The Road to Financial Independence
By Dr. Daniel H. Dahan
The road to financial independence is about a life of abundance. What does it mean exactly? What are we trying to achieve with financial independence?
It means what you do with what you have is more important than what you have. It’s about developing a certain philosophy that takes you on the road to independence.
The word “wealth” is a word that implies a variety of mental images. So we need to discuss this at a greater length to understand what it really means. For one person, wealth could mean having financial substance, which is enough financial substance to do whatever they want. For another person, wealth means having several million dollars in the bank, which is a concept about success, freedom, power, influence, pleasure, and even benevolence.
There are many different types of wealth — wealth of love, of having a great family, of appreciating the country where we live, of having amazing friends. The wealth philosophy is the economic future determined not by the economy but by your philosophy. It’s how you look at things.
Ask yourself how you are going to leave this world. What will you leave behind? Simply imagine what the world will be like when you leave.
The real question you should ask is, did the world benefit from my being on Earth? Did I leave more profit? Is it possible that you could touch something and leave it better than when you found it?
Imagine what would happen if everyone tried to leave everything they found in a better condition. I travel extensively, and when I am in a hotel and ready to leave my room, I always make sure that everything is put back the way it was when I first got there. I gather all the towels and put them in the tub, and I make sure that everything else is cleaned up. Now, I am not changing the bed sheets — obviously, that’s not my job to do. However, I will make sure that when the cleaning crew comes, it will seem as though nothing was moved or even touched other than the bed. Once you adopt this philosophy, you can develop a new attitude and a new way of life.
For example, there are people in our country who don’t like to pay taxes, just don’t want to pay taxes, and actually hate it. If you think about it, paying taxes is an important part of making this world and our country a better place. Everybody has to pay taxes when they start working. Taxes fix the roads, make sure the lights work, ensure there is security in our cities, and so many other things that the government provides because of those fees.
Now, someone may say, “The government takes too much,” or, “These agencies steal and lie and cheat.” That may be so, but that’s not my problem or my issue. I can work on resolving that in any way that is appropriate, but in the meantime, I still have to pay taxes and pay bills. Paying taxes and bills helps you reduce your liability and increase your assets. Why wouldn’t you want to do that?
People think that money is the root of all evil. Well, it may be true that the love of money is certainly evil, but money is not evil. There’s an evil way to acquire money because greed is associated with getting something for nothing, but ambition is a legitimate way of earning money.
Ambition translates to, “I want to have more money. I want to acquire more wealth, something at the service of others, not at the expense of others.” Zig Ziglar, a well-known speaker, once said, “If you help enough people get what they want, you can have everything you want.” That’s not greed. It’s a legitimate ambition at the service of others.
Here’s the definition of financial independence that I once heard and thought was priceless. Financial independence is “the ability to live solely from the income of your own personal resource.”
It is just such a beautiful way of defining it and a legitimate ambition to offer good services, develop great skills, and become a valuable person. Doing that will then bring you wealth. Obviously, the income you receive is to take care of your own personal resources. You’re not putting the burden of earning money on others to support you.
You now have the ability and desire to support others because you know that you can do it. It is such a worthy ambition; what we do with what we have says so much about us. It reveals the kind of philosophy for our life, attitude, what we know, how we think, and the makeup of our character. It is actually a reflection of our thoughts and our value systems.
I once heard someone say that if they had more money, they would have a great plan, a better plan. However, my mentor taught me that if you had a better plan, you would have more money. It’s not the amount that counts; it’s the plan. It’s not what you allocate that money to but how you allocate it.
I am going to share with you what I once heard about developing a great plan. It is called the 70/30 plan. It works like this: You need to learn to live on 70% of your income (after you’ve paid taxes). The remaining 30% is money you will allocate in a different way.
In my personal opinion, 10% should go to charity so you can help others who cannot take care of themselves. That number is also mentioned in the Bible, which obviously can only have divine repercussion. This is something that you should also teach your children because when they’re young, it is easy to train them to give 10%. When your children become adults, they will already know what it means to be generous.
The next 10% is set aside to manage as risk or venture capital — something you buy, maybe fix up and sell, or improve it to make a profit. After all, we are a capitalist country as opposed to other places in the world. In the United States, capital resides with the people, and the people have the ability, opportunity, and genius to produce ideas for goods and services to present to the market. Capitalism has created an abundance of opportunities.
The third 10% should go into a savings or investment account. This is what you put away for the future so that after five, 10, 15, or 20 years, you’ll be impressed by how much money you have saved, including the compounded interest.
