Money doesn’t buy happiness, but having the right amount of money and earning it the right way can give you the next best thing to ‘happiness’ – peace of mind.
Money has whatever context you give to it. People talk about money as if it has an opinion or as if it’s some sentient entity. It’s not. Money responds to how you treat it.
Treat it as scarce and it will run away from you. Treat it as abundant and it will come to you. Think of it as evil and it won’t like you. Think of it as a means to a useful end and it will work with you.
For a society filled with people who ‘don’t care about money’ it sure seems to be a central issue that runs through everything — from your life to political discourse.
I can’t solve the macro-financial issues in society, but I can share the things I’ve learned about money over the years that can help you reach financial freedom.
I use a low bar to define financial freedom. I’m not retired. I could quit working for a while, but not forever. To me, it means not having to constantly worry and stress about money. I’m not rich, but I make a living doing what I love so it doesn’t feel like work.
That, plus I can just go to the grocery store and buy whatever food I want without stressing about it. Within reason, I can go out to eat often, take trips, live in a nice place, etc, all without having to break my personal bank or go into debt.
That’s huge. I want you to get there.
Try these ‘rules’ out and see how they work in your life.
Far too many people don’t have the income they want because the skills they use can’t earn a high income. A common argument you hear – teachers should be paid like athletes. From an intrinsic value point of view, you could make that argument, but not from an economic one.
An athlete can entertain millions all at once while a teacher can serve 30 students maximum. The more people you can help with your service or product at a time, the more money you can make. Two, the market just values entertainment over education, period. Last, the barrier to entry is extremely high for professional athletes — the low supply of athletes and high demand for watching them play equals big money. Simple economics.
This isn’t to say that teaching in and of itself isn’t a valuable skill. It is, but you have to tweak it to make it profitable. For example, there are teachers who sell their lesson plans to thousands of other teachers. Or they take their talents to the digital sphere. I’ve seen an example of a chemistry teacher selling online courses to college students to help them pass their tests.
The market doesn’t care about the way you think the market should work. The market responds well to people with profitable skills. Whether you personally like it or not, you’re not going to make a high income unless you have skills, a service, or a product that warrants high income.
You don’t just have to apply this thinking to the sexy fields like e-commerce, blogging, information products, freelancing, etc. You can create a profitable skillset or business in many ways.
I saw an example of someone renting a powerwasher, doing jobs on their own for a little while, then taking the profits to hire other people to do the power washing jobs. Boom. They separated their time from money and now have a profit-making machine.
Once you see the world through this arbitrage sort of lens where you want to get in the mix of all the transactions that happen daily, you realize just how broad the definition of ‘profitable skill’ is.
I saw this Tweet from a finance expert I follow:
A news show was interviewing 3 families: One making $100,000. One making $300,000. One making $1,300,000. Guess what they ALL said?. They were ‘barely getting by’. Don’t let your lifestyle creep as your income increases. It won’t make you happier.
If you can focus on earning more and avoid lifestyle creep, you can be free. I consider myself in a position of freedom because I live below my means, have multiple years of savings at this point, and still work hard at something I enjoy.
I’d still be feeling stressed out if I started splurging money ridiculously as I increased my income. Don’t get me wrong, I’m not frugal at all. I just don’t let lifestyle creep reach too high of a level.
Saving money is difficult when you have no money. Personal finance people love to use this fictional example of someone who makes $40,000 a year, saves 10 percent of their income with discipline, and invests it into the market for multiple decades and becomes rich at 60.
This person doesn’t exist.
On top of it, you don’t want to wait until you’re older to enjoy your life and have freedom. The recipe for success is simple. Find and develop that profitable skill or set of skills, stay in that lane until you become profitable, and live relatively below your means.
At this point, I save about 30 percent of my money. At age 30 with this level of consistency, I simply don’t see how I become financially inflexible again.
You can follow this path, too. And it’s simply a matter of time. Becoming successful at these money-making ventures isn’t hard, it’s just tedious and requires patience.
I always tell people to give themselves five years to get their business to work, but I’ve also seen it happen in much shorter time frames from people with discipline and execution. Knowing what I know now, I could probably build another six-figure income stream in six months to a year. In fact, I am going to do that.
That’s the beauty of the profitable skill game. Get it right once and you realize just how simple it is. Not easy, simple. You just have to get out of your own way long enough to complete the series of steps.
You don’t want to live your life as an endless vacation. You think you do, but you don’t. Instead, you just want to do work you enjoy while having financial breathing room.
When you do get one of these income streams to work, don’t stop. Double, triple, and quadruple down.
Start to build new income streams, businesses, and projects. I focused on writing for the first four to five years, now I’m experimenting with products, programs, and other marketing platforms like YouTube and Instagram.
Begin to study investing and finding places to make more money from your money. Right now, I’m only at the level of buying basic index funds until I learn more. I’m interested in real estate. I could take the cash I have and buy items to flip. Maybe I’ll use some of the money to buy existing side projects and ramp them up.
There are so many ways to do this. This is how people become wealthy.
You separate yourself from your income or perform a high-income service, and then you double down on the upside and avoid the downside — things like massive levels of consumer debt, keeping up with the Joneses mentality, consuming more than producing, etc.
I didn’t spend a bunch of time on Dave Ramsey’s ethos of trying to pay down your debt and save your way to riches. Why? Because Dave Ramsey is rich because he has an information product company, not because he paid off his credit cards.
You want to be on the right side of the financial equation. On Dave’s side. On my side.
You want to be the creator and the producer. Once you figure that part out and learn how to make some extra coin, you’ll have the resources and time to focus on everything else.