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image of a soaring bald eagle with the words what is financial freedom

What Is Financial Freedom?

image of a soaring bald eagle with the words what is financial freedom

What is financial freedom? Plenty of money…for life! We share how to get to the next level of financial freedom.

Last time, we announced the release of our Financial Freedom Tool and how it fits our mission of helping good people have more money to do more good.

Today on The BIGG Success Show, we define financial freedom and discuss three ways to reach the next level of financial freedom. Here’s a summary of that discussion.

What is financial freedom?

Our definition of financial freedom is:

Plenty of money…for life.

Let’s take this definition of financial freedom part-by-part.

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Do More Good blog image of an eagle soaring in the glow of the sun

Do More Good

Do More Good blog image of an eagle soaring in the glow of the sun

Do more good by discovering how to gain more confidence, clarity and choices when it comes to your money.

Cue the drums. Sound the trumpets. Light the fireworks. Drum roll, please.

We’re excited to announce the release of our Financial Freedom Tool!

It’s software which helps you gain more confidence, clarity and choices when it comes to your money.

We talked more about this on The BIGG Success Show today. Here’s a summary of that discussion…

Financial freedom. What does it mean to you? Never mind that for now, we’ll talk about that next time. It’s the “what”.

Today, we want to share with you the “why”. Because the Financial Freedom Tool is more than just a software program. It’s a device to help you do more good.

But we’re getting ahead of ourselves. Let’s start at the beginning…

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FInancial freedom and security for BIGG Sucess

Financial Freedom is the New Financial Security

FInancial freedom and security for BIGG Sucess
Listen to this post! Click Play to hear George & Mary-Lynn on The BIGG Success Show Podcast (Duration 6:00)

When it comes to money, people have traditionally fallen into two camps:

Some seek financial freedom.

Others choose financial security.

[Mary-Lynn] We split right down the middle on that one – I’m all about financial security.

[George] And I’m a financial freedom guy.

[Mary-Lynn] Which makes decision-making interesting. Obviously, I’m more risk averse than George.

But here’s something we’ve noticed:

In today’s financial climate, you have to go for
financial freedom if you want financial security.

Here’s what led us to this conclusion:

3 Reasons Why Financial Freedom is the New Financial Security

 

  • “Generational returns” are abysmal for most generations

We ran some calculations. We THOUGHT we’d prove that the people who stayed the course after the stock market crash of 2008 were doing just fine.

But we were wrong!

We assumed people started investing a set amount each year, starting at the age of 25. Then we looked at their returns at the close of last year.

We found that people who stayed the course did better than those who got out. However, the results are different for different generations.

People who are now 60 plus are doing okay on their portfolios. But people between the ages of 31 and 59 are underperforming traditional expectations of stock market returns.

So these people may need to be careful using old models of financial planning.

(This is a good place to interject something you’ll often hear us say – you should talk with your own advisors about your specific situation.)

  • Social security does not equal financial security

We saw an interesting article on the U.S. News and World Report site called 10 Reasons to Worry About Your Retirement.

They list a number of things which are in your control. But what really caught our attention is that…

Only 18% of Americans plan to retire
with over a million dollars in assets.

Which essentially means – most Americans are largely counting on Social Security as their primary source of financial security.

BIGG Success is the place for BIGG goal-getters. We know you’re part of the elite group wanting financial freedom – which we’ll define as a nest-egg greater than a million dollars.

  • Volatility

We caught an interview with Jack Bogle on CNBC. He’s the founder of Vanguard, one of the best mutual fund families. He says to…

“Prepare for at least two declines of 25-30 percent,
maybe even 50 percent, in the coming decade.”

The Dow fell about 54% between October 2007 and March 2009. So we’re talking about history repeating itself here if Bogle turns out to be right.

Invest in assets you can control

 

So the question is: What can you do about it?

How can you put yourself on the path to financial freedom – the new financial security? The answer is…

Invest in assets you can control.

Of course, you can’t control everything that happens. But for example – when you own your own business, you can create a cash flow which far exceeds anything you will get from owning stocks.

But don’t jump in with both feet – if you have a job, try to find a way to start part-time. Or tweak your business model so it requires less capital.

Contrary to what you often hear, you don’t have to take a lot of risk today to make a lot of money.

In fact, that’s one of the secrets of entrepreneurs – they’re not risk lovers. They’re great risk managers.

That’s the key – focus on making your downside acceptable so you can move forward with no fear. It leads to BIGG success.

We talk more about this in our Special Report – DECIDE! 5 Keys to Know What to Do Next. Simply sign up below to get FREE instant access!

