4 Things Way More Important Than How Much You Make A Year

If you’re like most people, you wholeheartedly believe your ability to attain Financial Freedom is based entirely on how much money you make a year. But that’s simply not true.

Your income is just one piece of the puzzle. And it’s not even the most important component! Today, we’re looking at four essential elements that are even more important than your income in powering you to Freedom.

1. Your Monthly Expenses

One of the more common money myths is that people who make more money are automatically wealthy. But nothing could be further from the truth.

A look at the financial welfare of lottery winners reveals a shocking statistic: They’re actually more likely to file for bankruptcy than you are! That’s because big winners and big earners all face the enormous temptation of material wealth.

With money lining your pockets, you’re more likely to supersize your expenses until you’re spending more than you’re earning. And sustaining that image and lifestyle is expensive—so much so that you may dig yourself into debt in order to keep up appearances.

When it comes to your financial health, what really matters is not how much money you make but how much money you keep.

So, if you want to assess the likelihood you’ll reach Financial Freedom, take a look at the size of your monthly expenses relative to the size of your income.

2. The Right Approach To Your Net Worth

The way that most people look at net worth is simplistic and often dangerous. Net worth is often equated with wealth and freedom. But that dollar amount can be deceptive.

A millionaire might have all his cash tied up in exquisitely furnished homes, sports cars and high-tech toys. But a smart millionaire lives well within her means, has a strong safety net and maintains investments that produce a dependable income every month.

Ask yourself whether your money is in all the wrong places or whether you have a healthy mix of liquid and investment assets that propel your Freedom journey forward.

3. Your Rate of Return

Of course, having a portfolio of investments isn’t sufficient in and of itself. You need to invest your hard-earned money in the right assets.

For your Income Generator, that means a set of income-producing stocks that gives you a solid annual return of 5%. Your Growth Engine, meanwhile, can afford to contain some slightly riskier investments while you pursue long-term growth and higher dividends.

Don’t forget about the expenses you pay to maintain and build your portfolio. Big fees quickly eat up your gains and reduce your effective rate of return. So be sure to take steps to minimize your investment expenses.

And remember: A balanced, healthy set of assets incorporates the concepts of yin and yang. By maintaining a diverse portfolio, you ensure that you’re able to sustain a good financial return even when the market is down.

4. A Financial Plan

What’s the difference between a person who achieves Financial Freedom and someone else who never gets close? A strategy.

Financial Freedom doesn’t happen by accident. It takes discipline, yes, but also a realistic plan. In Financially Fit Bootcamp, you get the blueprint for constructing a Freedom Generator and a community that supports your efforts. But customizing that master plan to your life circumstances, your family’s needs and your big dreams is up to you.

If you’re not already working off a clear, step-by-step action plan, it’s time to get started:

The size of the income you make is just one piece of your multi-faceted financial life. When you think you don’t earn enough money to succeed, you’re setting yourself up for failure. Instead, by focusing on these four critical areas, you’ll position yourself to journey to Freedom—no matter what your income is.

image credit: Bigstock/Zinkevych

Dr. Tony is the co-founder of MindShift.money and the best-selling author of three books on personal and business finances. Having achieved Financial Freedom at 27, Dr. Tony believes that through Financially Fit Bootcamp and Cash Flow Cure everyone can get there. He has made it his life’s mission to help others live a life where their money works for them—not the other way around.

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