Those of you that are regular readers of Worldwide Success know that we don’t view wealth as the only measure of success.  However, we do spend quite a bit of time talking about money.  Why?  Because money talks.  Can money buy you happiness?  Probably not.  But can you completely ignore money and be happy and successful?  If you don’t have a certain level of financial peace of mind you most likely will struggle in your journey to success.  Unless you are a monk, or live on another planet, you have to deal with the reality of the way things work on this planet.  And on planet earth money talks.

Modern Slavery

Slavery was abolished in 1865, but even to this day many people are bound by the modern version of slavery, or the dependency on money.  Everyone has some basic needs in life that requires money, such as food, shelter, health care, mobility and even entertainment. Where most people go wrong is that they define their needs based on society’s definition of what they should have.

It is believed that the average person is exposed to thousands of commercials every day.  We are constantly being bombarded with stimulus to buy, and it is difficult to fight against this ongoing stimuli.  Consequently people end up living from paycheck to paycheck, without any hope of ever being able to free themselves from their jobs.  Worse yet, many people end up spending more than they earn, taking them further away from their freedom.

Debt – The Ultimate Slave Driver

Debt that results from the malaise of living beyond your means is the equivalent of shackles that keep you from doing the things that you want to accomplish in life.  Don’t get us wrong.  Debt when used strategically can be an effective financial tool.  Debt to finance an education that will give you the opportunity to have a well paid career is an excellent investment.  Debt to finance a start-up company may be a valid instrument to generate income.  Debt to buy a home you can afford is an enabler to the American dream.

But debt used to finance consumption of things that you can’t truly afford is a sure way to give up your freedom.  If you have accumulated debt over the years, especially the consumption driven type, your first goal should be to eliminate it.  Once you get rid of your debt then you need to focus on accumulating wealth that will bring you to financial independence.

Financial Independence

The term financial independence is an accurate way to describe the freedom one achieves when money is no longer a constraint.  It reflects the ability to spend your time however you wish.  Financial independence means that you work because it gives you pleasure and satisfaction, not because you need it to support yourself and your loved ones. When you reach financial independence, money is no longer your master and you are not longer a slave.

Financial independence does not necessarily mean that you are rich.  In fact, you can reach financial independence living a very modest lifestyle.  But it also does not mean living a life of scarcity.  The key is to define the lifestyle consisting of your minimum material needs to live a comfortable but not extravagant lifestyle, and then work towards accumulating enough wealth so that you can maintain that lifestyle indefinitely without having to work.

In order for you to accumulate enough wealth to live your desired lifestyle, you most likely will have to make some sacrifices.  You will need the discipline to live beneath your means for several years in order to save enough money that can grow through investment vehicles towards your desired goal.

How Much Money is Enough?

How much money is enough to reach financial freedom?  This is a very personal question that only you can answer.  However, a good rule of thumb is to figure out the minimum that you need to spend annually to live a comfortable but not extravagant lifestyle, and then multiply it by at least 15.  So, for example, if you need $70,000 per year to live your target lifestyle, you will need to accumulate at least $1,050,000 in order to achieve financial freedom.  Why 15?  It is a somewhat arbitrary number, but it is the equivalent of a 6.6% yield which should be achievable with a well-balanced risk adjusted portfolio even when accounting for inflation.

Money Talks

Why is money such an important theme when we talk about success?  Because we need money in order to live well.  Because money buys us freedom.  It is hard to imagine someone without freedom being successful.  And in the modern age, true freedom requires financial independence.  At the end of the day, money talks.