Achieving financial independence is more about changing our mentality than it is about accumulating money. It is about creating your own paycheck, not just living paycheck to paycheck. It is about overcoming fear and circumstance as much as it is about saving and building a retirement account.

The first and most important thing we all need to recognize and believe is that achieving financial independence is absolutely possible. Why then, is it so often not achieved by the vast majority of people? It has very little to do with talent, circumstance, geographic location, career choice, or family inheritance; actually, it has everything to do with desire, belief, hard work, sacrifice, and persistence.

Thankfully, we can change our mentality, habits, and circumstance. Below are listed several important steps, that if understood and consistently acted upon, will result in financial independence being achieved.

1. Implement the ‘Laws of Success’:

Like most of our goals and dreams in life, they are not achieved because we do not understand, believe, and implement the ‘Laws of Success.’ These laws teach that anything is possible if one will but…

• desire
• believe
• think differently
• set goals
• work hard
• learn from failure
• take risks
• and persist.

Unfortunately, people become comfortable with mediocrity, are unwilling to put in the necessary effort, and wrongfully assume that others and circumstance dictate their destination. People need to stop thinking that talent, education, money, and others determine their potential; but rather, to create their circumstance, to believe in their dreams, and to take action today!

2. Being Rich vs. Being Financially Independent:

The person whose income is $1.5 million, and whose expenses are $1.7 million … they are NOT rich (nor financially independent). Wealth is not (should not be) measured by the size of our house, the clothes we wear, or the cars we drive. True wealth is evident when someone…

• achieves income sufficient to become truly independent from anyone else financially
• has time freedom
• has assets and/or employees working for him/her
• has continual passive income month over month
• and most importantly – has the time and resources to give to others.

With this definition in mind, is not ‘wealth’ relative. $5,000 a month in passive income can achieve the definition of financial independence described above. People who achieve financial independence understand that wealth is achieved by changing our mentality, getting to the point where they don’t trade time for money (a job), eliminate all debts, have assets and/or employees working for them, and never fall victim to the fallacy that a pay raise or a promotion is the next step to financial independence. They understand that being or appearing rich is not the goal

… creating time freedom and passive income is the goal.

3. Change Your Mentality About Retirement:

The society, culture, and education system of our country unfortunately ingrains in our minds that we are to go to college, choose a major/career, get good grades, get a good job, and work for 40+ years building a retirement account so that at age 65 we can happily retire and then enjoy life.

So, for 40 years we work hard, get excited about pay raises and promotions, trade time for money, hand our money over to ‘trusted’ investors to build our retirement account, and sacrifice fun now in hopes that the golden years of our life we will be the time we finally get to ‘live it up.’ I don’t know about you, but I do not want anything to do with this type of retirement. Thus, the challenge for all of us is to change our mentality now, and implement the principles in this article long before age 65!

4. IRA’s & 401(k)’s … A Risky Retirement Plan:

Does anyone else find it strange that we hand over our money to institutions and unknown (and often greedy) investors who quite frankly are interested in making a dime now, not in forty years. Don’t get me wrong, I am absolutely a proponent of putting money into savings accounts, CD’s, IRA’s, and 401(k)’s (and I also understand the nature of risk in any investment); however, my problem is with the mentality that we allow and trust that OTHERS will create our financial independence, and all that is required of us
is to just make occasional deposits.

Anyone who has actually achieved financial independence (before age 65) most likely created it themselves: they took risks, they went against cultural norms, they bought assets that made them money, they started their own business, etc. These people didn’t rely upon a banker, an employer, a retirement account, or an unknown broker to determine their financial future.

5. The Typical Employee Mindset:

If you are ever to achieve financial independence, you must never fall victim of the typical employee mindset. What is this mindset, you ask?

• Do you think that a pay raise or promotion will be the solution to your problem(s)?
• Do you trade time for money?
• Do you believe that having a job equates to job security?
• Have you become content with mediocrity?
• Do you do just enough to keep your job?
• Do you think in terms of 9-5?
• Do you have thoughts of ‘that is not my job responsibility,’ etc.?

If having the typical employee mindset is ok by you (and don’t misunderstand me, there is nothing wrong with being an employee), then you must recognize that the eventual destination of this path is undoubtedly just a hope that an IRA or 401(k) will be sufficient to keep you alive (after you’ve worked for 40+ years to accumulate those funds). This is not my definition of financial independence.

6. Don’t Leave Your Job Quite Yet:

These points allude to the fact that in order to achieve financial independence, you would need to take a risk, leave your job, and be an entrepreneur. That is not necessarily what I am suggesting. One does need to first recognize that being an employee and trading time for money will never produce financial independence. However, becoming your own boss, starting a business, and being an entrepreneur is not necessarily the answer for everyone.

Because financial independence is relative for everyone, someone who desires security, is not as apt to take risks, does not want to manage others, etc. (and there is absolutely nothing wrong with this at all), these people need to be creative in other ventures on the side that will create passive income in addition to their salary.

Financial independence is not defined by having more money than someone else, or by being an owner of a company; rather, it is measured by time freedom, no financial worries / debt, and creating passive income (which can be done while still having a job), etc. The goal, thus, is not necessarily to become the boss or to be rich, but to create passive income and buy assets that make money (you define the amount) and that create time freedom. This is financial independence.

7. Taking a Risk – Entrepreneurship:

Now, although point #6 is absolutely true, the reality is that in most cases, financial independence is most likely to be achieved when someone takes the risk and starts their own business, or buy assets that make them continual passive income.

While there could be an entire book related to this one topic, simply put, the important thing is that one needs to recognize that financial independence is rarely achieved by being an employee. In addition, given the nature of our last recession (2008-2009), one can never assume that their retirement funds are not susceptible of large losses (very quickly).

8. Passive Income … This is the Answer:

Your approach and goal in all of your financial decisions and actions, and the key to actually achieving financial independence (hopefully long before the age of 65), should be…

to take every extra penny and invest it into assets that actually make you money continually month over month.

Let’s take a lawyer, for example, who has a very healthy income … if his expenses exceed, match, or even are slightly less than his expenses, he will have to spend 40+ years working 80 hours a week to make a lot of money. However, if that same person lived more frugally and took his extra money and bought cash-flowing properties (just as an example), it is extremely likely that this lawyer will not need to be a lawyer for 40+ years, but in a much shorter time period, he will have assets/properties that he can hire others to manage and will make him a consistent monthly income. He may make less doing this than as he would as an attorney, but now he has time freedom (no going into the office for 80 hours a week), and he has continual monthly passive income (passive meaning he does not necessarily have to work for
it). This is financial independence.

Recognize that the principles above are not intended to provide you specific business ideas on how to make money; rather, they are to help you understand the first and most important step – to change your mentality, approach, and goals. Analyze your life, goals, and habits and determine what exactly it is that keeps you from achieving financial independence. While there are many reasons why we don’t achieve our dreams and goals in life, almost all the reasons can essentially be summarized into three categories: fear, inaction, and being content with mediocrity.

The goal is not to get rich, it is to enrich your life by creating time freedom and the resources to bless others. Achieving financial independence is absolutely possible. What is required, however, is to understand and implement the points above, never allow others to determine your potential, and take the action necessary to achieve your goals.

Additional Reading:

• Robert T. Kiyosaki’s website
• Rich Dad Poor Dad by Robert T. Kiyosaki
• Think and Grow Rich by Napoleon Hill
• Law Of Success by Napoleon Hill
• Why We Want You To Be Rich by Donald Trump & Robert Kiyosaki