Updated: Jan 26
It might look to you as one of those articles which are all over the internet. You might be right. However, I am trying to express here my personal experience, thoughts and beliefs on the subject.
Just to make it clear, I am not financially independent. Not yet! But I am consistently heading there. In this article I am going to cover some concrete things on my radar, but also some mindset aspects.
I bet it will be interesting for you, so grab a cup of coffee and let's go!
ONE. I got a Bachelor's Degree
I know you have read many articles and seen many infographics saying that the superior education is a scam, student debt, and so on. But this is not going to be one of those articles, right? So here is why I am pro superior education.
It allowed me to get a well paid job, which means I have more money that I can invest as you will see down below. Beside that, you need an income for living while you are following the independence journey. I got bills to pay and a child to raise, and they cannot wait until I become financially independent.
Beside that, a job can also be attractive if you love what you are doing. I am an electronics engineer and electronics has been my passion since I was in school. I work in the area of product development for electric vehicles, so there is also some proudness that I contribute at least somehow to a cleaner world.
Both during the studies and while working I met extraordinary people which contributed to form my personality as it is today. Remember that relationships are one of the most valuable things you can build throughout your life.
TWO. I bought my own apartment
Again that's a controversial topic, and I will explain you why it is so.
The famous saying goes "Never buy a house". But the point there is that you should not "invest" too much money or get an overwhelming loan to buy a passive asset which will keep draining your money furthermore because of additional spending it requires.
On the other hand, getting a reasonable loan to buy an optimal apartment might be a very smart move in the case your alternative is to rent one. It is simple and straight forward: after years of rental you still don't own a living place. Furthermore, the apartment is likely to rise in price over time. I have about 4 years since I got mine, and during this time the prices rose by about 30%, while the interest rate from the bank was just about 4-5%. You do the math.
The key takeaway here is that you should find the compromise between your needs and the debt that you can take on, without being overwhelmed. In my case I got the right amount of space and comfort that I need. No extravagancy.
THREE. I focus on value I create
As I like to say: "I don't run after money. I let the money run after me". This philosophy means that I first try to fill everything I do with as much value as I can, and let the reward come after, rather asking for a reward for a value which I did not yet bring.
For example, don't ask for a salary increase saying that "this will motivate you to be more efficient". Instead, become more efficient, create more value, then ask for a reward, if it does not come by itself. I followed this way and it worked for me, as I climbed the ladder quite fast through the value I created for the company I work in. And I have a few colleagues who followed my advise and it worked for them as well.
The same applies for my content creation career. I am trying to put as much value as I can in everything I deliver to you. So hit the "follow" button to support me if you enjoy reading my content. Also share you thoughts in the comments section, either good or bad, as I try to take the criticism constructively.
FOUR. I educate my self financially
As dumb as it might sound, you need to understand the rules that drive the word of finance. Otherwise, it is impossible to accumulate wealth. Remember, financial literacy leads to financial freedom, and not vice-versa.
Yes, you might say there are cryptocurrency millionaires who made a ton of money in a couple of weeks. Well, you are right, but that was by poor luck. Furthermore, there is a big risk that those money will be lost in some other speculation attempt.
You need to think in terms of income streams rather than "get rich quick" schemes. You need to earn money consistently, otherwise it will go out as simple as it came in. Similar to lottery winners who are broke again in 2-3 years.
If you are investing in crypto assets, that is perfectly fine, as long as you do that based on your own researches and that is a justified and documented decision, not just because your neighbor gave you a super-tip!
So, how do I educate myself financially? There are many ways, starting with Youtube videos, reading blog articles, reading books and ending with financial courses on Coursera.
I can recommend you top 5 books which I have read by myself and found them extremely useful:
The Richest Man in Babylon – will help you to develop the necessary mindset for saving and investing. If you leave from paycheck to paycheck, that's the right book for you.
A Random Walk Down Wall Street – will make you aware about stock market speculative bubbles and will also present you different investing strategies, principles and situations.
Rich Dad Poor Dad – although it is not directly about investing in the stock market, it drives on your entrepreneurial mindset. Start thinking like rich people do.
Learn To Earn - brings to light mind-blowing facts you never knew would make you richer.
The 4-Hour Workweek - will remind you that the life is not only about money. If you make money by investing, that money is making sense only if you have the time to spend it. Business automation is one of the key things in this book.
Regardless if you follow my advice to read them, the most important thing is that you keep investing in your knowledge consistently and systematically.
