3 Sacrifices We Must Embrace to Achieve Financial Freedom
We must sacrifice something to get something else.
That is the most absolute truth! All of us exchange time for money, for example.
All of us are somehow programmed to study, get a job, earn an income, spend it and retire. This is viewed as normal and accepted by society. So 99% of the population follow that same path..
The reality is that this life model brings its challenges along the way. We might study hard, get good grades, specialize with an MBA and still, we might fail at finding a good paying job.
Even if we do, the job might consume so much of our time that our life surrounds itself by it.
The other one, comes from how we use our income. I was negatively surprised to read that 65% of Americans save almost nothing and are likely to struggle when they get to retirement.
So we are sacrificing our time for money and we are keeping none of it. How crazy is that?
The first sacrifice we have to do is to limit ourselves to a budget and avoid spending all our income. There is no way around it.
If your spending habits cannot be controlled, then forget how much you earn. It does not really matter. You are going to spend it all anyway…
Complaining about income is rather common. However, most of the people should look to the other side of the balancesheet and should really start optimizing their spending.
Forget your wishes and focus on your needs. What do you need to survive? Do you really need a 3 bedroom house? Do you need to go shopping every weekend? What about a brand new car?
Start questioning yourself about your spending habits. You will see how much money you are spending without really needing. What if you lose 50% of your income? How would you survive?
We all feel great joy about having buying power but that is the mindset that makes us buy stuff we do not need.
Stop enjoying when you spend and start feeling good when you save.
For many people, this is not only a personal sacrifice but also a social one. Many of us live in a bubble on which what we have dictates what we are.
Believe it or not, this simple fact plays a huge role in our spending habits. If our friends just bought that new car, we will feel inferior if we do not do the same.
But we should put things into perspective. If our friends are spending, they are not saving (unless they are indeed rich). If they are not saving, they will hit a wall later on.
So who do you think does not have to worry with the wall? We, savers! We are more likely to achieve financial freedom than the people around us.
We are sacrificing the comfort and the joy of spending today for a better life quality tomorrow.
Financial freedom will for most us come out of 3 vectors: income, savings, and investments.
These are the 3 pillars for building wealth!
If we improve our income, we can save more and therefore we have the capacity to invest more. Plain and simple right?
In theory, yes, but in practice not so much. To getter a higher income, we must sacrifice more of our time. I find it difficult to go to our employer and ask for raise if we are doing the same thing and working the same hours. There is no reason for a salary upgrade.
If we want a raise, we will likely have to do a harder job or work more hours.
Even if you are a freelancer, the concept also applies. You have to specialize yourself in something or get better clients. Either way, you will have to put in more of your time to be able to do it.
Invest in yourself, learn something new or create a side business. There are more ways to increase your income than the ones you think. Check here for side income ideas.
This next sacrifice comes from getting out of a comfort zone.
Most of us are happy with the 1% rate on a savings account because we feel the money is safe and will never reduce in value.
Well, we are wrong. Inflation is eating our money but we like to do nothing about it. The fact is that everything around us increases in price every year. So, in fact, we are losing money but mentally we are not.
Achieving financial freedom is not confortable and requires a new mindset.
In order to fight against inflation, we have to put our money into vehicles that allow us to overcome its rate. In other words, we have to take more risks and embrace volatility as part of the journey.
That means sacrificing what we think is safe for the less safe so we can get higher returns.
There are many investments strategies, some riskier than others. We cannot expect to get rich from one day to the other, because if that is possible it is because it usually involves a pretty high risk.
On the other hand, if we do not take risks, we will likely never make it to financial freedom.
What are you sacrificing right now? I am curious. Let me know in the comments below.