After you read about the new Rich concept, you understood that more important and valuable than having 1 million in your pocket is having the money but also having time and mobility. Based on these three pillars that are super addressed in Tim Ferris’ book, 4-hour-work-week, emerge the New Rich. And at the end of the day, what every New Rich wants is financial freedom.
But what is financial freedom?
According to Dave Ramsey, “Having financial freedom is controlling the finances instead of them controlling you,” is “being able to make important changes in your life without getting stressed by the financial impact, because you are prepared.”
More than that, having financial freedom is being able to choose the lifestyle you want to have and live it. It’s about having options and not being limited. And the greater the financial freedom, the greater the options.
The path to achieving it
Of course, the path to financial freedom is not simple and fast. It requires dedication, planning and clarity in the objectives. But one thing is clear, if you unite the pillars of the new rich with the structuring of financial freedom you will surely be on a path of options. If you choose not to use the pillars, you may be able to conquer your financial freedom but the price can be very expensive: your precious time and your mobility. And what about having money and not having time, health (we often get sick of both stress and too much work) and mobility?
Phases to reach financial freedom
Based on these concepts, we can define different phases of financial freedom. You can evaluate your current stage, understand where you want to go and plan to get there.
Phase 1: Live on paycheck to paycheck locally
That’s what most of us have been taught to, unbelievably. That we need a job that at the end of the month pays the bills. It’s the typical rat race. Although paying the bills is important, after you fall in this trap with no other plans, it’s hard to get out of it. At this level we have no extra money, no time, no mobility. The options are minimal. If you are in this situation, know that many who today have total financial freedom have also been at this stage. Decide what you intend for yourself and follow your path in a tireless way. By doing so, focus first on reviewing your expenses and other possible ways to generate revenue and save money. Whether for an emergency or even to go to phase 2 of financial freedom.
Phase 2: Generate enough savings for a sabbatical year
When you reach an important saving level, you get more options. Whether it’s to take a vacation dream or even a sabbatical year. Even if you don’t choose to go, just the fact that you have the option is already liberating. In addition, having more expressive savings can be very important in an emergency or even if you loose your job or decide to change your lifestyle. At this stage you can have the combination of time, money and mobility for a specific period which is already amazing and can open many horizons, creating unimaginable experiences.
Phase 3: Work remotely
Through remote work, you can manage to partially achieve the three pillars of the new Rich: mobility, time and money. Considering that the remote work allows you to be and work wherever you want and at the time you want it already gives you much more freedom. Whether you take your child to the doctor or spend the morning on the beach, with a remote job you can. However you are still dependent on the job. So at this stage it is interesting to continue with your savings and investing in starting passive income opportunities that you do not depend on financially immediately. This same step should also be an option to reach Phase 2.
Phase 4: Investing in passive income
When you reach Phase 2, you are already able to think about investments in passive income that may initially add up to your current earnings. Your goal in generating passive income should be to replace your earnings with traditional or remote jobs and even eventually exceeding it considerably. This way you can leave your job, if you want to, and have access to the New Rich’s lifestyle, with a balance between time, money and full-time mobility. Always think about creating new forms of passive income so your are not dependent on only one. By obtaining a consistent passive income, you can think of mini retirements followed by a few weeks of work focused on generating more passive income.
Phase 5: Living on Passive income basis
If you have reached a passive income level where you are super comfortable with your lifestyle, generating monthly income for a long term retirement, then you can enjoy 100% of your financial freedom. Here’s when you get to decide what you want to do with your life. If you want to work because you love what you do, if you want to travel or if you want to dedicate your time to your family. With the financial part well structured through passive income generation, you have time and mobility to choose how you want to live the rest of your life. Isn’t that liberating?
If you thought financial freedom was just for millionaires, you’re mistaken. It all depends on your lifestyle standard that you’ve defined for yourself and the actions you take. It’s up to you to define where you want to be in 5, 10 and 20 years. Plan it up and walk towards your financial freedom!