The 7 Wealth Principles For Financial Freedom
Wealth Principle #1 – It’s Not About The Money
The first wealth principle is from the book It’s Not About The Money by Brent Kessel, where he demonstrates in great detail how our financial situation is “not about the money”.
Ever wonder why you might get a raise at work, and be making more money, but you are still always living paycheck to paycheck?
The root of all this stems from childhood beliefs, stories and scenarios that we are living out as adults. Once we get to the emotional root of our money issues, then the money will work in our lives.
For example, when I was having money difficulties, with 7 different debts to people and creditors, I realized that I had created it because I felt that I had to be punished.
I felt guilty about leaving my fiance, guilty about leaving my family, guilty about leaving my school. Even though I wanted to leave, the guilt I felt for doing what I wanted made me punish myself using money.
Now, that’s my story, what’s yours?
Because trust me, your money situation is rooted in a cause that has nothing to do with money.
Find out what’s bothering you, resolve it, forgive and let go.
Wealth Principle #2 – You Don’t Know About Money Until You Have Money
Wealth Principle #2 talks about our knowledge about money, which is basically this, if you have no money, you need to learn more about money.
Wealth comes to those who value and study about wealth.
Those who go out and get the experience, go through the trials and errors, and gain financial wisdom are the ones with the money.
If you find yourself giving financial advice, when you are not financially fit, then stop, and go find someone else who actually has money and do what they tell you to do.
In addition, if you want to get financial advice from others, be sure you are getting financial advice from someone who has money and knows what they are talking about…instead of from your broke neighbor or best friend.
Wealth Principle #3 – Wealth is Measured in Net Worth, Not In How Much You Spend
Wealth Principle #3 is dedicated to all of the high wage earners who spend all their money on fancy houses, schools for their kids, and nice vacations…all the while saving and investing nothing.
This is most of the population of the United States, living beyond their means and spending to look wealthy.
The truth is, wealth is measured in Net Worth, and not in how much you make or how much you spend.
Net Worth is the difference between all that you have and all that you owe other people. For instance, if you have $3,000 worth of stuff, and you owe $10,000 to credit cards and other people. Then your Net Worth is -$7,000.
Wealthy people are ranking by their Net Worth. So if you want to measure your wealth, go ahead and calculate what your Net Worth is.
Wealth Principle #4 – You Become Financially Free When Your Passive Income is Equal To or Greater Than Your Expenses
Wealth Principle #4 was ingrained in me when I was told by a financially friend to play the Cash Flow board game every week until I could win the game in 30 minutes.
In Cash Flow, the only way to get out of the rat race, is to grow your passive income and lower your expenses.
It didn’t matter how much money you made in your job.
In fact, in the game, it was always easier for the janitor to become financially free, just because the janitor had lower expenses.
The key was to accumulate investments that yielded passive income, like rental properties, dividends, royalties, etc.
Besides passive income, if you kept adding expenses, like a yacht, more children, private schools, etc, then it took longer to become financially free.
Once I grasped that Passive Income and Expenses were the key, I grew my passive income and lowered my expenses until I got to the point where I could quit my job.
This is not easy, as when I did get an increase in pay, I sometimes spent more money.
Shortly before I quit my job, the lease on my car ended and I decided to save myself the $200/mo in expense, and go without a car.
For me, that $200/mo gave me freedom.
Until you are financially free, do not increase your expenses.
Wealth Principle #5 – Pay Yourself FIRST
Wealth Principle #5 is introduced in the book The Richest Man in Babylon by George Clason, and refers to saving money for yourself.
Basically, whenever you get paid, take at least 10% and save it for yourself, put it away for You, pay yourself.
After you take out your share of your money, then you can use the rest to pay bills, etc.
I first learned to Pay Myself First at the Millionaire Mind Intensive Seminar, where they taught us to take our income and make separate accounts. The most important was our Financial Freedom Account, and that was the account that we had to pay first.
In our Financial Freedom Account, we could invest the money, but we could never spend it. We could only spend the money that it makes.
Wealth Principle #6 – Become Financially Literate
This advice came to me from the book Rich Dad Poor Dad by Robert Kiyosaki, and basically states that you need to understand numbers and financial terms to become wealthy.
You need to be financially literate.
Here are some things that you should know:
1) How to calculate a percent
2) Assets = anything that pays you
3) Liability = anything that you have to pay for
4) Net Worth = Assets – Liabilities
5) Cash Flow = Income – Expenses
6) Passive Income = Money that you make without spending time
7) How to Calculate Return on Investment
8) Understanding Interest Rates
If you don’t know these things, learn them.
If you don’t know how, consider joining a finance freedom training program.
Wealth Principle #7 – What you Track Increases, or What You Focus On Grows
I was taught this in the Millionaire Mind Intensive Seminar, and again when I read Secrets of the Millionaire Mind by T Harv Eker.
I started to track my Net Worth every month.
As long as I tracked my Net Worth, it improved over time.
After I gave birth to my son, there were 2 years when I stopped tracking my Net Worth, and you know what happened?
It stayed exactly the same, around $60,000.
As soon as I started tracking it again, it went up into the $80,000 range, and now that my son is 4, my Net Worth is over 6 Figures.
Now, not only do I track my Net Worth, but I also track my Cash Flow and my Passive Income, and the amount of money in my Financial Freedom Account!
Conclusion
These wealth principles guided me to pay off all of my debts, quit my job and create a successful online business where I help people become financially free.
The wealth principles led me to take the following actions:
1) Track my Net Worth, Cash Flow, Passive Income and Financial Freedom Account Monthly
2) Keep my expenses down
3) Invest to create passive income
4) Automate my saving transfers so I pay myself first every week
5) Examine my thoughts and participate in activities that change my thinking to improve my wealth on a weekly basis
6) Learn from others who are wealthier than I am AND who are also living a lifestyle that I want
7) Be kind and gentle and loving to myself, and forgive myself for anything that I still feel guilty about
If you take these wealth principles to heart, follow them, memorize them and really practice them, you will also become wealthy.
I remember back when I was buried in debt with hardly any assets to my name.
Now I have no debt, and I do what I love which is be a homemaker, and also a part time entrepreneur.
I’m going on my first cruise in a week, with my husband and son…and it’s all paid for upfront.
We just bought our first condo in August in Waikiki, and I keep investing for more and more passive income.
What is it that you want to do?
What would you do if you were financially free?
What would your life look like?
If you were like me 6 years ago, and hungry to be free no matter what, then follow the wealth principles and claim your freedom.
If you feel like you need some hand holding, and want to join a group of like minded individuals all striving for financial freedom who will push you towards your goals, then CLICK HERE, enter your name and email, and watch the free video explaining my finance freedom training program.