Financial education given in school is a disgrace to the American public. We all have different viewpoints on why this is, but finding a solution is a better use of our time.
The main thing hurting Americans is not knowing the difference between saving and investing. I have met many people who can balance a checkbook, stay on budget, and live below their means, but they still fall behind.
Do you want to know why the rich continue to get richer? They invest in assets that appreciate (increase in value) ahead of inflation.
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What is saving? What do you think about when you hear the word financial security? Four years ago, when I was 38 years old, I believed financial security was having $15,000 in a standard savings account.
Let me repeat that again. I was 38 years old and still thought a standard savings account was the highest tier of financial security.
For most of us, financial security is having enough to pay our bills, a little extra for fun, and a bit to save for emergencies and vacations.
Why does saving alone always fail? If you are a hardcore saver, you will still fail long term. You may not even know that you failed.
Retirement Planning vs. Creating Passive Income
You will simply live a life with less because your money won’t travel as far. You may be unable to help your kid through college or go on a vacation to Italy.
Savers fail because they cannot keep pace with inflation, the cost of living, healthcare, and college. Plus, some form of maintenance will always hinder your savings account.
What is investing? To truly get ahead in this world, you will need to start investing. People hear investing and immediately start freaking out.
Fear of losing money is why most of us lose money. We work hard for our money and want to ensure we keep every penny in a safe savings account for us to admire.
The Fast Track to Wealth
Investing is simply making your money for you. You can invest time, energy, and money to earn a return on your investment (ROI).
You can buy, build, or create assets that make you money. Investing is so powerful because of the 8th wonder of the world—compounding.
Investing versus inflation. Let’s say inflation is 6% in 2023, and your company gives you a 6% raise going into 2023. Is that enough to outpace inflation?
No. You are simply breaking even. Plus, most companies don’t even attempt to adjust your pay for inflation or the cost of living.
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By investing, you should double or triple the amount of inflation per year. Every year, your income should increase when you invest.
Let’s examine how my passive income from investing has increased from 2019 to 2023. My passive income includes rent from two rental properties, dividends, and book royalties.
June 2019: $0.06
June 2020: $160 (+2200%)
June 2021: $682 (+440%)
June 2022: $1,557 (+220%)
June 2023: $2,132 (+73%)
As you can see, I am easily beating 6% inflation year-over-year because income keeps growing. My book sales keep increasing, my rents keep rising, and my dividends keep compounding.
Financial Independence 103: Free with a Family
What is financial freedom? They never taught us the definition of financial freedom because they didn’t want us to achieve it.
Financial freedom is when the income from your assets (passive income) exceeds your expenses. This definition means that you can stop working and live on passive income.
Obviously, if they taught us that in middle or high school, they would have fewer consumers and more intelligent workers. They don’t want that, do they?
So most of us work for 20 to 30 years to achieve financial security, but things get in our way. Housing prices increase, inflation rates, college prices grow out of control, recessions, market crashes, etc., are some things that can happen.
Stock Market Investing 102: Dividend Growth Investing
Let’s not forget about health care bills, car maintenance, housing repairs, and family emergencies. All these things can weigh on a household’s ability to achieve financial security.
Becoming an investor. Every household should invest, even only in a high-yield savings account.
Being an investor is so much more than putting money into the stock market or buying a rental property. You can invest without spending any money.
Most importantly, invest in building your mindset. Read books like “Rich Dad, Poor Dad” and “How to Make a Living with Your Writing.”
Real Estate Investing 101
Your goal is to have little side hustle and investments that can help you outpace inflation and save for emergencies.
The main thing about becoming an investor is starting small. They trained us to have an employee mindset, where all our income derives from a W-2 paycheck.
Investing requires an entrepreneurial mindset, so it may take time to comprehend that you can create your paychecks.
I worked for the government for 24 years, so converting to an entrepreneurial mindset was challenging. But I overcame it.
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I learned how to raise rents, invest in dividends, and create content from my mind that sells on the internet.
Taking your first steps toward financial freedom. Here are three steps I recommend for anyone wanting to change their life.
- Rent something to someone else. This can be a room, car, storage space, or game console.
- Invest for dividends. You can start dividend investing with as little as $5 per week.
- Create content. Creating content is risk-free. The only thing you can lose is your time.
If you take the time to learn these methods, you will outpace inflation and change your family’s financial trajectory.
So You Think You Are Middle Class, Huh?
Conclusion. Most people will never take massive action toward achieving financial freedom. They cling to the idea of obtaining financial security.
The rental market from 2020 to 2023 should be a warning of what’s to come. Investors are hungry to take over Mainstreet America.
Will You Make a Good Landlord?
Housing and rental prices will continue to rise exponentially. Your 9-5 job will not allow you to cover your rent costs, let alone save for a down payment.
Things are getting scary, and only financial intelligence can save you. I jumped into achieving financial freedom head first and accomplished this goal in four years.
Don’t look back in five years and say you got left behind. The time for change is now, and there are many ways to earn passive income. However, they all take knowledge and work ethic. Good Luck!
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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. All Right Reserved Military Family Investing
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