Seven Strategies To Achieve Complete Financial Independence – Part One
How To Never Worry About Money Again
Chief Executive Officer, Founder
Todd Sixt is the CEO of Strait & Sound. He is a successful and seasoned leader of financial service teams. His focus is to ensure Strait & Sound’s clients are provided with a first-class experience and that the work delivered by our people is unsurpassed in the financial services industry. At his core, he believes in excellence. Todd is deeply committed to helping clients achieve complete financial independence.
When I say the words “complete financial independence” what image comes to mind for you? Do you envision ultra-rich people living on a yacht? Do you see international jet-setters with lavish homes on several continents? Do you picture high-end sports cars with luxurious appointments? In other words, do you see something straight out of an episode of the popular 1980’s TV series Lifestyles of the Rich and the Famous?
If so, you might be surprised at what I’m about to tell you. Right now, my organization is helping numerous clients work toward complete financial independence and almost none of them fit the description above. Robin Leach (if he were still alive) wouldn’t profile these people because they seem so, well, ordinary. And yet, they have something that most “rich” people don’t have – freedom from money worries. If you or someone you care about would like to achieve this, here are seven of my best ideas for doing so.
What Is Complete Financial Independence?
I’ll review the seven strategies in just a moment. But first I want to describe what it means to achieve complete financial independence. Despite what you might think, this is not about having a great big pile of money in the bank. It’s also not about lavish lifestyles, just the opposite, in fact. This is about achieving a certain position in life where:
- Your lifestyle is comfortable, but reasonable and disciplined.
- Your cash in-flows are substantially more than your cash out-flows monthly and annually.
- Your income sources and assets are diversified so that losses in any one area do not force you to alter your lifestyle: social security, cash, investments, pensions, real estate, etc.
- Your income sources will continue to produce more than you need for the rest of your life.
- You may or may not be working for money, depending on what you want to do with your time.
- You have the right set of advisors around you to give you great counsel when you approach forks in the road.
- If necessary, and especially as you and your loved ones age, you have people you trust around you to help manage your financial affairs.
People who arrive at this position in life really don’t have to think about money. This freedom allows them to do other things with their time and energy. And here is the good news as I see it. I believe most people can achieve this milestone. To do so, you’ll need to:
- Adopt a specific mindset regarding money.
- Follow certain disciplines over the long-term.
- Earn a decent annual income (although it’s probably lower than you might think) and be smart with it.
Most people in this country can do these three things. I’m not saying this will be easy and I also don’t think this can happen quickly for most people. It takes time and effort. But, after more than 20 years of advising people about how to achieve their financial goals, here is what I’ve learned. Your annual income and inheritance money have less to do with achieving complete financial independence than do your mindset and the disciplines I present below.
The Seven Strategies
After more than two decades of advising people about money matters, here are seven strategies that I believe can lead to complete financial independence:
- Develop a healthy perspective regarding money – Stewardship.
- Develop and follow a long-term financial plan.
- Earn the highest income possible for as long as possible.
- Live beneath your means.
- Save and invest.
- Protect your wealth as you grow it.
- Be wise with inherited wealth.
In this first article on this topic, I’ll explore the first three strategies. Part two of this article will explore the other four strategies.
Strategy One: Develop A Healthy Perspective Regarding Money—Stewardship
It might seem strange that my first recommendation has to do with mindset and not money, per se. I find that how you think about money tends to determine how much you stress about it and what you do, and don’t do, with it. If you want to achieve complete financial independence, where you never worry about money again, step one is to take a stewardship perspective. This not only reduces stress, it increases the likelihood that you’ll make wise decisions and take necessary risks with your money.
Most people these days tend to see wealth in one of two ways: they own it or they manage it. I’ve discovered that those who believe they own their wealth try to hold on to it with all their might, like squeezing a handful of sand on a beach. If you believe this, I recommend that you attend the funeral of both a rich and a poor person. Then ask yourself how much wealth each one took with them. The answer, of course, is zero—for both the rich and the poor person.
I believe a much healthier way to look at money, a way that leads to real happiness, is the same way we look at health. Do you own your health? Would you ever say: “I feel great today because my health is up 2.5%?” Of course not. Instead, healthy people roll out of bed in the morning and look forward to a great day—a day where they get to do the things they love to do.
In other words, health enables you to live a great life. But you don’t really own it. Instead, like wealth, you have to manage it and make great decisions with it or you won’t have it for very long. Just as we are stewards of our health by eating right, taking vitamins and exercising, we also need to be stewards of our wealth. We do this by adopting certain disciplines that help us be healthy with our money over time.