Today’s topic is a deep mindset adjustment that most people will never understand. It’s not necessarily their fault because the world trains us to think with a financial security mindset. When you adopt a financial freedom mindset, every single thing in your life changes. But, let’s take it from the top.
When I was researching this topic, I went back and searched my articles for clues. Yep, I have written so many words that I don’t even know what I have in my catalog. I found an early article titled “Is Becoming Rich Something for You?”
In that article, I profess that there are three levels of wealth: financially secure, financially comfortable, and financially rich. I can still stand by these assertions; however, they represent the physical status of wealth.
I Live Paycheck to Paycheck 3
Today, we will dig deeper into the mindsets that drive us all. This overarching narrative is how we let our lives unfold, and more importantly, how we push our children into future roles as providers, employees, and spouses.
Let’s start with my guess at the definitions of these two mindsets. These are just my take after reading 60 books, watching the world through a different lens, and trying to simplify it all into a few words.
Financial security. The financial security mindset is a state of mind that only relaxes when there is a defined outcome from a financial endeavor. This mindset leans towards fixed income jobs and salaries, savings accounts, education and certificates, pensions, social security, annuities, etc.
Financial Freedom. The financial freedom mindset is a state of mind that only relaxes once it learns how to create money. This mindset leans towards entrepreneurship, the stock market, real estate investing, cryptocurrencies, side-hustles, etc.
As you can see, these are competing mindsets. They are very akin to “Earned income vs. passive income.” A great question is if you can have both mindsets at the same time?
$1,000 Dividend Spending Spree
The amazing thing about both of these mindsets is that you can carry both of them simultaneously. I know because I am doing it right now. As much as I love entrepreneurship, I am still grinding away at my day job, building a better retirement pension.
It would be selfish of me to run off and become an entrepreneur with a family of four. In fact, I think that life is best spent keeping both mindsets in a continual battle. The most important thing is understanding which mind is in charge at the moment. I wonder if it has something to do with left brain vs. right brain methods.
Most people (97%) will never break past the financial security mindset. Having a job that pays them $75,000/year allows them to cram their lifestyle into this salary level. They get a house, car, school, clothes that conform to the amount they make. Then they settle in for the long haul.
How to Stay Motivated
When it is time for their children to grow up and leave, they pass the financial security mindset on to the children. But, what’s happening is that companies no longer give a shit about our children. Jobs, by themselves, have become risky.
When life gives you lemons, make passive income lemonade. Security and Freedom are opposing forces. The person with the $75,000/year salary thinks that they are free. Yet, they have built their lives around the wage. If they wanted to spend $100,000 on a six-month trip to Europe, they couldn’t. In fact, their mind wouldn’t even allow them to fathom taking this trip.
That is the danger of a financial security mindset. You think that you are free, but you are in a prison of your own choosing. The wardens are your job, boss, taxes, debt, time, etc.
Happiness isn’t free. To build a financial freedom mindset, you first need to let go of everything you hold dear. College is important, but the education that can set you free comes from self-education. The book that can rock your mental world is “Unfair Advantage” by Robert Kiyosaki. If you are having a hard time grasping the different mindsets, start there.
The financial freedom mindset person could also be making $75,000/year but have an entirely different view of the world. They may be backpacking in Europe or renting a room in a mansion in Vermont, close to the slopes.
You see, financial security and financial freedom is not an income level; it’s deeper than that. The main difference is that the financial freedom mindset learns how to create money. Once you know how to do this, your world will change forever.
Defeat Toxic Consumerism
I was a smart little kid growing up. I got straight As and joined the military. I grinded away for 20 years before I started building my financial freedom mindset. But, here is where I am so blessed to welcome my new view on life—my kids.
My oldest son wasn’t the best in school, at least compared to my magical grades. I was very strict on him because he wouldn’t survive without good grades, college or military, and playing by the rules—under my financial security mindset.
Today, I know how to create income streams. I can set both of my children up in a house with two renters paying the entire mortgage. If he wants to focus on training dogs, he can open a dog park to earn passive income while building his dog business.
He can also leverage his love for animals with a blog that helps bring in customers to his dog business. All this, plus he can still work a day job. There are only a few true entrepreneurs that can lean 150% into business at all costs. The rest of us have other factors that motivate us.
Diversify Your Passive Income
Elon Musk is a serial entrepreneur—he loves the thrill of creating a start-up. It would be disingenuous for the rest of us to think we are that pure at entrepreneurship. The rest of us probably want to achieve freedom of time and money.
That means that we don’t have to go all-in as entrepreneurs. We can build enough passive income streams until we free ourselves from our captors—I mean jobs. Then we can focus on what makes us happy.
As we send our kids out, they can be a 50/50 hybrid mentality between security and freedom. That way, they can make $75,0000/year at a job but have $25,000/year from passive income streams. If their job starts being stupid, they already have things in place that allow them to make a move. I discuss more in “Can You Achieve Work-Life Balance?” and “Can You Achieve Work-Life Balance 2.”
In my article “Welcome to Stress Freedom,” I asked if you could create a $50/month income stream outside of an earned income job? If you can’t, I hope you take these mindsets seriously. Once you learn to create wealth, life takes on a new spin; that is true freedom.
Money doesn’t’ set you free; the ability to create money sets you free. I’ll leave it at that for today. I will explore this topic many more times over the next 30-40 years of writing I have left. Sadly, people live in a box out of fear of creating an income stream. I’m reading a book about this fear right now, so more to follow. Enjoy and Happy Investing.
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
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