5 Things I’ve Learned from Financially Independent People

Do you have someone inspiring you to do what you do every day? I do. In fact I have several people in different areas of my life. And you’ve probably noticed it through the quotes published every week our Facebook page!

When it comes to financial independence, there are a few people I have been following for years that have been amazing sources of education, inspiration and motivation.

In this article, I’d like to share with you 5 things I’ve learned from financially independent people. In other words, 5 inspiring lessons who have helped me on my young investor journey.

#1 Do What You Love  

If you want to become financially independent, ask yourself this question: “Do I love what I do?” 

One of the first things I’ve learned from financially independent is to do what you love. Why? By doing what you are passionate about, you are in the perfect mindset to do your best and drive yourself toward success. You can compare it to a relationship. When you’re in love with somebody, you’ll do your best every day to make your relationship works and lasts through the years, right? 

Making money is certainly a central element of becoming financially independent; however, only chasing money isn’t necessarily the right approach for you to succeed. 

Beyond their fortune and worldwide success, do you know what Steve Jobs, Walt Disney, and Jeff Bezos have in common? They all started their business in a garage without any other resource than love and passion. Can you imagine yourself working days and nights in a garage for the only purpose of money? Only love can do that. 

Love is a driving force to build success. Money is merely a consequence of your love for what you do. 

In saying that, unfortunately love alone is not always enough… And I’d recommend combining with the next tips.

#2 Save More Than You Spend 

Your financial independence is based on your own net value. Your net value can be described as the total wealth you own.

You may earn tons of money, but if your lifestyle is to live pay check to pay check, and keep spending more than you make, then your dream of financial independence will never come true…

Your ability to save money is critical! The more you save every month, the more financially independent you’ll be. I know, it’s not exciting news and you probably know that already… but I can’t say it enough!

Reaching financial freedom happens thanks to good cashflow management and budgeting … And further, if you don’t have savings to invest, you’ll never be in a position to make your money work for you. So saving is essential to be financially independent.

Saving more than I spend is one of the first things I learned from financially independent people. And that’s what had the biggest impact on my journey towards financial freedom and independence. I also quickly understood it is easier said than done … 

Here is my strategy. Before receiving your pay check, forecast your expenses for the month (rent, shopping, insurance, car fuel, …) and add a margin for unexpected expenses and emergencies. The key here is to assess what you really need to buy to limit your spending. I’m not saying all entertainment should be removed, just focus on what’s essential for your wellbeing. This might include gym membership, Netflix subscription, a budget for coffee catch-ups with friends and dinner with your partner. All important things that I believe do impact your well being.

When I receive my pay check, I automatically transfer into my savings account the amount I don’t plan to spend. 

Then the key is to make that money work for you, not let it sit on a savings account…

#3 Don’t let your money sleep, invest it!

Saving is great, investing is better! I understood this simple moto a while back and it really helped on my journey to reach financial independence.

Investing is unquestionably your best option to make your money work for you. When I looked around, it was obvious to me that all financially independent people I knew had one thing in common… They invested their money.

And if you look at people in the spotlight, big fortunes have been built through strategic wealth investments: Oprah Winfrey, Mark Zuckerberg, Suze Orman, Dave Ramsey, … 

Let me give you a concrete example: 

“Oprah Winfrey first bought Weight Watchers stock in October 2015 for $43.5 million. Her investment is now [in 2018] worth more than $400 million.” (CNN.com)

I agree these numbers are CRAZY! But the same applies to smaller amounts.

Using a compound interest calculator you can easily figure that out. See my investment simulation below: by saving and investing as little as $100 monthly (or $25 per week) over 25 years at an 8% return on investment rate, you’ll be able to build retirement savings of up to $91,483.94!!

#4 Keep learning… 

“An investment in knowledge pays the best interest.” Benjamin Franklin

This quote is over 260 years old … and remains so true! I often say: would you take an exam without taking any lesson first? If you want to succeed in anything, you need to first learn about that thing. Same applies to finance.

Unfortunately, we weren’t really taught how money works at school … And that’s a real shame as it is one skillset we could all benefit from.

If you’ve read my article “Do you need to be financially literate”, I guess you understand more than ever the importance of financial literacy.

Understanding how money works is your passport to financial independence! 

Beyond that, what I really learned from financially independent people is to keep learning. The world is constantly changing and new opportunities present themselves all the time. Keeping on the pulse, constantly reviewing what we know and learning more is a fundamental key to the success of financially independent people. And even once they’ve achieved financial freedom they never stop learning and seeking new opportunities. 

Have you ever heard of the 5-hour rule? This rule has become famous thanks to top world leaders such as Bill Gates, Warren Buffet, Elon Musk, and Oprah Winfrey. It encourages people to spend 5 hours a week doing deliberate learning. Bill Gates for example claims to read 50 books a year, that’s approximately one a week!! Now if reading is not your thing… watch videos, listen to podcasts, do workshops… whatever it is that works for you, never stop learning!

#5 Always have goals to reach 

Being financially independent requires drives and motivation. When reading about financially independent people, I realized that their success stemmed from their mindset and clarity to achieve their goals. In other words, you need to know where you want to go, if you want to get there.

This is why setting goals is so important. Elon Musk really inspires me when it comes to setting goals. PayPal, Space X, Tesla, (…) and lately OpenAL: Elon Musk is a great illustration of having goals to reach to go from success to success. 

Now take a blank sheet of paper, a pen and write down everything you’d like to achieve. Based on your current situation, pick the most achievable goal (for now) and ask yourself: what can I do to reach it? Do that on a regular basis and you’ll see your dream goals turning into reality before you know it.

When thinking of financial independence, people often have an amount in mind. That can be one of your goals. For example: make $500,000 dollars per year so you can retire early. To achieve this goal, what I learned from financially independent people that supported me on my journey is to set smaller goals that are more easily achievable so you can feel progress and keep motivated on your journey. Break it down per month and work out how you can reach that monthly goal. Budgeting better and saving more? Starting a side hustle? Investing in Stock? The options are endless… 

The pre-requisite is simply to know what you want to achieve and give yourself the means to achieve that. (Note: understanding the world of finance and the tools available to you so you can achieve financial independence is critical to achieve your goals).

So now tell me, what’s your next goal?

Conclusion

Financial independence is without a doubt a dream shared by many of us. Reaching it can be a very long and exhausting journey … This is why having role models to learn and inspire yourself from is so important. Finding who inspires you can be a huge source of motivation to empower you (especially in hard times). And more than inspiring, they’ll often give you the keys and short cuts to reach financial freedom and independence faster. 

Don’t stand on the sidelines

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Salomé Darme