Why are people scared of losing their jobs? One reason and just one. Losing your job equates to losing your cash flow. Why do people need cash flow? To spend it. To spend on it what? Bills!
What are bills? All money we owe and we’ve to pay at a specific time, failure to pay comes with severe consequences on a person’s entire life. i.e going hungry, becoming homeless, etc.
Of all bills, those that represent basic needs are more important and urgent. These are the bills that keep you awake at night, make you talk to yourself on the road, give you stress and headache, and make you self quarantine just to minimize other unnecessary expenditures you may incur for enjoying life.
If you wonder why out of 100 people in a given community, only 10 of them get to travel every year, you got your answer. They can’t afford it! They got other bills to pay. Basic-needs-bills.
How can you think about traveling when you are not sure you’ll eat next week? How can you plan to go on a vacation before you’ve paid last month’s rent? Extremely hard. Right?
Stop Playing Catchup in Your Finances
Therefore, mark my words, you can forget being rich until you've got passed the level of struggling with your basic needs. As long as you still fight to pay for your food, rent, and transport you're trapped on the financial treadmill -- you get to stay on it but won't make progress except for sweat and joint pain. As a matter of fact, struggling with your basic needs is a sign that you're still far behind on the financial track.
If you're in that situation, just know you're playing catch up.
The problem of playing catch up is that you've to double-work and sometimes triple-work where others do less and with ease for similar results. At this point of life, you can neither compete, nor thrive, you simply survive and thank God for it.
Unless, you find an effective financial strategy to secure basic needs, and stop worrying day and night, I hate to be the bearer of bad news but my friend you might never see the dawn of massive wealth. Because the inability to afford basic needs with ease keeps you several steps behind.
The Financial Mistake You do
One thing is clear, as we grow up we find opportunities of earning money whether it is through the businesses we set up or employment. Not to forget the few who win the lottery. Rationally, every coin you earn should be used wisely in a way that'll make you not wish to earn it again. Unfortunately, the opposite is true. As it is today, one moment you earn it, another moment you don't know where it went.
Some of you who are well vast in the subject of finance, probably have figured out what I'm trying to hint on. Investment. Don't rush it though. I still haven't mentioned the financial mistake we all do which traps us into a cycle of poverty.
Investing is the science of putting money into things that'll earn more of it without losing the capital. You know your investment is good when after breaking even (getting your capital back) you make more money (profit).
Most people get to this level of investment as they pursue financial freedom. Kudos to them! Nonetheless, most of them, and sometimes all of them make this mistake as they start out their investment journey.
Anecdote1; If you knew you needed oxygen to survive and that without it you won't be able to do anything else, and if you had to buy it like any other good, on the long list of things you want, what'd you buy first in bulk? Oxygen! Right? A lot of it!
The same is true with your basic needs; food, rent, etc.
A person, just beginning in their career, gets money and invests in another business, stocks, gold, etc. The problem arises when that person can't pay their monthly or weekly bills without slicing their investment. In this case, such a person is more likely to spend beyond 15 years struggling financially.
Because their monthly, and weekly bills (like oxygen) can't allow them to water and manure their investment seeds. Hence financial stagnation. This is why you find people working for over 40 years paycheck to paycheck only to retire at 60 or above with a meager monthly income. Which is no change at all.
Just like the guy who had to buy oxygen first and in bulk, we all have to treat our basic needs the same way. I believe shelter and food are up there right next to oxygen. Therefore, the first most important, and urgent question every young person and another financial-freedom beginner should ask is 'how can I secure my shelter and food?'
Own a House ASAP
If you can manage to own your house within the first 10 years of your career, you'd spend the remaining years amassing wealth beyond your imagination. Also, owning your house within the shortest time possible, allows you the convenience to live happily and confidently.
Let's face it, what worse could happen to you? No matter what happens in the world, lockdowns or pandemics, owning your house protects you from the pressure of not being able to pay rent on time or affording it. This is the problem most people deal with on a monthly basis for quite a long time.
After owning your house, believe me, affording food becomes much easier. I won't tell you to grow your own food, in your own backyard, even though you can do it. But what if your house has a boys-quarter house on the side, you can rent it and use the money to take care of all home bills.
At this point, after securing your house and food bills, the level of stress you experience drops to almost zero. You're now left to pursue your endeavors. On this level, you are the boss, able to make your own choices and decisions.
In case you're still starting out with financial freedom, please focus on securing basic needs first. Invest first in your first house. From there, you'll no longer be playing catchup but splinting. Imagine, how far you can get!