I hear all the time I became a business owner because I want financial freedom.
But then I hear ‘I don’t work for the money' or ‘I don’t yet make enough to sort out my money stuff.’
And ‘I definitely don’t have a money mindset.’ I hear you. This was me too at literally every stage of my life as a financial adviser, even when I was making great money.
We are conditioned to:
Live to our means, when you get a pay rise and you spend more, right?
That the only way to be rich and wealthy is to work harder and make more money, right?
And then time ticks on, quickly. It seems no matter how much money you’ve made, or how successful your business has become, you still never have enough money to spend, save and invest for the financial freedom you so desire.
Everyone has a money mindset.
Subconscious internal conditioning is driving your financial behaviors every single day. Whether that is how you spend, how you feel you need to make money, if you're in a cycle of debt and if you never put any money towards your financial future because it feels scary. Your brain is designed to keep you safe, and these thoughts that you have, which can be limiting, are what is keeping you in your comfort zone. Even when that comfort zone is holding you back in a serious way!
It is oddly comforting to work harder, and harder, to make money instead of finding the time to invest some of the money you already make in finding financial freedom. Your brain doesn’t know what is true or false. It only knows what you tell it and if your internal narrative is negatively impacting you, then you do need to take action to re-write the way you THINK.
So let’s consider the cost of your financial freedom.
Firstly what is financial freedom? Financial freedom isn’t saying “I don’t care about the money” and “I go to work for the love of it”. This is a belief that will very likely sabotage your financial freedom, it will lead to:
Giving away wealth
Never holding on to your riches and becoming wealthy.
Financial freedom is a feeling you have when you don’t fear money and instead you feel totally at peace and you are living your best life by making the most of every single £1 you make. Financial freedom is when you’re business is making you “enough” money for you to spend on the life you value, but find the space to save and invest for your financial independence. Your financial freedom number is the amount of income you need to make each month to live your best life. So it is your monthly spending all added up. It is quite simple to work out.
There is a difference between being Financially Free and having Financial independence.
Financial Independence is when you own enough assets that can generate the level of income you need to be financially free, and you no longer NEED to go to work. Aka you could retire if you wanted! Your financial independence number is your financial freedom number multiplied by the number of years you plan to be retired, the rule of thumb is 25 years. Work it out: if you currently spend £3,000 a month, this is £36,000 a year, meaning your financial independence number is £900,000. You’d need almost a million in financial assets, in this example, to have financial independence and be financially free, and that isn’t including adjusting for the impact of inflation. Assets that contribute to your financial independence:
General investments (ISA and GIA)
Your business (if it has a saleable or recurring value without you in it)
Your state pension
Other alternative investments.
Although your state pension could contribute towards your financial independence, we don’t know with any certainty when we will receive it and how much it will be. A lot can change over time, depending on government policy. If you seek financial freedom and financial independence, you need to ensure that you are managing ALL the money you make in your business right now. And that your money mindset doesn’t sabotage your long-term success of reaching your goals.
Ensure you are maximising revenue-generating activities.
Ensure you charge enough for your valued service.
Ensure you make the most of every £1 you make, and hold on to what you don’t need right now by investing some of it into tax-led investments like a pension, lifetime ISA if you’re under 40, or a VCT strategy. These investments will reclaim tax or give you a government incentive and this will have a profound impact on your financial independence number over time.
Time is your biggest asset.
Don’t waste it believing that you don’t yet have enough money, or time, for your money stuff. That’s a limiting belief at play, keeping you supposedly safe from doing what you think is comfortable:
Spending somehow everything you make
Holding on to very little wealth
Missing out on vital government incentives when it matters
You need a wealth review now
Arrange a complimentary wealth review HERE. I have many ways of working with you, whether 1-2-1 or in a group environment. I am passionate about helping business owners navigate these challenging times and not losing out by not taking any action at all. If you’d like my business owner checklist you can get your hands on it HERE.
Don’t waste your time and be the one in 10 years' time saying ‘I wish I had…..’.
Emma Wright, a Chartered Financial Planner and Certified 'Vouched For' top-rated Financial Coach.
This isn’t financial advice, it is education. I do not know your personal circumstances and I do not know what will happen moving forward.