How would you feel if your mother suddenly falls ill and needs a surgery? [You'd say God forbid!]. But let’s say your insurance doesn’t cover her medical bills [That’s if you have one]. What comes to your mind? To borrow from relatives and friends, or from the bank or even GoFundMe?
At this time, you would wish that things were different; that you had enough money to pay her medical bills and take care of other unforeseen circumstances without blinking an eyelid. You would drive her to the hospital, whip out your debit card, pay all her medical bills and get her admitted -- just like that! On your way home, you' would stop at a fine restaurant for a good meal and even pick up a new car for her. Sounds like a dream, right? But really, that's a taste of financial freedom.
As defined by Chris Hogan, financial freedom is “when you are able to take life decisions without being excessively stressed about their financial impacts because you have sufficiently prepared yourself ahead of time. You control your finances rather than being controlled by them.”
The next question every person would ask is, “How do I attain financial freedom?”
Two books have tested and proven principles on how to gain financial freedom. They are: Rich Dad, Poor Dad by Robert Kiyosaki and The Richest Man in Babylon by George S. Clason. While Robert Kiyosaki’s book programs an individual’s mindset towards earning passive income rather than active income, George S. Clason’s book articulates laws that one must follow to attain financial freedom. If you haven’t read them, we got you covered here!
Photo credit: Penn State
Robert Kiyosaki’s 6 Basic Rules of Investing are:
1. Adjust your Mindset from that of poor and middle-class individuals and think like a rich person.
2. Know what kind of income you are working for: Ordinarily-earned income, portfolio income, or passive income.
3. Convert Ordinary Income into Passive Income: You don’t have to slave away all your life working for money. Invest that money and let it work for you.
4. The investor is either an asset or a liability: For you as an investor to become an asset, you must invest in your own financial education by taking courses, reading books or playing financial games which replicate real life situations. Else, you may lose most of the money you will make in life and become a liability to yourself.
5. Good deals attract money: Find a good deal first. The funds to finance it will eventually follow. You will leverage on Other People’s Money (OPM)
6. Learn to evaluate risk and reward: If a business will cost you more money than you are likely to make from it, it’s a bad venture. Don’t do it.
George S. Clason’s book is divided into two parts: The 7 Rules of Money and the 5 Laws of Gold.
The 7 Rules of Money are:
1. Start thy purse to fattening – Save money.
2. Control thy expenditures -- Don't spend more than you need.
3. Make thy gold multiply – Invest wisely
4. Guard thy treasures against loss -- avoid investments that sound too good to be true
5. Make of thy dwelling a profitable investment -- own your home.
6. Ensure a future income -- protect yourself with life insurance.
7. Increase thy ability to earn -- strive to become wiser and more knowledgeable.
The 5 Laws of Gold are as follows:
1. Gold cometh gladly and in increasing quantity to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
Interpretation: Invest 10% or more of your money per month or at any time you earn it. Your money will grow significantly if you do this consistently.
2. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks of the field.
Interpretation: Don’t leave your money idle. Invest it so that it will grow more money for you.
3. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
Interpretation: Seek advice from experienced people before you decide where to invest your money.
4. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar, or which are not approved by those who are skilled in its keep.
Interpretation: Do not give your money to unexperienced people to invest for you. If you want to invest your funds in technology, seek the advice of an experienced CEO of a technology company, not that of a dressmaker who knows nothing about technology.
5. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
Interpretation: Do not fall for investments that promise absurdly high returns. They are most likely scams.
Photo Credit: WallStreetMojo
Article Credit: Hephzber Ifunanya Nwoka