“With rising costs of living, should I stop aiming to achieve financial freedom and focus on survival?”
This is a question that I was recently asked by one of our readers, Emily.
I get it. There's a lot going on right now.
There's the cost of living crisis led by rocketing inflation.
As a result of that, the stock markets are declining and interest rates are rising.
Everything seems to be going against the goal of trying to become financially free.
Today, I hope to convince you that aiming to achieve financial freedom or financial independence is something you should carry on doing, particularly now more than ever.
First of all, I want to say that I really understand what's going on now.
Even in our household, we still have not turned the heating on and it's the end of October.
I have a thick blanket that follows me everywhere around the house.
That's because we fully understand the urgency of the energy crisis and many of the things that are going on.
Should I Stop Aiming To Achieve Financial Freedom?
Today, I want to share some of the reasons why I believe you should not stop aiming for financial freedom. Here they are:
1. You Should Always Have a North Star Goal
First, you should always have a big goal that you're aiming for in your life ahead of you.
Mary and I like to call this our North Star goal.
The thing about this goal is that this should not waver, or change, no matter what's going on.
Whether you've watched the news, and it feels like the whole world is falling apart.
That goal will give you something to focus on.
Aiming for financial independence or financial freedom is one such goal that you should have in your life.
Think of it as your long-range, North star goal.
What you want to do along the way is readjust aspects of your daily life as you work towards achieving that goal.
You shouldn't give up on the goal altogether because of what's happening now in your everyday life.
It's okay for everyday life to be very challenging and that's completely understandable.
Most people are struggling right now.
But that does not mean you should give up on that goal because it gives you something that you're working towards.
2. 95% Never Achieve Financially Freedom
Around 5% of people, 1 in 20 people become financially free over time.
Common reasons why you might expect 95% don't achieve it include:
- Earnings – they don't earn enough,
- Savings – they don't have a high savings rate,
- Habits – they had poor money habits,
- Skills – they aren't growing in their abilities,
- Knowledge – they don't have quality information,
- Sacrifice – they're not prepared to give up on some things.
All these are valid.
However, the answer is even simpler.
At the very top of the reasons why 95% of people never achieve financial freedom is that they never had it as a goal in the first place.
So if you want to be financially free sometime in the future, it really pays to have this as a goal that you're aiming for.
3. Short-term Thinking Cultivates Scarcity Thinking
Thinking only short term cultivates a scarcity mindset but thinking long term cultivates an abundance mindset.
I say this because the thing about having an abundance mindset is that it helps you to explore more of your creativity.
Doing this really pushes you to solve your problems.
As such, you're always thinking about growth rather than simply protecting all that you've got.
But if you focus only on today, trying to survive and trying to stop all the fires, all you're doing is building upon a scarcity mindset.
You'll act as though things are running out or ending in your life.
When in actual fact, if you're thinking more long-term and you're working according to a plan, you are building in the room and allowing space for things to go wrong.
Long-term thinking allows you to:
- Do some what-if scenarios
- Use reasonable assumptions as you think about the future.
The more you operate from that perspective, the more you develop and enhance your abundance mindset and engage your creativity in helping to solve your problems.
4. There Will Always Be Recessions and Wars.
Looking back on history, it's clear that there will always be major events like recessions and wars.
I began this journey of trying to become financially independent properly in the year 2009.
We all know what happened around that time, the Global Financial Crisis of 2007 / 2008.
So in 2009, I was emerging out of that crisis with a goal that I wanted a different life for me and my wife.
In fact, Mary and I met in that year of 2009 in October.
We met with that connected mindset of wanting to change our lives and achieve financial freedom in our lives.
But the thing I've learned is that this journey of becoming financially free prepares you for the inevitable future that will be made up of wars and recessions.
They will happen and they will always keep happening.
Between 2009 and 2020 (the next recession driven by the Covid-19 Pandemic), we became financially independent.
Guess what that did for our lives?
It better prepared us for the eventual downturn and the eventual economic events that will follow, which we are experiencing right now.
So that journey of becoming financially independent, which for us included becoming mortgage free, better prepared us for the inevitable.