When I was in graduate school, my wife and I were both students continuing our education. We agreed that as soon as our first child was born, we would put $100 in a savings account every month. If you calculate $100 per month times 12 months, that equals $1,200. Multiply that by 20 years, and it comes out to be $24,000. If you add compounded interest on top of that, you will get an incredible sum.
That’s exactly what I had when my first daughter got married at the age of 21. We had close to $27,000 in the bank, which we had accumulated for her, but it only took a $100 investment per month.
We can all be students of capital, profit, equity, and value in this country. It’s easy to engage in free enterprise, and we can all adopt the behavior that brings wealth of lifestyle and treasure. If we focus and work together as a nation, we can build the most powerful and attractive society ever. We have the knowledge, tools, schools, market, and resources because the riches are there for the taking, and we deserve it.
I once read about a professor from MIT who taught personal economics, and his philosophy was “decide how you want to live now, versus how long you want to work.” In other words, if you spend everything you earn now, you’ll have no choice but to work longer and harder. Basically, he encouraged his students to think about tomorrow today so that they’d have a better tomorrow.
Something else to be careful about is credit cards because, as you may already realize, they are addictive, extremely dangerous, and can possibly cause some of the most devastating financial developments in your life. If you’re going to use them, you need to go into debt strategically, not habitually.
So it’s hard to get rich quickly, but it’s easy to get rich slowly. If you feel that things in your life are unfair, stop pondering what’s fair and start examining what’s keeping you back instead of what’s putting everyone else ahead.
Study the experiences of others who built their way to the top instead of those who were born there. In three decades as a consultant, I can attest that anyone can reach the top.
If you’re not financially independent by the age of 50, it doesn’t mean you live in the wrong country, community, or time or that you are the wrong person. It simply means that you have the wrong plan. You can be a sincere, devoted, dedicated, loving, caring, and smart person, but you have to learn how to read a financial statement and truly understand what it says.
Here is something you may want to do. Take a piece of paper and list the value of your assets on one side and your liabilities on the other side. Then subtract the total of one from the other, and you will come up with your current net worth.
What’s important about your financial statement isn’t going to be about looking good. It’s not important how good it looks; it’s important that you do it. Keep reviewing it regularly because if you want things to change, you have to change.
It is also very important that you keep excellent books for tax purposes and for yourself, your financial future, and your self-worth.
Isn’t it incredible when you hear a professional who works long hours wonder “where it all goes” after looking at their finances? I don’t understand it. An important discipline to learn is how to track and keep up with your money. It’s a new road, and you’re walking in the direction of becoming a new person and eventually arriving at a new destination.
How is it possible that you could earn $20,000 a month and be broke? The answer is simple and easy — by spending $21,000 a month. It’s important to realize what you earn versus what you spend and if your spending is necessary for what you need.
By becoming that person, you can attract all those treasures and values that most people call a good life. It’s an abundant life, a productive life, an enterprising life, an influential life, a stylish life. It’s a very good life.
I sometimes hear people say, “If I had more money, I would be happy.” That’s not really true. The key to happiness is not more. Happiness is an art to be studied and practiced. More money will only make you more of what you already are and send you more quickly to your destination.
If you are inclined to be unhappy, you will be absolutely miserable with a lot of money.
If you are inclined to be mean, you will be a terror with a lot of money.
If you are inclined to drink a little too much, you will be a drunk with a lot of money.
More money will only make you more of what you are.
The good news is that more money will amplify your happiness if you are inclined to be happy.
Style is not more. Style is an art, a genius, a design. Philosopher Mortimer Adler said, “If you don’t go for the finer tastes, you will settle for the mediocre ones.”
Lifestyle is culture, music, dance, art, sculpture, literature, plays, and concerts. Lifestyle is a taste of the fine — a worthy purpose, developing an appetite for the unique things in life. It’s not the amount; it’s the quality.
The last thought I want to leave you with is that when a seed grows, it must first decompose. It decomposes, breaks down, and then grows to become a tree or plant. It is the same with human beings. For a person to grow, succeed, and achieve greatness, they must first go “into darkness,” and then the light is revealed to them.
Dr. Daniel H. Dahan is recognized as the nation’s leading exPert authority on medical integration. He is the senior consultant for Consultants Of America, which manages over 1,250 offices in 45 states. He is also the author of The Ultimate You: 356 Ways You Can Improve Your Life; and has 52,000 daily listeners on his free “Daily Wisdom” podcasts. Learn more at www.dahan.com, send an email to drdahan@ consultantsamerica.com or call (888)67-DAHAN. Scan our QR Code to watch videos from this article.
