FROM HERE TO FINANCIAL HAPPINESS πΈ ENRICH YOUR LIFE IN 77 DAYS
Sam Dogen a financial advisor
they say that in the year 2018
he was going to watch Soft Ball game with his friend Bob on a weekend
there Bob had bought his new Tesla Model 3 car
which was selling a lot in the market
Bob was doing a lot of show off there
that how does this car run on autopilot
he was driving his car with his I phone and was saying many interesting things
like I heard this in news recently
on 9th September a lady gave birth to a baby in Philadelphia in the front seat of Tesla
and the delivery happened, when Tesla was running on auto pilot
because of which, that baby is also called as World's First Tesla Baby
so Bob was saying such interesting things to everyone
Sam was shocked by listening to all these things
he was shocked because
that how did Bob a 31 year old pre school teacher
had bought a $53,000 car
which is obviously a lot of money
according to Sam it was their biggest financial mistake
which he shouldn't have done
and at the same time, there was a hype about Tesla
after listening to all those things, Sam drove that car one day
he says that the experience of driving this was very different
even he liked the Tesla Model 3
and even he wanted to buy that car
but because this car was very costly to him
and as he was a financial advisor, he didn't want to do that mistake
so as a financial advisor what he did was
instead of buying this $53,000 car
he started calculating it's opportunity cost
where he saw, if he invest this much money of his savings
what can be better opportunity for him than this car
then he started doing research about Tesla Company or Elon Musk's company
he started to realize about this company potential
and finally after doing all these things he decided that
instead of buying a Tesla Model 3 of $53,000, will buy the Tesla Stocks worth $53,000
in October 2018 on the per share value of $298
bought the Tesla stocks
and guess what after some time, these Tesla stocks reached $367
by doing this he had got a profit of $11,500
and he didn't want to sell that
and after 6 months, when there were some problems in the company
because of a Tweet of Elon Musk, the stocks came down to $179
then their profit of $11,500 converted to a loss of $20,000
but still he didn't sell his stocks he was still
now fast forward after 2 years, where the entire world market crashed
there Tesla stocks were rising
then Sam thought, just like last time, these stock will fall one day
then what Sam did was, at $888 per share value
sold his 75% stock
because he didn't want to handle the volatility of this market
due to which he got a lot of profit
but ya the fact was, after some time Tesla stocks reached to $1,126
thinking of which Sam regretted
but as it is said that Hindsight is always 20/20
after doing things we feel that we shouldn't have done it, but anyways
Sam had booked a good profit
and then he was thinking how stupid Bob is
even he should have bought the stocks instead of the car
do you know the interesting part was
Bob whom he was thinking is stupid
he was investing a lot of his money in Tesla, from a long time
because of which he had generated a lot of profit
and with some part of the profit he bought Tesla Model 3
look friends the things we should learn from this story is
wealth is not like that as we think it is
many time when you think people are less capable than you
you think that they are financially behind you
well many time is is not necessary that they are behind you
many times many people do well financially
but since all their wealth is in their investment
which we can't see, so they won't look rich many times
and many times even if they look so, they look stupid
which is not always the case
ya being financially free doesn't mean
that you have a lot of wealth which is visible to people
by which you can live a luxurious life
no but the meaning of being financially free is
you live a comfortable life where you don't worry about money
where your money keeps you safe and work for you
now Author Jonathan Clements in their book From Here to Financial Happiness
in this book they share 77 short lessons
I will merge all those points and share with you 4 practical steps
which will help you to be financially free
as with that as I had gifted you shares of Google few weeks ago
let's come to lesson no. 1
which is No saving with debt
author says to start your financial freedom journey
first you have to do one thing
that is clear all your debts
clear the loan and this is the most basic rule of finance
that if you have any kind of debt
specially bad debt you cannot start your investing journey
author says, some people start long term investing with their debt
where they will be paying their debt and also doing some investment
by this their process of becoming financially free, slows down
so author says first clear all your small debts
like mobile phone, laptop emi, car loan
and such things which you can finish early
ya sometimes the big amounts like home loan
that can't be easy to clear, those are exceptions, keep them aside
but clear your small debts
plus the author also says, to use credit cards wisely
because US Department of Labor had did a research on 7,900 citizens of age 20 to 40
by that we know that, those who were at high credit card debt
their stress was affecting their physical health overtime
by which they faced many problems in daily life
pain in joints and stiffness
and were facing many problems
you should know how you are using your credit card for not only your mental peace but also physical health
many people don't know that by using credit cards the interest starts
and it's amount keeps increasing
and there is a solution related to it, which you will know in 4th point
but first remember that
that clear all your debts as much as possible
after that start your savings journey properly
Lesson no. 2 Financial safety net
this might have even happened with you
something needs repair in your home, like your phone is broken or your T.V is not turning on
on there is a problem in the engine of your car or bike
like I remember my friend was saying, that the graphic card of his computer was spoilt
the price was very high, at that time he didn't had money to buy it
so somehow he started working without graphic card
at that time he didn't had credit card and he didn't want to borrow money from someone
he he decided that next month when he gets income he will buy the graphic card with that income
now look, many people are just like this
if there is any problem, for it's solution they use their credit card or depend on next salary
if something happens they say, they will do it from next month
do the EMI many times
but author says, no one thinks what if their source of income stops
many people are salary based
and their job is their main source of income
there are only few people who have passive income
if their main source of income dies of any reason
job went or anything, even then, they will have a different source of income on which they can depend on
now as it was seen during Covid time
