We learn from our elderly – study, work hard, save money and get rich. That information is far from true. We have been given a mindset of money as the end product. But we have never been given financial education. Today we will discuss what we know about financial freedom and how we can change our minds to adopt new thoughts which will change our world.

This blog will help anyone and any level of their life to be financially freedom. It is also for someone who is a teacher, wants to help others to become financially free. Also, parents can teach their children and create a new path for them.

What do we know and why that didn’t work?

Study hard → Work Hard (Job) → Save Money → Get Rich

You might have heard from your parents once you complete your 10th study with a good mark, your future is bright and the similar message you hear every stage of your life. I am not saying they are wrong. Our parents motivate us in each stage of life to pass. But, the system created these stages of life and the outcome they are marketing, which is misleading.

Saving money is not getting rich?

You also heard about this after you get a job, your parents told you to save money, don’t do unnecessary expenses, learn the art of saving money. Save money for your future, for the emergency, medical expenses, for your old age. If you have only one way of source of income, where you give your time for money, then you should stick to the principle. But you will not be financially free. It might save something for your future. You might have bought a house, with the expense of not enjoying your life. We will come to the topic of how you can be financially free soon. Hold your anger that will help you get out of the Rat race.

Schools don’t teach us how to handle money!

Schools are a factory of knowledgeable workers, you might argue with me. But It is the truth. 90% of the population followed the same root, some of them gone out of the rat race and been financially free. Why?

Schools don’t provide financial education! The school guides us to be specialists in one field and work for someone to earn money. It didn’t teach us how to use the money? We got that education from our parents or family members. Schools are preparing us to be in the rat race trap. In it, you can survive life, not live your life.

Let’s take a look at a person’s life who followed the same principle, how they are doing?

Tom is a good at study and hardworking individual. He completed his Bachelor’s degree and got a job in XYZ corporation as an Engineer. Now his earning is $100k/yr. Soon he needs to pay tax to the government, let’s say 20% tax. He is happy with what he got as this is his first job and first time earning money. Also, he saves money in the bank, thinking that that will help him get rich. After 2yr he was promoted to a higher position, and the salary increased by 15%. With the salary hike, he has a new desire to buy a Car or House, expense increase. And every year inflation eating our money by 5 – 6% rate. He is working hard and earning money and spending on expenses and earning money and spending. The loop is called Rat race. You will get paid until you work for money. When you are unable to work, your earning also stops.

Simple take away:

• If you are in an academy or your children are in school, start educating them in finance. It does not mean what you know now! Learn more about finance and coach your children or student.
• If you are already in the Rat race or going to be in, you are too late. You have to be there a few years and spend extra time learning skills that will get you out. Minimum of 2 years required. It all depends how you plan it.
• If you devoted all your life to the rat race and you are in your 40’s, then also there is a chance you can retire early without working till 50 or 60. You have an opportunity that you have some saved money, that will help you earn more money. But that will depend on how investing them. I will suggest spending some of your time accruing knowledge as your one mistake take you down.

Learning to Earning!

All the above scenarios focus on our learning about money and how to use them. If you spend time learning it, that will earn you financially free.

What is Financial Learning?

As I emphasize financial literacy, let’s learn some of them which help you get started.

We have to understand our income and expenses, which come in many from Taxes, Basic Needs, and Wants. After all of our deductions which we don’t have much control over, it’s time for savings or spends to buy our wants. The most important thing we need to keep in mind is the difference between Assets and Liability.

Money In –

• We earn money by doing work for others.

Money Out –

• Deductions – Tax
• Basic needs like House Rent, Foods, Cloth, Internet
• Wants – Like Car, Bike and others.

Asset vs Liability

Assets that get you income with little or no attention.

Liability will take money from your pocket.

Example Of Liability – Let’s say you have $1000 per month left after your expenses. Let’s say you buy a car using a bank loan. Now you have to pay $100/month from your pocket. That is Liability. And if you sell that Car after 1yr that will also sell at less price. Buy something which is taking money from your pocket as an expense that is a liability.

Example of Assets – You have $1000 per month left after your monthly expenses and $5000 on your savings. You want to buy a rental house with a $3000 down payment and a mortgage of $300 per month for 25 yrs. And you rent the house for $600 per month. Also, you don’t want to manage the house, so you gave property management to do the work for you. They charge you $60 per month and other expenses $40. After all repayment and deductions, your net profit is $200. Now in your pocket every month $1200. And the price of a property will grow over time, that you can sell and earn profit.

Money and its emotional aspects!

Now you know what Assets and Liabilities are. Let’s talk about other factors preventing us from becoming financially free.

Types of fear

1. Too risky
2. I am too old
3. I don’t have enough the money
4. Fear of not losing money

Growing up, we have been taught the importance of money and told stories about the fear of financial troubles. We are injected with fear, and the repeated nudges make the fear stick in our minds. We answer “too risky” or “I don’t have enough money” when someone asks why we don’t invest. Fear comes in many forms, but ultimately, it’s the same.

How can we fight the emotional factor?

Unlearn → Learn → Believe

Unlearn – We have to stop recalling the information which we have in our mind. Over time repeated practice, it will never come to you again immediately. In difficult situations, don’t let the old memory take over.

Learn – Learn how financial freedom people using their different mindsets to become rich. Learn how to earn money in various ways and choose the one that suits you.

Believe – Once you choose or find your path believe in your decision. Keep going, and you will find freedom. Don’t stop learning.

Summary:

We all want to be financial freedom, and no one wants to work for someone till the ’60s. But 90% of us look for secure income as they don’t want to take the risk. We think that we are secure working for someone, but we are not. The security is for the short term. If you want to join the 10% reach category, you have to learn and understand them.

1. Understand how to increase your assets
2. Understand and find your mission
3. Find the laws about tax and how you can pay less tax and earn more profit.
4. Learn about investing

Ultimately what I am trying to say is to think about the problem and find the way out. I will suggest starting with Rich Dad and Poor Dad’s book.

Questions:

• If you have a house of your own and you are staying in it and paying the mortgage. Asset or Liability?
  1. Asset
  2. Liability – Correct – as money goes out of pocket.
• If you have some savings of $1000, what are your fear says about investing the money?
  1. I have $1000, that is if I lose job – can’t invest
  2. I don’t know about investment, but I know it is risky – I can’t invest
  3. I could have invested if I had more than $1000.
  4. Waiting for the market to down! Waiting for the right time!
  5. I don’t know about investing, but I will learn and find my way to be financially free!
  6. Others
• You are in your 20’s. You have $0 money. What will you do to earn it?
  1. I will work on my skills which will work as an asset and make me earn money.
  2. I will work part-time to earn money and then reinvest it.
  3. Nothing continue study in the university and after completion get a job and earn money.