Managing your personal finances will indicate whether you can achieve financial freedom or not. This can be a daunting and confusing process – but honestly, mastering money management is not that difficult. If you stick with these 7 golden rules for financial freedom you will definitely become financially successful.
Remember that most of these golden rules require changing mindset for success because they are behavioral in nature. By committing yourself to these rules seriously, you will definitely achieve your financial success.
Here we go.
#1: Have A Positive Cash Flow
Having a positive cash flow means that you must have control over your expenditures and make sure that your income is always higher than your expenses.
#2: Be Debt-Free
You need to get rid of your bad debts. You can read my previous article on 7 Tips to Become Debt-Free: Achieve Financial Freedom Fast. Having bad debt is one of the main factors that hurdles ones towards financial success. So it is very important that you prioritize getting out of the debts that probably burdening you to have a positive cash flow.
# 3: Pay Yourself First
One of the best and effective money rules you must apply in your personal finances is to impose a “Pay yourself first rule”. This means that you will have to get a permanent portion of your income, ideally a minimum of 20% (the higher the better), which is intended ONLY for your investments.
You can automate savings for your investments fund. This funds will only be used for your investment projects in the future or your current investment portfolio.
#4: Create Wealth Through Entrepreneurship
Working for someone else will never provide you a financial freedom. Working for someone else will require you a lot of time to trade for your salary. And the long working hours will always tie you down to your tight schedules every single day – so you have no freedom at all.
Successful and self-made rich people have one thing in common – they are entrepreneurs. A successful entrepreneur runs multiple businesses that create passive income. This passive income requires only minimal time, while it continuously rolls over time, and their wealth continuously grows.
Since businesses with passive income require only minimal time, entrepreneurs diversify and create more businesses, that again creates more passive income. Pretty cool and amazing.
If you are an employee today and you apply a “pay yourself first rule” in your personal finances, this will enable you to start a wealth generating passive income by using your investment funds wisely.
You can start with one business that generates passive income. Master the process and reinvest your income to create another business sooner or later.
Remember that the “pay yourself first rule” must continue its cycle of investing and reinvesting over time. This is the fastest way to create infinite wealth over time and achieve your financial freedom.
Prioritizing and maximizing your passive income is your road to financial freedom, so stop working hard to climb up the corporate ladder. Although this is the surest way of making money, it will never create wealth stream as that entrepreneurship will.
#5: Hire Your Money To Work For You
Today, there are a lot of people working really hard to earn money through their jobs. I know some friends who have 2-3 jobs and they only sleep 4 hours a day just to sustain their financial needs.
On the other hand, I know a lot of successful people, mostly entrepreneurs, who have multiple sources of passive income without compromising some hours of sleep, because they manage their money and grow wealth.
Money itself is capable to earn money through proper investments. If you imagine that whenever you invest your money is like “hiring” a worker to work for you and earn money 24/7. How many times will do it then? I bet you will say… “As much as you can”.
The safest way to grow your money is through a savings account. Yes, that seems to be like that, but this will only give you a very minimal interest income. Being safe is not what an entrepreneur will be looking for in order to grow their wealth. It is the possibility of making real money and taking the risks behind it.
Getting around 2% interest rates per year with your savings account will not make you wealthy. This is due to the inflation rate that normally increases year after year.
So instead, you can invest your money and grow wealth exponentially in things that can create ongoing passive income throughout the years. For example in businesses, real estate and other ventures with great potential to grow continuously.
Yes, investments are risky but the reward is totally satisfying when they pan out. Remember that you will never get rich by playing safe. Starting a business is risky but it has great potential for you to grow wealth exponentially and achieve financial freedom.
#6: The Power Of Doing More With Less
When I was in my grade school, I remember a poster in our classroom saying: TIME IS GOLD. At the very young age, I just thought that it simply means “never waste your time” – you have to be productive by using your time wisely. This has always been true but there’s more than beyond that.
When I reached university, even though I studied Business Management and Accountancy, the university taught us how to work hard to earn money. The emphasis was based on earning money through employment wherein you have work a lot of hours because time is gold… time is money.
This poor mindset has paralyzed a lot of people’s potential for gaining wealth. Using a lot of hours to work for someone else will only offer you a very limited source of income and will never bring wealth into your life.
Notice that the successful entrepreneurs have one thing in common – the high level of financial intelligence that makes them able to grow their businesses by using the leverage of other people’s time and other people’s money, instead of relying on their own sweat, blood, tears and hours.
#7: Have A Great Team
Using other peoples time and skills require a phenomenal team. Starting a business and let someone else manage it for you is the main key to passive income. That means you do not have to be hands-on in every phase or element of your business.
Having a great team will ensure you a successful business, while a bad team, on the other hand, will sink your business in a short period of time.
For example, having a very good manager will ensure a smooth management of your business, while a lawyer will ensure all the legalities and legal documents for the business.
Hiring people on your team is very crucial. You need to select and get the best people to work for you – including your own employees. Do not hesitate to spend the extra money and wait for the best of the best to join your team – wherein you can rely on these people to get the job done right… even with a very minimal supervision.
Last but not the least, have a mentor on your team. A high financial intelligence is being achieved by educating yourself and by surrounding yourself with the successful people. Keep learning.
Learning is a continuous process. Your mentor will guide you throughout your success, especially at a beginning of your business journey and when you meet challenges along the way.
A great team will ensure your continuous success, profit and wealth growth.
Our mindset is our best tool to achieve financial freedom. The only barrier we have is the low level of our financial intelligence in achieving financial success.
Remember that this is not your fault, because our childhood and schools or university have built us the poor mindset of working hard for money instead of investing wisely and let money work for us.
The gateway to financial success has always been open to everyone. You have to enter it and move forward to the road of financial freedom.
I hope these 7 golden rules for financial freedom have enlightened and empowered you to start your journey to the road of success.
If you have any question or comment, please write them below and I will be happy to help you to the best that I can. Good luck and God bless.
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