The Secret To Achieving Financial Independence

Foreign. Hi, I'm Brian Scribonia, host of the Common Sense Financial podcast. The most wealthy and financially independent people I know realize something that most people don't. They realize that wealth, true financial independence, is not found in the amount of money that they have. That is what most people believe. They think that if they have a lot of money saved that they will have this sense of independence. And, and there is some truth to that. Accumulating a lot of money is a great accomplishment in this consumer driven society that we live in. However, money itself is not what the most wealthy, most successful people I know focus on in their pursuit for financial independence. Before I share what this is with you, I want you to ask yourself this question. If you had $1 million, what would that million dollars represent to you? I really want you to think about this for a moment. Imagine you have a stack of $100 bills in front of you, totaling $1 million. What does it mean to you? What is it doing for you? Regardless of what you're thinking right now, you have to realize that the money itself is useless until you give the money a purpose. Is your purpose to simply have the stack of money providing you comfort in just knowing it's there? Or is your purpose to have that stack of money fulfilling your checkbook every month with passive income it is generating all by itself? In this podcast, I will share with you this simple paradigm shift that I believe could be the most significant money lesson you ever learned. And you see, much of what we have been taught about money is wrong or misguided at the very least. We are told to save money and are given arbitrary targets to shoot for, like accumulating a million dollars by age 65, then retire. Really, there are many reasons this makes absolutely no sense. But that's another podcast for another day. What I want to concentrate on here is the stack of $100 bills I had you envision a moment ago. There are two very important things to understand about your perception of this stack of money. If you spend the money, then it's gone forever. If you put the money to work, it can create more of itself. In other words, if your money is producing money, then you're creating more of it. And having more money is good, right? But there are many misconceptions about what this means and how to do it. The average person will look to the stock market or use risky investments in an attempt to create more money. There is a time and place for this approach when you are simply accumulating money. But when it comes to creating financial Independence for yourself. This is equivalent to gambling and and is the trap many people unknowingly fall into. There is a better way. And learning how to put your money to work like the wealthy is what I want to share with you. A moment ago I asked you what money represents to you. Most people would say that there is security in having money, which is true. Life is difficult without having money. The next question I asked was what does the money mean to you? Most people would say that it is the hope of having financial freedom and not having to worry about money again. It's something most everyone desires for themselves. The idea of financial freedom is appealing. And the last question I asked was what is it doing for you? In other words, how is your money providing the security and financial freedom we're discussing? I really would like for you to think about this and think about what I'm asking you. See, simply having money is not enough. The money has to be playing its part in delivering what you desire from it. A pile of hundred dollar bills may give you a warm and fuzzy feeling, but it's not the answer. And this is where many people miss the point of building wealth and fall into the trap of believing that the accumulated money is all that is involved with reaching their goal of financial independence. It's simply not. I see it day in and day out when talking with people who have accumulated a significant amount of assets in their retirement accounts. They have followed the standard device of saving for retirement to accumulate money for their future. Yet when they want to retire, they look at their stack of hundred dollar bills and don't know what to do. They have the money, but the money is not giving them what they need. What do they need? They need income. Another word for income. They need cash flow. They need money flowing to them from the stack of hundred dollar bills. The money's not the answer. It's not the solution in and of itself. But there is a problem and is a pretty serious problem. There is this misguided belief that having money flow to them simply means grabbing from the stack of hundred dollar bills. They view it as money in the bank. And. And if there's money in the bank and you need money, simply withdraw from the account. That's a problem. This process of taking from the stack of $100 bill slowly depletes the stack. Eventually the money's all gone. How many times have you heard stories of famous movie stars, athletes, lottery winners having millions of dollars and then filing for bankruptcy? It seems impossible until you understand what's happening. They file for bankruptcy because they spent their stack of money and then went into debt in an attempt to salvage what they believe was their financial freedom. They believed the stack of money was their freedom and spent the money. The stack of money is not the formula for financial freedom. Financial freedom is having a consistent flow of income that is generated from the money. It's not the money itself. We want income without taking from the stack. So how do we do this? First of all, stop believing some of the lies you've been told about money your whole life. One of the beliefs people have is that the stock market will always go up over time. And if you take from your stack, the gross of the market will replace what was taken. This is a fairly ridiculous concept considering the fact that the stock market does not always go up. There are times when it goes down. There are also times when the market is flat or returns very little. So if you're taking from your stack and the market goes down, what happens? You end up taking a larger percentage of the stack, which compounds the problem and accelerates the depletion of your stack. We can discuss statistical probability, but the truth is that no one knows what the market will do and there's no way to predict the results. Sequence of returns can be