Direct link to The Bigg Success Show audio file | podcast:
http://traffic.libsyn.com/biggsuccess/00868-070213.mp3

Image in this post from stock.xchng

Build Your Own Economy to Be a Success

personal economy | BIGG SuccessUncertainty. It’s a word you hear a lot these days.

How do you live with uncertainty? How do you face the great unknown?

Think like an entrepreneur!

BIGG success is life on your own terms. You’re the person in charge of your life.

Entrepreneurs know that you can’t predict the future.

So don’t try. Instead, do what they do – create your future.

But not just any future. The future you want.

Build your own personal economy day by day, moment by moment.

Watch the inflows and outflows in your economy. Build a baseline for future flows of money.

Inflows

How much do you plan to increase your income next year? The year after?

Build a plan for three to five years. Then ask a very important question:

How will you get from where you are to where you want to be?

Be on the lookout for opportunities that match well with your passions and proficiencies. Then go for the ones that you think are the most profitable.

It’s a powerful combination when your passions and proficiencies meet profits.

Outflows

Many people never stop to think about this basic reality:

It’s easier to control your outflows than your inflows.

So while you project your income to grow, be careful about future increases in expenditures.

Sure, some will go up. Inflation will play in. And you probably want to enjoy some of the fruits of your labor now.

But controlling your outflows will give you more options and create a more sustainable personal economy.

Surplus

You do plan on a surplus, right? No deficit spending here!

With the surplus you generate, you can invest. Your money starts working for you. It’s a powerful thing.

Because, eventually, your Department of the Treasury will dwarf your Department of Labor.

It’s what you want – the freedom to work when you want, where you want, with who you want. That’s BIGG success!

Image in this post from dleafy

Entrepreneuring Your Personal Finances

personal_financeBigg success is life on your own terms. You are the entrepreneur of your life. Entrepreneurs look at the world through a different lens than do large company CEOs.

For example, large companies and small companies use different financial models. Large companies generally have the ability to raise large amounts of money when they need it.

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For small companies, it’s much more difficult. So it’s more critical for small business owners to watch their cash flow. For us as individuals, our financial model is much closer to the entrepreneur’s.

The two decisions

There are two types of decisions which we must think about: investing decisions and financing decisions.

For large companies, these two types of decisions are independent. They decide what they will invest in. They determine how they will finance their firm.

In an entrepreneurial firm and for us as individuals, these decisions are interdependent. We invest in the things we can finance. It could be a new business or a piece of real estate. But it could also include a new car or a new house.
 
If we have an idea for a project, we first must either have the needed financial resources already available or we have to sell someone on funding it.

If neither of those is true – if we don’t have the money or we can’t sell someone on funding it, we can’t do the project.

Now let’s look at four ways to think entrepreneurially about your personal finances:

Bootstrap
Entrepreneurs understand that they have limited resources. They recognize it, but still make the most of what they already have. You can carry that same attitude into your personal finances.

Retain earnings
This is what we call it when a business saves money. Pre-fund your projects when possible. If you know that you need financing to make an investment, why not finance it yourself? That’s financial freedom.

If cash is king, reserve borrowing capability is queen.
Protect and preserve both your credit rating and your credit capacity. Then you’ll have the ability to fund your bigg opportunity when you see it.

Create value with your projects
Simply stated, Value = Cash Flow ÷ Cost of Capital.
Entrepreneurs must understand that capital comes with a cost. It may mean giving up a stake in the company. It may mean sharing the money with partners or bankers. In all cases, it requires a reasonable return on the money invested.

As an individual, your capital comes with a cost as well. You have to share some of the money you will make in the future with your funders. So just like an entrepreneur, you need to understand if the benefit you will receive from the project makes it worth the money you’re investing.

To determine this, look at the incremental cash flow from any project you consider. If the return on your investment exceeds the cost of the capital needed to fund it, you should do the project and vice versa.

Let’s say you have an old car that’s requiring a lot of repairs. You see that you can save money if you buy a newer car and pay interest. That’s a project that’s worth doing.

Smart entrepreneurs and wealthy people look at every cash outlay as an investment. They want to make sure they’re getting enough value out of the investment to make it worthwhile.

Now that value may be somewhat fuzzy – like it makes you happier or adds to your sense of well-being. In any case, thinking entrepreneurially about your money leads to bigg success.

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Thank you so much for reading our post today. Please join us next time when we’ll talk about the long and winding road to bigg success. Until then, here’s to your bigg success!

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Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00486-092209.mp3

Related posts

The Trap That Keeps You from being Financially Free

Freedom Or Security – Which Do You Choose?

(Image in today's post by srbichara)