What I am saying here is that aiming for financial freedom and working towards it prepares you for the next inevitable economic downturn.
5. You're Getting Older and Need Money Working Early
This is stating the obvious but it's an important reminder.
Yesterday, you were younger than you are today.
You need time for your investments to get to work because investing requires compounding for growth.
So my point is if you're not prioritising financial freedom now when on earth are you actually going to do it?
The chances are, it will likely be never.
We're all living longer on average and that means we all have a necessary need for our money to last us even longer into the future.
If you're not prioritising financial freedom, then you're not going to take the steps to prioritise investing for money to grow and compound for you potentially for decades.
6. It Helps You To Continually Question Your Lifestyle
We continue to live in a consumerist culture.
Spend some time on Instagram and you might not think that we're going through some of the most challenging times in our economic history.
As we have emerged from the Covid-19 pandemic, it has forced most of us to question what we truly want out of our lives.
Rising inflation has forced us to assess our relationship with money and better question our priorities.
Our old ways of wanting everything now rather than later is not sustainable.
Pursuing financial freedom forces us to ask the important questions that most of us run away from.
e.g. If I want to become financially free, what changes do I gradually need to make to my lifestyle today?
7. In The Worst Case, It Brings You Closer to Financial Freedom
Aiming for financial freedom in the worst-case scenario will bring you closer to financial freedom compared to where you started.
You're far more likely to, in my opinion,
- survive future financial stresses or worries,
- create future generational wealth,
- and have more capacity to give or help other people.
Then there is the learning that you can pass on to your children about how they can do the same too if you have children.
I hope I've been able to convince you that financial freedom is something never to give up on even though you might be struggling now financially.
If anything, this more than any other time is a time to really re-assess where you are in your life.
Have another look at your finances, and reaffirm your goal and life's vision for achieving financial freedom in your life.
You'll never regret aiming for this goal. Do make sure that you have some fun too as you work towards it.
I'd love to hear what you think in the comments below.
Feel free to check out how we're helping 10,000 people achieve financial independence by 2030.
Frequently Asked Questions on Achieving Financial Freedom
Here are some frequently asked questions to help you achieve financial freedom.
What is the fastest way to achieve financial freedom?
The fastest ways to achieve financial freedom include:
- Start investing in the stock market as early as possible.
- Increase your savings rate to over 50% and invest it consistently in stocks.
- Invest in income-generating assets like property using leverage.
- Create an online business that generates cashflow that you can invest.
- Work on your career and get promotions and salary increases to invest.
- Build a business that you can sell and make lots of money from.
- Move to another country with a low cost of living and earn from a high-income part of the world.
- Pay off your mortgage early and cut down your costs and then invest in income generating assets that pay for your lifestyle.
What are the 7 Steps to financial freedom?
Here are the steps you can follow to achieve financial freedom:
- Decide on financial freedom as a goal.
- Work out your financial freedom number.
- Be clear on why this goal is important to you.
- Work on your mindset and surround yourself with people with the same goal.
- Choose a strategy for achieving your goal e.g. stock marketing investing, property investing, career maximisation, starting a side business, etc.
- Decide on a savings rate to begin with e.g. 10% to 20%
- Work on simplifying your lifestyle to increase that savings rate.
- Invest your savings consistently, e.g. in income-generating assets such as the stocks/funds, property, etc.
- Keep your lifestyle simple and avoid lifestyle creep.
- Improve your skillset so that you can earn more, save more, and invest more.
- Explore creative ways to pay off your debts fast e.g. mortgage overpayments.
- Join a community of like-minded people on the journey who will keep you accountable.
Is it possible to be financially free?
- First, it needs to be a goal that you're aiming for.
- You then need to start living below your means.
- Investing early is important for compounding to work for you.
- You have to improve your skills in order to earn more.
- Adjust your everyday life circumstances to align with your goal.
- Take calculated risks to earn more and invest in assets.
- Surround yourself with people who are aiming for this goal too.
- Late Starter to Financial Freedom? Read This
- 85 Easy Ways To Make Extra Money Today
- The Not So Simple Path To Financial Independence
Which of the points that I made really got you thinking? Jump in the comments and let's chat about it.