Name: 5 Simple Steps to Financial Freedom
Uploaded: 2020-11-29T19:20:09.000Z
Duration: 8 min 51 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Not having money is miserable, and I have been  there. Sharing a 100 square foot room with a  

To-infinitive

roommate and counting every penny to make sure  that I can make it until the end of the month  

has taught me a lot. I am still very careful  with money because I know what it means to cut  

down on your meals to make the rent at the end of  the month. Back when I was a freshman, I wasn't  

thinking to make a lot of money, but I wanted  to get out of that desperate financial position  

because I had to make a lot of compromises.  I couldn't focus on my college because I had  

to work for hours every day to be able to pay  the rent. So my only hope was, once I graduate,  

I will have the required skills to find a job that  will provide me with the comfort of free time.  

I will use that time to develop a business or  skills that will further increase my income. 

It seemed like a reasonable plan; however,  it wasn't long enough that I realized  

it wasn't as good as I thought because  I wasn't ready to wait a few years  

to graduate and then figure out what to do.  So I decided to try everything I could. I tried  

to start an online business, got into real  estate, joined a little startup. And after  

years of commitment and hard work, I made it. When you don't have to worry about money,  

trust me! Life changes. You no longer base  your every decision on how much does it cost. 

You will suddenly have the freedom to do things  that are interesting to you, that matter to you.  

You will have the freedom to take a break from  everything and don't worry about the rent.  

You don't have to be a billionaire to  do that. It takes far less than that. 

I want to share with you some basic steps to  achieve financial freedom if you are just starting  

out or still on the way to do that.    

Number 1 - Stay Cashflow Positive    

How good are you at managing your  cashflow? is eventually, what determines  

how financially successful are you going to  be? If you have taken accounting classes, you  

probably know what cash flow is. But in college,  they teach that - Businesses have cashflow;  

however, in life, we deal with the same problem.  We have to manage the inflow and outflow of cash.  

To keep your business healthy, you  have to make sure that there is  

more money coming in than going out, or at least  the amount of money that leaves the business  

is equal to the amount that it receives.  It doesn't matter how much debt or expenses  

the business has. As long as it generates  more cash than it loses, it's a good business. 

Personal finance works exactly the same way.  It doesn't matter how much debt you have,  

mortgage, student loans, car lease,  as long as you are cashflow positive. 

Don't take unnecessary responsibilities   

This mistake is literally one of the main reasons  why a lot of people are struggling financially.  

They might be cashflow positive, but then they  take a financial responsibility that they can't  

afford. I am not just talking about getting  a brand new car lease or credit card debt,  

but they get into an expensive relationship  maybe or start a family. Don't get me wrong!  

I am not saying that starting a family is a bad  idea. But here is the equation, let's say your  

cashflow is balanced. You start a family, raise a  kid, your expenses increase, you get a second job  

or get a promotion, and your income rises as well. Not bad, right? 

But as you keep getting older, your expenses rise  as well, and at some point exceed your income,  

so you become cashflow negative, and for the  rest of your life, you will be working hard  

to catch up with your negative cash flow, and  that's known as - generational poverty. You get  

to the point where you don't have the means to  build capital that will get you out of poverty.  

Most people today can't get financially  independent not because they don't work hard,  

but rather they put themselves in a situation  where they have no other option but to spend  

So, To keep your cashflow always  positive, you need to do, step number 3.

Around 4K years ago in a kingdom in ancient  Mesopotamia. There was a guy named Arkad who  

was poor, like really poor. To escape poverty,  he worked hard to put food on the table; however,  

when he received the payment for his service,  he put very little food on the table and lent  

the rest of the money to a shield maker, who  then paid interest on the loan. Instead of  

spending that interest to improve his standard  of living, he lent it to another shield maker,  

thus growing his wealth even more. After repeating  this process for many years, his wealth grew  

so big that he did not have to work again, and  ended up the richest man in that city, Babylon.  

  You might not find a shield marker today to  

lend him your money, but there are clearly other  instruments that you can use to grow wealth.  

Consider this. The S&p500 is an index that  measures the performance of the top 500  

US companies. Historically it had an average rate  of return of around 10 percent. This means that  

if you put aside and invest just 1K dollars  every month into the SP500 when you are 20,  

by the time you get 50, you will have almost 2  million dollars ( $1,991,377). And That's just  

with a thousand dollars. Imagine if you increase  that number every year to 2K or 3K or even 5K  

as your income grows, you will end up  with tenths of millions of dollars. 

That's how you keep your  cash flow always positive. 

  How to invest in the SP500 and how exactly does it  

works, we have already covered that in a previous  video which link I will leave in the description. 

little disclaimer - we are not financial advisers,  and anything we say on this channel should not be  

taken as financial advice. You should do your  own research before making any investment.

Don't go out and throw all of your money into the  stock market because investing isn't all sunshine  

and rainbows. If you would put in a thousand  dollars into the S&P500 in June 200 7  

and decide to withdraw it a year later because  you had an emergency. How much do you think  

you would have made on that thousand dollars? I  am sorry to say this, but Negative 50 percent.  

You would need to wait another five years  (2013) just to earn your money back.  

And that's how the market works. It jumps up and  down every day. Sometimes a crisis hits, and it  

might need a few years to recover. That's why if  you are serious about the stock market, you should  

be in it for the long run to rip the profits. But to truly feel that you are financially  

independent, you need to be liquid. If something  goes wrong, you are not worried. You got fired,  

business is going south, a recession is around the  corner, no problem, you have got yourself covered,  

you have enough cash to not worry about  the bills for at least six months.

All of the things we have  talked about in this video  

sound amazing, but how on earth do  you get the money to do all of that.  

The only feasible option seems to win the  lottery. You can, of course try that, good luck! 

However you have another  option, plan your spendings! 

You are not going to build a 6-month cash cushion  in a single month. You are not going to build a  

million-dollar investment portfolio in a few  months. And guess what?! you don't have to! 

Financial independence isn't the final  destination. The goal isn't just to make  

enough money and retire for good. Instead, to  put yourself in a position where you are not  

going to base your every decision on how  much it cost. You are not going to accept  

that new job just because it pays slightly higher. You are probably going to continue working but  

instead working on things that matter to you the  most. With fewer financial problems, hopefully,  

your life is going to be a little more colorful.   

enjoyed this video. If you did, give it thumbs up.  And if you are new around here, then subscribe and  

turn on your notifications. We are trying our  best to make great videos for you and hopefully  

help you achieve your financial goals. Thanks for watching and until next time. 