Hidden in Plain Sight! The Four Pillars of Financial Freedom.
Get a Job and Buy Stuff.
Most folks get a job to pay for things they need and want: a house, clothes, food, cars, entertainment, travel, and other “living expenses.” And maybe save a little bit through a 401K or IRA, save some for their kids’ college, and hope for the best. Their biggest “investment” is their house. But a house is a terrible investment… it doesn’t produce a positive cash flow – it just takes money away. So do cars, clothes, food, entertainment, and everything else. Nevertheless, you need a place to live, clothes to wear, and food to eat.
However, being financially uneducated and generally uninformed, little to any assets are built or bought to create a positive cash flow. Folks just consume. And sadly, most folk’s job is the single point of failure in their financial existence… they become a slave to it, perhaps become fearful, and end up being one paycheck away from financial disaster.
They have a chair with only one leg – their paycheck. Have you ever tried to balance on a chair with one leg??
But Fear Not… all this could be avoided if they use their soon-to-be-newfound knowledge to convert their JOB (wage income) into building a stable four-legged chair.
Soon-To-Be-NewFound Knowledge
There are four pillars to sustainable financial freedom. The percentages are in relation to one another and, and ultimately determined by what makes you feel comfortable:
1) Portfolio (50%) 2) Property (20-40%) 3) Business (20-40%) 4) Cash (10%)
Build & Sustain Wealth
The idea is to build the pillars as you go, reinvesting each pillars’ own “dividends” into itself, adding more when you can. Each “leg” is a self-contained machine, that produces a positive cash flow. And when the “dividends” or positive cash flow match your “living expenses,” you are financially free. Your four pillars not only sustain themselves and you, but are increasing in their productivity. At this point, your job, represented by the dotted line, is no longer necessary.
There are lots of books on how to build wealth, and I recommend starting your financial journey by heading down to your local library and checking out a few**. Get reading!!
-HGB
*Arranging these four assets into a holding company LLC with sub-LLCs could be considered an “advanced” step towards financial bulletproofness. This is a way to mitigate risk – separating yourself from the assets and creating a double buffer to protect yourself.
**HippieGreenBeret’s (HGB’s) Recommended Reading List from your Local Library will be a post in the future!