Whatever your dream there’s probably an element of it that involves being financially independent. Not having to worry about where the next chunk of cash for your mortgage, or bills, is coming from frees up your mind to achieve a whole lot more. For success coach Ryan Jackson, the definition of financial independence isn’t how many zeros you have in your bank account, or yachts moored off Cannes.
It’s having the freedom to do what you really want to with your time, whether that’s incubate new startups, write a novel from a beach hut, or ride a bike all day. Here, the entrepreneur who went from a life of urban crime, to running successful businesses, reveals the six steps you need to take to financial independence…
1. Mind Your Mindset The first thing to realise is that gaining financial independence isn’t going to be easy, so you need to check your head. ‘The most important thing is to truly believe that it’s possible for you. In fact, have an unshakeable belief that it will happen – that you WILL achieve financial freedom. Any doubt or self-doubt acts as a deterrent and a barrier to your success.’
Life Hack: It can be hard to overcome the internal voices of self-doubt, so Jackson recommends working on yourself to develop a success mindset. ‘Read some books by winners and leaders in their field; go on a course or get some help from a coach or therapist to clear your way ahead.’
2. Gather Your Tools Think of this project as something you need to build from the ground up, except that the raw material is time, and the tools are knowledge. Everything from inspiration to practical steps can come from keeping an open mind and learning all that you can from every opportunity.
‘You need to know what you’re doing, and what others are doing in the market – or even in other industries or service areas,’ says Jackson. ‘There will be replicable or transferable ideas, attitudes, strategies or processes that will be useful to you, your work, and your goals. You need to be more successful than the competition in order to achieve your goals.’
Life Hack: Your first steps need take you no further than a search engine. ‘Research any areas you’re wanting to develop in your journey to financial freedom – whether it’s Googling ‘passive income’ ideas, scrutinising the stock exchange, sending yourself on a course or to a conference, or studying best practice in a whole new business area.’
3. Hatch A Plan Having a vision is important, it’s where your drive will come from, but without a plan it will remain a tantalisingly out of reach dream. ‘Rather than having an intangible aspiration in the clouds – pin down what you want to achieve in an action plan. Start with your end-goal in mind, then, working backwards, break down the actions, stages, and steps towards each milestone on your way to that goal,’ says Jackson.
Many plans like this still flounder, often because they are too open ended – there are no deadlines. You need to keep yourself honest, says Jackson: ‘Decide on the first steps you are going to take, and the priorities you have, and give yourself a timescale or deadline date to achieve each step along the way.;
Life Hack: Draw up your personal financial freedom plan and then treat it like a business. ‘Write a serious business plan for yourself covering, say, the next five years. Give yourself some key performance indicators, and hold yourself accountable to achieving these.’
4. Slash Your Costs We’re all guilty, at some point, of frittering away our resources. How often have you felt the pressure to splash out on an expensive gadget, only to find that the buzz you get from it fades, often before you’ve even paid off the credit card bill. And the cash we waste signing up for unused streaming plans and gym membership can be staggering. A 2019 UK study by Fridge Raiders claimed that Brits were wasting £4 billion ($5 billion) a year on unused gym subs alone.
Jackson warns against the luxury trap, where the more you earn, the more you spend. A luxury lifestyle might be nice but is it going to help you become financially independent? Probably not. ‘Money spent on non-essentials and luxuries is effectively money wasted, and financial independence depends on your income exceeding your expenditure.’
Life Hack: The first step is to take control of your finances. Check your incomings against your expenditure and find places to cut back spending. ‘Adjust your ‘luxury’ lifestyle or expectations and make sure you cut your expenditure, as well as growing your income,’ advises Jackson.
5. Decouple Earning From Doing If you have to work for every cent or penny that you earn, then you’re probably going to struggle to scale up your wealth. The secret, says Jackson is to generate passive income: ‘So you’re earning even while you’re sleeping. Minimal effort for maximum return. Projects like property development, rental, selling your intellectual property like courses or resources, or franchising, for example, can give a good return on investment, with minimal effort on your part (especially if you pay other people to do the ‘hard’ work).’
Life Hack Sit down and write out all the possible ways you can either monetise your existing assets, or invest in new initiatives to earn you money, effortlessly. ‘Select one to put into action, and make it happen.’
6. Get Into Investing ‘Cutting your spending on non-essentials will free up money to invest in ventures that will generate more income for you. Ploughing profits and income into your investments will also grow your income exponentially,’ says Jackson. As he points out, today’s market has a huge menu of things to invest in, and new ways to do so, from stocks and shares to startups and people.
Just remember that investments can lose you money as well as grow it, so never put all of your eggs into one basket, and always keep some money back as emergency savings. ‘If you invest in diverse areas – different services, products, etc – this will safeguard you against any future fluctuations or insecurity in a particular market.’
Life Hack: Use some of the financial slack you gained from cutting costs to invest. ‘Calculate what you can afford to invest, and prioritise what will give you the best return on your investment. Review regularly, asking yourself, “what can I invest in this month?”’
WHAT NEXT? For inspiration on how to come up with a new product or service, that may generate passive income in the future, read RSNG’s guide to thinking like an entrepreneur, with Paul Sloane.
Comments are for information only and should not be taken as, or replace, financial advice. Investments can collapse in value and you can lose money with no compensation.
Find out more about success coach and entrepreneur Ryan Jackson
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