When you are ready to take it to the next level, you can take some professional courses, like I did on Coursera, where I took the Investment Management Specialization from University of Geneva. Below is one of the certificates. I'm very proud of it :)
Currently I'm thinking of getting a Master's Degree in Finance. Let's see...
I'm sure you got the idea, so let's move forward.
FIVE. I started to invest
This is a very important aspect for building wealth. As seeds need to be planted into ground to start growing into plants, so does the money. It needs to be "planted", as keeping it under your pillow won't bring you too much of a benefit.
I am not going to describe here how investing works. There are plenty of articles on by website which can help you become better investors. I will just briefly mention one important aspect.
Understand the power of compounding. Just go through a simulation using a compounding interest calculator, and you will be amazed.
Back in August 2021, I started to track my own investments so that in time I will have a real picture of that exponential curve. Here is where I am at the moment:
Well, there is no exponential tendency visible yet, as my portfolio suffered from the recent market down-turn. Maybe I will post a new article next year and I am sure it will look much better. 😀
I encourage you to invest as well, but first, please follow the point number four above.
SIX. Start a side hustle
Yes, compounding is nice but I don't want to wait 40 years until I get financially free. I bet the same stands for you.
Following the income stream approach that I mentioned above, I need to build some sort of income beside my main job. But, I introduced 3 rules for any side hustle I might build throughout my life:
The side hustle shall not become a second job, i.e. it shall not be bound to a specific place or working hours
The side hustle shall be something I enjoy doing, i.e. it might be a sort of hobby.
It shall not come in exchange of my time, i.e. offering some service as a freelancer would not fit if I have to trade my time in exchange of money, again.
Here is how I got to create my Youtube channel and write content on my website and Medium for you, my dear readers. Don't get me wrong, I spend hours in writing the content, but I can do it whenever I want and wherever I want. Most importantly, I really enjoy writing! 😇
I'm not making any money yet, but I will keep it consistent and will turn into a true side hustle, if you support me.
Oh, one very important thing, which is not directly tied to finance: go to gym!
The physical training keeps you in shape, improves your health and helps your brain think clearer.
So, that is what I am going to do right now. Save the draft and go to gym. I will continue when I am back 💪
..........................................................................later in the evening...................................................................
Now I am back and I'm ready to proceed with the last part of the article...
SEVEN. The mindset and what's yet to come
I decided to combine the mindset with the future prospects because they are closely interinfluenced. So, I will cover a few subpoints here.
I gave up on materialism
In the first place, don't buy things to impress others. People that you attract based on the staff you own are not the right ones to be surrounded by, believe me. Rather, buy things that you like, and care less about what others think.
On the other hand, adopt the thinking that the material things are not the ones which make you happier. You won't be happier if you eat 3 kind of cakes instead of bread. Focus on the quality of your time and your relationships, that's what really matters.
I am not saying that you shall become a minimalist, of course not, and neither am I. Just stop putting too much value into some pieces of wood, metal and plastic.
AND...if your are doing that, you will see that it will also became much easier to reduce the unnecessary spending. That's a bonus. 😉
Why am I investing?
That's a fair question to come after what I have talked earlier - no yachts, no sports cars, no penthouse. Well, it is simply freedom. Freedom of time, freedom of lifestyle, freedom of dreams. If your dream is to have a super-car, that is totally fine, as long as you are getting it for your own feelings and not just to impress others.
Another reason why I am investing is that it drives a lot of fun. It challenges both my rational and emotional intelligence. Those of you who are actively investing know what I am talking about. It became a real hobby as I said, and it will be a profitable one.
Currently I am also seriously considering to include some impact investing in my portfolio. There are many ways and one of the simplest is crowdfunding of environmental friendly projects. There are plenty of such platforms available. I will not be the next Elon Musk, but this might be the way I will put my footprint in a noble cause.
What comes after my million?
Difficult question, though. I will most probably continue my job, as I really enjoy what I am doing...but please ask me once again after I will get that money....😅
Anyway, it is important to continue to be active, whatever your occupation is. If you are wealthy it doesn't mean you have to live a parasite or vegetable life. It is important to keep your brain and body healthy and engaged.
In rest, pretty standard staff: space travelling, getting a Nobel prize and conservation of my brain before I die.
Just kidding, of course, but I promise I will write one more article on how I was spending my million. 👍
My last word
In short, you shall not be super-focused on accumulation of wealth and target to leave after you get rich, because most probably you will be old then. Time is a form of wealth on its own, so be careful with it.
LIVE YOUR LIFE EVERY DAY
That being said, I will you all great success in your financial journey!
Iasi, 23 March 2022
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