If someone gave you $500,000 right now…
Would you actually know what you’re going to do with it?
In an unsurprising quest, I’m interested in making more money. Like the majority of the world’s population, I want to make more money so that I have financial freedom. My end goal is to be able to make all of the money I need to live from investment assets and be able to allocate my time towards projects that I am passionate about, not that pay the bills.
As a freelance writer, I’m lucky to work with three clients who I am proud and passionate to work alongside. So, while I am able to check the second box of allocating my time to projects that I love to work on—I still don’t want my finances tied to the time I spend working on them.
And that’s what got me on this quest.
In June 2019, I decided that I wanted to be more responsible with my finances and to figure out how I was going to make this finacial freedom dream reality. I started where most do, reading Rich Dad, Poor Dad and realizing how tainted my perspective on money was just by growing up in a middle class family. I had to change my perspective to see money as a friend, as a tool, and as something good not evil.
While that perspective change was a stepping stone closer to achieving my dreams, I still had to do the hardwork.
I needed to figure out how I was going to spend, save, and invest my current income and how that was going to bridge the gap between being asset-less to asset-rich.
This hardwork is perfectly outlined in Ramit Sethi’s finacial guideline, I Will Teach You To Be Rich. That’s when I first stumbled upon the first sentence you read in this article,
If someone gave you $500,000 right now, would you actually know what you’re going to do with it?
Your first instinct is to say yes.
“I’d pay off my college debt, give my parents some of it, invest it, and use a small portion to take a nice vacation.”
But in the world of financial freedom—this means nothing. Answers like this mean that you have absolutely no idea what you would do with the money given to you.
You know who does know? This person:
I would take $87,345 and pay off the rest of my college debt.
I would give my parents $75,000.
I would invest $5,000 into a Roth IRA and choose to allocate it to target date funds, and then save another $15,000 in seperate savings accounts to be used in the following 3 years.
I would invest $250,000 in safe investments, defined to me as companies that sell products that I use everyday.
I would invest $57,655 in 1–3 new companies who’s product I strongly believe will have a big place in the future.
I would spend $10,000 on a vacation.
This person just spent $500,000—to the dollar.
And this is the level of granularity that we need to think in when we say,
“I want to make more money so I can have financial freedom.”
We need to think, what am I going to do with that money? Because only then can we figure out how much money we need to live the life that we’re interested in living.
On my quest to make more money, I’ve realized just how little effort most of us put into making more money. If we don’t know what we’re going to do with it, how could we know how much we need? If we don’t know how much we need, then how can we be so okay with saying, “I want more money.”
This statement has no backbone. It has no chance of being anything but a fluttering thought or statement, soon to be swept away by a myriad of thoughts or other things to say trailing behind it.
What does have a backbone?
A financial plan.
And guess who reaches the exclusive VIP level of financial freedom?
The people who make a plan.
Here’s a link to Google Sheets, where you can make your own financial plan so that in a few years, you have achieved financial freedom instead of only thought about how cool it would be.
See you in the VIP section.