I recently went Googling for an online calculator that would help me confirm that I am actually financially independent and how reliably my investment return will keep paying me a comfortable income for the rest of my life even if market conditions change.
Not that I was concerned I had made a monumental mistake or anything. I have already determined, using the 4% safe withdrawal rate calculation, that I have more than enough to be financially independent. It’s just nice to be able to confirm that there is a suitable buffer should interest rate returns fall and/or inflation skyrocket.
Now there are many, many calculators available on the inter-web that will allow you to work out how much you need to save before you can retire, how long your savings will last at whatever withdrawal rate you choose, and so on. But I wanted one that would work out whether I would have enough money saved to remain comfortable in my retirement if, for example, the world went through another major financial crisis similar to only a few years ago. Since I’m probably going to be around for at least another 30 years plus, there’s a very good chance that we will experience something similar again while I’m still around.
After much searching, I discovered “The Ultimate Retirement Calculator”. Simple to use and understand, but also includes factors such as receiving a pension at a later age, one-off payments like an investment or business sale perhaps. And the great thing is, you can easily adjust all of the parameters such as inflation, tax, or withdrawal rates to build different scenarios.
The results will show you your progress on a year-by-year chart, inflation adjusted until whatever age you set.
This and other calculators are available on the brilliant website of financial mentor, blogger, and early retiree Todd Tressider, financialmentor.com.
I have spent some time perusing Todd’s website and have to say that it’s one of the best financial advice sites I have come across. And much of the information, including downloadable ebooks, podcasts, and other resources is completely free.
Following several emails between Todd and myself, he has kindly agreed for me to post one of his excellent articles here on Get FIRE’d asap.
Todd has a background in finance and investing with a stack of fancy credentials to his name. He reached financial independence at 35 and offers advice and mentoring to individuals and businesses who understand the value of his experience. That is, in between spending time with his family and doing whatever he wants…..because he can.
So does he flash the cash, enjoy exotic holidays abroad, drive a posh car or spend his hard earned keeping up with the Jones’?
In Todd’s words “I have been married only once, never divorced, and spend more time cooking healthy meals at home than dining in pricey restaurants. I prefer playing with my kids at a local park to jet-setting around the world. In short, I’m an “average Joe” except for my financial and business expertise. The reason I choose an ordinary but comfortable lifestyle is because I prefer to build net worth instead of overhead so I can enjoy freedom instead of flash.”
So whether you’re still on the FIRE journey, almost there, or have already reached your financial freedom goal, Todd spells out what I believe are the fundamentals of not only creating the wealth that will ensure that you do become financially free, but also manage to stay there.
Discover the Ten Key Principles to Build True Wealth (Surprise! It’s about a lot more than just making money)
True wealth is about a lot more than just growing your net worth.
Yes, it’s true that financial independence is all about money, but living a wealthy life isn’t. This distinction is critical.
We’ve all seen rich people who are miserable, and poor people who are happy.
Research even shows the relationship between money and happiness is small.
Below are the key ten principles that will help you achieve true wealth — both financially and personally.
1st Wealth Building Principle: Get Deeply Motivated
Money is a shallow motivator — too shallow to drive you deep enough to achieve success.
The problem is financial wealth is an external goal with benefits limited to the world outside of you. Money buys things, but money doesn’t buy happiness. It can build you a prettier prison, but it can’t get you out of prison.
The inherent limits of external goals (fancy houses, cars, and big bank accounts) similarly limits how motivated you will be when pursuing them.
To succeed in building wealth, you want to be driven by internal goals deeper than just the external trappings of wealth.
You want a cause that will bring transformation to your life and drive you deep enough to overcome all the obstacles that stand between you and financial freedom.
Internally-driven goals that might focus your attention long enough to succeed include the following:
- Freedom: Break loose from the shackles of daily labor so that you have more time to grow, create, and live to your fullest potential.
- Charity: The more you have the more you can give. Charitable foundations created by wealthy families often provide the financial muscle to empower great social and environmental causes.
