There isn’t anything free about financial freedom. It comes at a cost, and for many, that cost is more than they’re willing to pay. The cost I’m speaking of is outlined in the equation below, which is also this week’s Steveism:
Cost = Sacrifice + Delayed Gratification
I devised this equation during my first mentoring program and have used it since to explain the price that must be paid to achieve a level of financial empowerment many aspire to, but few are able to enjoy.
The two components of the cost of financial freedom are:
- Sacrifice
What you are willing to permanently forego to achieve your goal. - Delayed Gratification
What you are willing to temporarily forego, until after you’ve achieved your goal.
If you want to know more about what each means, including practical and powerful examples from my own life, then watch this short video:
Know this: you can’t achieve a level of financial empowerment over and above what’s normal, unless you do something that’s abnormal.
Think of elite athletes and the diligence and determination they bring to mastering their minds and bodies. They can’t afford to cheat on their diet or training regime and still expect to outperform their self-disciplined and determined competitors. Instead, if they want to compete they too must willingly choose to go without the things that would diminish their performance potential – sometimes temporarily, sometimes permanently, because they believe the long-term gain is worth the short-term pain..
It’s the same with elite money management. You can’t just cheat and spend a bit here and there thinking it won’t matter, or use debt to pay for luxuries you can’t afford today and worry about repaying their cost tomorrow. Instead you need to choose not to conform to today’s message of instant gratification, but instead hold on to the expectation of gaining something even better tomorrow.
True financial freedom is having the resources to buy whatever you want, while simultaneously not having the want to waste your resources.
What’s something you’ve given up temporarily or permanently to achieve an elite level in life, whether financially, career-wise, in a sport, or otherwise? Take a moment to either share your story and insights, or else read what others have written below.
Until next time, remember that success comes from doing things differently.
– Steve McKnight
Nailed it in one. I know I gave up having a car early on and that amongst other things lead me to where I am today. Then I meet people who say I can’t do that! They miss their real answer is … not willing to pay the price (sacrifice/delayed gratification) and wonder why they don’t have freedom!!!
So true Steve. My husband and I downsized to one car and kept our small 4 cylinder car from 2006 to reduce on costs. I still look at the nice fancy cars but know it will limit our investing money if we purchase one!
When I got serious again about gathering a deposit together for my house, I put pen to paper to formulate a detailed plan on how I would achieve this, my main goal was to gather the deposit together, I then made my action plan, in the sacriafce section was to do the following
Permanent for life
– to completely give up gambling!!!
Temporary till goal has been met
– greatly reduce my drinking or give up completely
– cancel my yearly Carlton FC Membership
– greatly reduce my general going out, movies, cafes, restaurants, bars, pubs, AFL games and other sporting events.
– put doing online surveys as my top priority above leisure to assist me in paying for groceries etc
– give up stopping for food on the way home from work (I worked in the city at the time)
– give up stopping for drinks at bars on the way home from work (I worked in the city at the time)
– give up purchasing songs and movies on iTunes and on other platforms
– give up take away food etc
– look at cheaper options (home brands) for my grocery shopping and only buy what I need eg milk and bread not what I want eg chips and chocolate.
– don’t buy any new clothes till goal is met
Fantastic!
“The main reason people do not achieve their goals and dreams is they trade what the want most for what they want now.” Zig Ziglar
Yep very good point, no alacrity to set long term goals or sacrifice those sorts of short term hobbies and expensive activities, that’s the young generation these days, either don’t care if they don’t have much money or future, or just say they want this that and the other, eg house and family but have no idea what it truly takes to make it happen, or research properly to know the costs they will be in for aside from bank fees, eg bills and council rates.
Perfect timing post Boot Camp 2017, which was amazing! To quote Steve, “you can’t get a full time outcome for a part time effort”… I think this also applies to sacrificing and delayed gratification.
To achieve financial freedom we went to seminar after seminar, promised we were going to do what it takes but never quite did it. I was a huge procrastinator and we were too comfortable. Finally the knowledge of a less than ideal future income pushed us to action. We sold everything we owned, house, cars, antiques, family heirlooms, construction tools, jewellery EVERYTHING. I lived with a computer, desk, camp chair and mattress on the floor for over a year, nothing else, while I purchased and rehabbed properties, to create a portfolio. Once the decision is made and action taken, it really isn’t that hard. The benefits now are a lifestyle of our choosing which is currently travelling full time in our fifth wheeler/F350 with no worries about where the next dollar is coming from. You have to feel some pain to achieve a gain.
Hi Steve
I am 67 now & attribute much of my progress in Real Estate to two reasons. 1. I had a Dad who was a Bank Manager & a great exponent of “Bricks & Mortar” investing. As soon as I turned 21 I purchased my first property – a Terrace House in Carlton. 2. National Savings. I had a scholarship at Uni & actually was hired whilst still there & in those days you could elect to have a portion of your money taken from your pay & accumulated. After a couple of years it was amazing just how much I had & with the Bank loan – my first renter was purchased. My renovations skills are not great but I learned quickly how to make a place look better without spending too much on it. My philosophy is buy, rent out & hold using equity to purchase wisely. Selling & paying the Government Capital Gains Tax I consider distasteful in the extreme – and whilst I have done it from time to time avoid it. BTW, I do not use agents to collect my rents. All my tenants have a lease renewed yearly & pay their rent into an account monthly (in one only special case weekly). I use one insurer and have no troubles at all. I have a couple of part time handy guys who paint & repair when necessary.
So to comment on Steve’s massage, I did sacrifice early on & have delayed gratification – but I do not look at it that way. I have all I & my lady need & look upon property investment as almost a bit of a hobby. Sure if I sold up I would be quite wealthy but how much cash do you need to be happy? What will happen when I get really old or fall off the perch? The will is done & others can worry about that!