When people think of spending, they usually think of some product or experience. There’s another way to spend though, and it’s on your financial freedom.
Yes, you can actually buy your financial freedom. It’s a purchase just like any other purchase, expect this one gets you a lifetime of not having to worry about money. Or less worry, I should say because there is never any zero worry.
Buying Your Financial Freedom: How it Works
Here’s how buying your financial freedom works. For people with consistent incomes, contribute a percentage every month to investments and let compounding do the rest of the work for you. Example: someone making $7,000 per month would contribute $1,400 (20 percent) or more, each and every month.
Assuming a 10 percent rate of return, that money compounds to:
- $18,480 after one year
- $112,822 after five years
- $294,524 after 10 years
- $1,058,442 after 20 years
- $3,039,850 after 30 years
That’s with never increasing your contribution amount, which is unlikely. In this scenario, only $504,000 was invested but compound interest does the heavy lifting, especially in the later years.
For those with inconsistent incomes, contribute a percentage of your income when you get it. For example, a sales person who closes a big deal and gets a commission check for $50,000. Invest a portion of that $50,000 and do that for every deal closed. The numbers will be similar to the ones above.
Just by living your life and investing a percentage of your income, you can build great wealth, which becomes your financial freedom. You can speed up the process by investing more, making wiser investments, or adding more time in the market (like by starting early).
Financial Freedom: One of the Most Important Things You Can Buy
Short of basic needs, experiences, and time with family, I’d be hard pressed to think of more important things to buy than financial freedom. It’s more valuable than “stuff” like toys, cars, boats, etc.
When you have financial freedom, nobody controls what you do because of money. If you have a job you don’t like, you don’t have to stay. Or when a company wants to relocate you to the middle of nowhere, you don’t have to go because you aren’t reliant on a paycheck.
Financial Freedom: Also A Mindset
Financial freedom is having enough money to survive and thrive without having an income you have to work for. It’s also a mindset.
It’s the way you think, feel, and act about life and life decisions. And none of it has to be dictated around money or basic survival.
Spending on Financial Freedom: Well Worth It
When you earn money by working, you are presented with choices about what to do with your money. Everyone has to cover basic living expenses like food, shelter, medical, etc. but the other money can be spent, invested, or a combination of both.
By paying yourself first into an investment, you are taking the steps to buy your financial freedom. It’s a gift that starts the moment you begin contributing and continues the rest of your life. Even well before reaching financial freedom, the gift is present because there is a plan in place and money is compounding.
As the compounding really starts to heat up, it becomes a runaway train and will earn you more money than most people can make in a regular job. With all of it going toward your financial freedom, one of the best gifts you can ever give yourself.