where many people lost their job and were destroyed completely
so well what is it's solution, the author says
If you want to feel better about your finances today then you should spend more time thinking about what you are gonna pay for tomorrow
which means basically author is saying us
here we have to create an emergency fund
you store your money, at a place where you can use it even after loosing your main source of income
you cannot spend this money on any random things
like for vacation, for buying a car or anything
no
here you have to create an emergency fund
which should be the backup of your main income source
because of which, in case something happens and you loose your job
you will not get a new job until you can survive and be safe
and how to do that, well to do that author says
that you have to calculate your monthly expenses
let's say your monthly expenses is 20,000 rupees
you should at least keep 1,20,000 rupees safe at side
which is your emergency fund
if there is any problem, like covid, lock-down
even then you will have a buffer time of 6 months
where you can do many things, can find a job or create a new source of revenue
which will be very helpful for your survival and your respect
Lesson no. 3 Invest conservatively and buy stocks with caution to increase your wealth
J Walk when they launched a website Priceline of discount offer in the early 2000's
by this their net worth reached $1.8 Billion in just one year
and at the other side the world's greatest investor Warren Buffet
they had to wait 55 years to earn their first Billion Dollars
look there is how much difference
but the thing is J Walk's income was not sustainable
everyone knew that this dotcom bubble will burst
and when that bubble burst, by end of October 2000
in just a few months, out of billions of dollars of J walk only 33 Million Dollars were left
and Warren Buffet were into the top 1% richest club of the world
and are still today
and for the coming many years, he will be in the top 1% list
the reason behind this is, Warren Buffet, is investing from past 7 decades
and he had rarely sold his shares
so even the author says, if someone wants to be financially free
so to invest your money stock market can be a very good place to you
where you get not only returns, but the company pay you dividends many times
which means they share some percent of their profit to their share holders
for example
you might know that Warren Buffet is a major share holder of Coca Cola
so the C.E.O of Coca Cola
he gets the highest 16 Million Dollar salary per year
on the other side, Warren Buffet by the dividends of Coca Cola
earn 547 Million Dollars
so you might have understood where to invest to become financially free
author says when you think long term to invest in stock market you don't need to understand any rocket science
but the companies which you know about properly or better
use their products daily
which you are using from many years, which you believe on
you like those products
it will be good for you to invest in such companies
and one of the most successful Mutual Fund manager
Peter Lynns, who had wrote many good books on investment
even he says the same thing
you should invest in such companies whose products you use or you know better about them
whose products you like and you believe on
as many people use I phone
eat Maggie, drink Coca Cola
use Tesla Cars
so it can be good for you to invest in such companies
as it was proven in the starting story
and here you don't need to see the daily fluctuations of the market
in the Intelligent Investor, the mentor of Warren Buffet, Benjamin Graham, even they say in their book
that we should not focus on the daily fluctuations of the market
but you should just pick the good companies
and invest in that for long term
this will give you very good returns in long run.
Point no 4 is Rugality leads to better finances
look our physical health, mental health and relationships
and overall in entire life, habits play the biggest role
and this is an universal fact
that good habits makes good life
financial success is nothing but the result of your good habits
if you think logically
if you want to be financially free
you have to save money, you have to invest it
but you have very less time
so it is very important for you to save and invest money
author says 90% people can't achieve financial freedom because of their bad habits
their bad habits impact savings a lot
because people don't think exponentially they always think linearly
example what we think is, I am just eating one pizza, what will happen by that
I am just eating one burger today, what will happen with that
with these small things, they make it a habit and start eating outside food
order everyday some thing or the other from Zomato
at least it happens every week and that becomes a habit
because of which a particular amount Zomato gets every time
goes to different junk food companies
money is also going
plus all these things impact your health
I saw a video, there were two people
both take different choice every day
one person gets up early then the other gets up late
one person eats junk food everyday the other person eats healthy
all these small choice which comes in front of us everyday
our habits
one person spends his money on useless things
buys and eats useless things
on the other hand the other person instead of eating unwanted things he saves it
or eats healthy food
and all these things of 1 day, 2 day, I month or 1 year compounds
it's effect becomes so high that the person who had bad habits his health gets worse
his money slowly decreases
and his relationship life, everything comes to an end
on the other side, who had made small habits
those small habits brings improvement in his life slowly
his savings and his investments start giving him money
his health helps him living a good life
and in long term one person's frugality changes his life completely
on the other hand, the ignorance, his smoking, eating unhealthy
will destroy his life
so even you have to understand this thing
that the small decisions which you are taking everyday
may be you won't see it's results today, tomorrow or even after a month
but you will definitely see some difference in some years
and that thing will hurt you in the long run
so start living your life frugally
instead of spending on unwanted things, start saving
start investing
ya it might not help you to get rich in some time
but definitely in long run, you can save money and make money
so don't keep linear thinking, keep exponential thinking
how can you do all these things
try not to spend more than 50% of your income
and you have to invest 12% for long term
for retirement and all
if you do like this, you will benefit from it in long run
I want to say you a bonus point, start working on different sources of income
start working on many different sources of income as much as possible
if you just have one job then obviously that's very risky thing
you have to create sources of income side by side
which can give you income at least a little
this thing will help you to earn money in long run and to be financially free