“The economy has no effect on one’s success. It is our actions in aggregate which affect our economy.’ –Brendan Palmer
That is how many of the participant felt after Brendan Palmer finished his presentation at last week’s BusinessLink networking breakfast meeting. His subject was “The importance of financial literacy.”
Brendan explained the difference between Yuppies and Financially free people, Yuppies (Young Urban Professionals) can be seen by their flashy watches, expensive luxury cars, label clothing and expensive habits. Those with financial freedom don’t show off their wealth, as it is in safe investments like property, shares and businesses. They are down to earth and buy clothing from ordinary stores like Edgars etc, and groceries from OK, TM and the local grocery store.
Typical yuppies get broke in a short time because they are heavily borrowed and spend more than they earn. Financially free people have managed to invest in assets that generate more money than they spend- in other words they make money while sleeping.
Being financially free or poor has no relationship with being born poor or living in a poor country. The difference is in your ATTITUDE towards money.
Financially free people have learned and developed certain habits:
- They respect money- refusing to spend unless it’s really necessary
- They make money work for them instead of working for money
- They pay themselves first by saving / investing at last 10% of every penny they get
- They seek advice on money matters
- They make budgets and stick to them
- They are committed to financial freedom, working hard until they achieve their goal
- They take advantage of compound interest, which enables money saved to grow quickly
- They avoid debt (if they have to borrow, it should not exceed 20% of their earnings)
- The pay for assets with cash rather than debt
- They buy cheaper brands
- They know that wealth takes time to accumulate and are therefore patient and committed
This is not new knowledge; we have all heard it before. The problem may be that we never committed ourselves to the goal of financial freedom and are not seriously financially disciplined.
If you commit yourself to achieve financial freedom, educate yourself and become financially literate, then adopt the habits necessary as outlined above. Get your spouse or[partner to commit together with you for support. In ten to twenty years you will be financially free.