- Growth: When you have financial freedom, you also have more time to pursue personal freedom. The wealth in your external world becomes a mirror to the wealth in your internal world. The principles that lead to financial wealth can also lead to true wealth by affecting other areas of your life.
- Leadership: Grow your own wealth ethically and joyfully so that you can lead by example for friends and family to rise above the bonds of financial mediocrity and follow in your footsteps.
The reason deeper causes are essential is because building wealth isn’t easy.
You will encounter many problems that must be overcome along your journey to financial freedom. You will pay a price to reach your goal.
To stay the course long enough to succeed, you must be motivated by a commitment that runs deeper than just the lifestyle that money can buy. This step-by-step course to financial freedom can help you find your “why” to propel you toward your goal.
2nd Wealth Building Principle: Give More Value Than You Take
Adding value to the world by giving more than you receive makes everyone better off. That’s how you build true wealth. You improve others lives by improving your own.
Sure, history is replete with people who have amassed financial empires by exploiting others or the environment, but taking value can never lead to happiness or fulfillment.
Exploitation may bring riches, but giving value brings happiness and fulfillment as well as riches — and that’s true wealth.
By giving more value than you receive, success becomes a measure of how much you’ve given. The wealthier you become, the more you are giving to others.
It’s a rewarding way to live.
“From what we get in life, we make a living. From what we give, we make a life.”– Arthur Ashe
3rd Wealth Building Principle: Live With 100% Integrity
Never do or say anything that wouldn’t make your Mother and Father proud.
Don’t cause harm, encroach on others property, violate moral law, or damage the environment. Don’t lie, insult, or cheat in pursuit of financial wealth.
Heck, don’t even stretch the truth. It just isn’t worth it.
The rule is simple: if it doesn’t feel right then it probably isn’t. If you don’t feel comfortable telling your spouse, children, and parents what you are doing, then you probably shouldn’t do it.
Never choose expediency over integrity because no amount of financial wealth can replace a good night’s sleep, a clear conscience, and a peaceful mind.
4th Wealth Building Principle: Be Courageous
Humans are social animals which makes us cautious to venture independently. Yet, wealth doesn’t come from following the crowd. It results from doing what others won’t so you can have what others never will.
Wealth results from doing what others won’t so you can have what others never will.
It takes courage to be a self-starter and be self-responsible. It takes courage to walk new paths and develop new skills. It takes courage to stand out from the crowd. It takes courage to put out the extra effort when others don’t.
In short, it takes courage to build wealth.
It may be true that the nail that stands up is the nail that gets hammered down, but it’s equally true that the nail that never got driven is the nail that didn’t fulfill its purpose.
Live with courage so you can live fully and experience true wealth.
5th Wealth Building Principle: Be Disciplined
Wealth is the cumulative result of many little things added together and compounded over a lifetime. That means your daily habits will make or break your success.
Saving, investing, reinvesting, and growing your financial and business intelligence are all essential wealth building habits that require persistent and consistent effort.
In other words, wealth building requires discipline.
Without discipline, you risk falling prey to the number one wealth killer: procrastination. You must begin the right habits today without delay. It takes discipline to overcome procrastination by starting today and persisting tomorrow.
There is no substitute for action. Anything less is just an excuse.
Another obstacle to disciplined, daily habits is “magical thinking.” This is the false belief that financial security will magically appear out of thin air without a specific plan or action causing it.
Wealth happens because you do what it takes to make it happen. The appearance of “instant wealth” actually stands on the foundation of years of disciplined, daily habits.
Luck comes to those who make their own breaks, and this course shows you how to do it.
That’s the first five of Todd’s 10 Commandments. I’ll post the follow up with the remaining, you guessed it, 5 in next week’s post. Wow, that’ll be November already.
In the meantime, head on over to financialmentor.com and check out the other worthwhile articles and resources on this great site.
And feel free to comment here at Get FIRE’d asap too. Your feedback is always welcome.