devastating to an income strategy, and it's not something you can control. No matter how smart you are. In order to keep your stack of hundred dollar bills, you have to really pay attention to what you have control over. And one thing's for sure, you do not have control over the market. If we rely on things we cannot control, we're leaving ourselves exposed to the possibility of seeing our stack go away. Nobody wants that now. Another common belief is at the other end of the spectrum is that this mindset or this fear of losing money that results in basically burying the stack in the backyard. It's hard imagine this as a viable income strategy unless you believe that the money itself is financial independence. But the reality is that buried money cannot be used because if you dig it up and to use some of it, the stack is getting smaller, which diminishes the independence you thought you had. So this approach isn't going to deliver the results you're looking for. Since burying your stack of hundred dollar bills is not going to create any income, we have to stop looking at these extremes of focusing on the stack of money and realize there's a better way that most people seem to ignore. Everyone except the successful people have figured this out. For those who have figured this out, they know where to focus and they keep their attention on it. They focus on putting their stack of hundred dollar bills to work for them to create consistent income. Instead of spending from the stack, they use the stack to create income that can be spent. If you spend the stack, the stack eventually goes away along with your income, forcing you to be the source of income and starting the process all over again. This defeats the purpose of what financial independence is all about, which is not having to work to meet your income needs. You see, the definition of financial independence is having your money work for you to create consistent income instead of you having to work to create income. If you were only interested in having a stack of $100 bills, then you'll never experience the financial independence I'm talking about, because you will still have to work to generate income or live in fear of running out of money. That's not what I would call being financially free. Once you realize that money itself is not the answer, but the income the money generates, the sooner you can begin to experience the true financial freedom. If you have successfully accumulated stacks of money in your bank, investment and retirement accounts, you need to realize that you're only halfway there. There's still work to be done. You have to take the money you have and create predictable streams of income that will deliver the freedom you're searching for. What you have done to accumulate money will not be the same method you use to distribute income from your money. It does not work that way. And here's why. An accumulation strategy is not the same as an income strategy. Don't be misled to believe that you can save and invest to accumulate money. Then remain invested as you always have and begin distributing money to yourself. And I'll take this a step further. Simply reducing your perceived risk from stocks to bonds isn't the answer either. People have been misled into thinking that investing in the same things but with less risk is the answer. But reducing risk while doing the same thing still carries risk and volatility. Regardless of whether you have a high risk portfolio or a low risk portfolio, it is all the same method. Investing in a typical stock, bond, ETF or mutual fund leaves you exposed to things outside of your control, which can result in depleting your stack of $100 bills. So the bottom line is the most important thing when it comes to using your money is creating income and having consistency, consistent returns, consistent income, consistent results. You cannot confidently rely on your stack of hundred dollar bills to provide for your income needs without these things. Otherwise you may find yourself dipping into your stack and ultimately running out of money. Here's a simple example of what I'm talking about. Think of a chicken. The chicken can provide a meal by producing eggs to eat. This chicken can do this day after day for you. If you harvest the chicken for a single meal, you no longer have the chicken working for you and have to go get another chicken. Your stack of hundred dollar bills is the and the income generated from your stack are the eggs. This is the mindset you have to have around money. If you want to experience financial independence for yourself, your focus has to be on having your stack of money generate income. It's not gambling your stack in the stock market. So forget about using things as like mutual funds, ETFs, stocks or bonds. And it's not protecting your stack by burying it. So you can forget about using bank accounts, CDs or a home safe. Even commit to using programs and strategies that are income generating. Focus on creating and protecting your income. If you've been following me for a while, you know that my approach to all things relating to money is getting your mindset straight before moving money. The reason I feel so strongly about this is that there is too much nonsense being taught about chasing returns and accumulating money. Until you get your mindset straight and realize how you will actually use the money you have, none of this will make any sense. Once you have your mindset straight and focused on what is important for achieving financial independence and the sooner all this will come into focus for you. It's not about rates of return. It's not about fees. It's not about picking the best investments. It's all about cash flow. There's no shortcuts. There are no rich, quick solutions. There's no secret pill. There's only common sense. With all that said, my team and I are here to teach you how this is done. That's why we've created a community of people just like you who want to think differently about money, create their retirement mindset and reach their goals. If you're not already following me on Facebook, YouTube, Instagram, LinkedIn, and if you're not already subscribed to our Forbes Top 10 rated podcast, the Common Sense Financial Podcast. Take time to do that now and if you have any specific questions or are looking for an advisor to help you through the maze of investing and financial planning strategies, reach out to us through our website. That concludes today's podcast. I'm Brian Scribonia and thank you for listening to the Common Sense Financial Podcast. Sam.