just to save (or to spend it like most people do.)
Stay disciplined and keep saving so you can eventually have a big enough sum to invest in property or shares where your return will be greater than the paltry interest you get on your savings.
Fact 3: Income won’t make you rich
Many people believe that a high-paying job will be their ticket to financial independence, but unfortunately they’re wrong.
Of course it will be easier to become wealthy if you have a lot of money flowing to you but as I’ve already explained, you have to spend less than you earn.
It seems like common sense, but studies have demonstrated that high-earning doctors are the least likely group to amass significant wealth.
So use your income to buy assets which will grow in value and give you cash flow.
Things like well located residential real estate or blue chip shares.
Fact 4: Get good tax advice
Wealth creation doesn’t happen by chance, it needs a plan and is a team effort.
So when it comes to taxes, get the best advice that you can afford.
Everyone’s tax liability is different, so you must consult a professional who understands your personal situation.
There are a myriad of tax deductions available to investors and business owners and it is your responsibility to legally minimise your tax liability.
Fact 5: Don’t forget to smell the roses
This requires a fine balance because you don’t want to sacrifice tomorrow for today, but you don’t want to be miserable today either.
Financial independence is a journey that requires some long stretches and it certainly requires patience.
Enjoy your journey, because if you don’t it’s unlikely you’ll enjoy the destination.
If there’s something that you’ve always wanted to do, don’t postpone your happiness, because none of us knows what tomorrow may bring.
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