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Brian Tracy lays out four rules for financial independence: spend less than you earn, save 10% first, skip status purchases like new cars, and never touch your savings. Saving $100 a month from age 20 to 65 can grow to over $1 million.
Brian Tracy lays out four rules for financial independence: spend less than you earn, save 10% first, skip status purchases like new cars, and never touch your savings. Saving $100 a month from age 20 to 65 can grow to over $1 million.
The rules for achieving financial independence are simple. More importantly, following these rules is essential to your financial independence. The rules are as. Rule number one is spend less than you earn, five words, and then save or invest the difference. This has always been the case. This is the key to financial success going back to the richest man in Babylon by klassen more than 2,000 years ago. You can be a blithering idiot at an average job, working at a gas station or on the farm or driving a truck at an average wage. But if you save $100 a month on average from age 20 to age 65 and let it accumulate, you'll be worth more than a million dollars, $100 a month, $25 a week, or less than $4 a day. About the same amount as buying a latte coffee at Starbucks. Can you do that? Ok, well, do lots of other things, but do that for sure. Now rule number two for achieving financial independence is that 10% of every dollar you earn is yours to keep. What this means is that you need to develop a habit from the beginning of your career and throughout of cutting 10% off the top of your salary and living on the other 90%. Most people, as we said before, get their paycheck and they spend most of it. If there's anything left over, they throw it in the bank temporarily and then they grab it out and spend it on something else. They look at their bank account and shout, gee, we've got money here, let's burn it. Some people have just got to get rid of the money. Rule number three is resolve in advance to prefer financial independence to status. The work in the Millionaire Next Door found that the mark of self made millionaires is that they weren't concerned about impressing the neighbors or keeping up with the Joneses. They were more concerned with financial independence than by looking good on the outside. At least until they became wealthy. So say to yourself, financial independence is number one to me and status is number two or three or four or ten, then be willing to stick to it. It's absolutely amazing what will happen to you financially. Do you know what we found out about self made millionaires is they never buy new cars. Why? Because in a new car there's several thousand dollars of depreciation. That's money that you lose the minute you drive it off the lot. So what self made millionaires do, based on interviews with thousands of them, is they pick a car they really like, they follow it in Consumer Reports and JD Power for quality and service, and then about two to three years out, they look for used models with low mileage and good service records. And then they buy a car that 20 to 25% in depreciation has already been taken out of. I worked with a man once who started with nothing and achieved a net worth of $800 million. He lived in a nice, normal neighborhood, you know, with doctors and lawyers and architects, but not ostentatious. But the people living on either side of him were just two paychecks away from homelessness. If their income was cut off for two months, they wouldn't be able to make their mortgage payments. I watched this guy. He drove the same used car for three or four years. He liked Cadillacs, so he'd get a nice Cadillac, take good care of it. Then he'd get another used or loaner vehicle from a dealership so that it had already been depreciated. He was never ostentatious at all. And he ended up one of the richest men in America. When you met him, he'd be wearing an old sweater, he didn't have a huge wardrobe, wore the same suits to meetings, and he had no bills at all. But when he wanted to go somewhere, he'd fly in his private 25 million dollar jet all by himself. Now back to the last rule for achieving financial independence. Rule number four is once you put the money away, never touch it. Now this is important, so if you're writing it down, write it in red. You see, many of us make the mistake of thinking that if you save money, you put that money away so you can have it. It's fun money. So when you decide, I want to buy a car or I want to go on a trip, I want a boat, I want a motorhome. You go and you get this money that you saved. However, if you want to spend money on those things, set up a separate savings account. This money is for your financial security. This is your financial freedom for fund. Once you put money into this financial freedom account, you lock it in like a one way door. It goes in and it never comes out. You never spend it. I can tell you all kinds of stories about how this will change your life, including in my life. But please believe me, once you put it away and decide that you will never spend it, as far as you're concerned, it's gone forever. I personally will do whatever is necessary, no matter what. My financial emergency is to not touch my financial fortress. Never touch it. Because if you even think, even a tiny glimmer that you can get it if you need it, then you'll find yourself needing it at the first opportunity. So the key to financial success is pay yourself first, save 10% off of your account, buy used things rather than new, and once you put money away, never, never, never touch it, put it away and let it stay there until it accumulates and and enables you to do anything you want in life. If you enjoyed this information and would like to receive six additional free videos on the top questions people ask me about personal and financial success and achievement, visit www.briantracy.com successmastery. That's www.briantracy dot com success mastery and we'll set you up with six free videos.
