3 Lessons I Learned by Helping My Employee Become Financially Free
And how you can apply them to reach your own financial goals.
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As a property investor and owner of one of the U.K.'s biggest property-training companies, it can sometimes be hard to get people to understand that anyone can become financially free. Financial freedom simply means that you have enough passive income to cover your living expenses. To help people understand the possibilities, every so often I challenge myself to either start from nothing and become financially free or to help someone else do so. I film the whole experience and document it on my YouTube channel to inspire others to take control of their finances. It is both a lot of fun and a lot of hard work, but it really is worth it.
Recently, I helped my employee Amelia Asante attain financial freedom. She started as my videographer and is now a talent manager. She has always asked a lot of questions about property investment, but I wanted to know she was serious about investing in herself. When she signed up for my Academy, I knew she meant business. That's when I decided to do a financial-freedom challenge with her. We spent a week together and, through a range of strategies from rent to rent to house hacking, we got her to financial freedom.
Here are the three major lessons I learned from my most recent financial-freedom challenge.
1. Take leaps of faith
When my employee put in an offer for a property as part of the financial-freedom challenge, she wasn't entirely sure where she would get the deposit from. To make matters worse, once she decided to go ahead, she found out her 95% mortgage was actually only going to be a 90% mortgage. Many people will wait until everything is certain to make a move. Most people want to dot every "i" and cross every "t" before they take the necessary action to change their life. While it is always important to have a plan and consider the best case, likely case and worst case before doing anything, don't let yourself become paralyzed by indecision.
Sometimes you have to take a leap of faith, even when it is scary to do so. My employee managed to get the money together via deal sourcing, and her bravery paid off. If she had decided to wait, she would have lost out and would not have reached her financial-freedom goal. Being the person willing to take that risk that others simply won't is an important step on the pathway to success.
Ultimately, Asante did have some savings in the bank (which she needed for other things), and if everything did go wrong, she could withdraw her offer. So the worst case for her wasn't actually that bad. But many people would still hesitate; make sure you are not one of them.
2. Just because it seems too good to be true, doesn't mean it is
When we were doing the challenge, many things were totally new to Asante and her family. They hadn't used these strategies before, and it would have been easy to just dismiss them and stick to the familiar. So many people say, "If it sounds too good to be true, it probably is" and then turn down opportunities that could have really benefited them. These people forget one word from that phrase: "probably." The saying isn't, "If it sounds too good to be true, it certainly is," but so many people take it that way. Yes, do your due diligence when confronted by new opportunities, but never dismiss them out of hand.
What is "too good to be true" depends entirely on your frame of reference. Buying a property, refurbishing it and then refinancing all your money out of the property may sound "too good to be true" to a regular buy-to-let investor, but my students and I do it all the time. Similarly, when I was first told about cryptocurrencies and bought some, I thought I wouldn't be able to sell and get my money out. It was just not in my frame of reference yet. But then I sold some, and it became normal to me. Always look to expand what is normal to you and never assume anything is "too good to be true" without investigating it first.
3. Financial freedom is just a starting point
The popular perception is that financial freedom is the same as being rich. It's not. Financial freedom is just where your passive income covers your living costs. If you have a low cost of living, this will be a relatively small amount of money. For my employee, who is at the beginning of her career and is happy to house hack and live with other people, that number is smaller than someone with a large family to take care of.
Becoming financially free is just a first step. It allows you the freedom to pursue your dreams without having to worry about covering your living costs. The point is freedom, not riches. You must use that freedom effectively to get to a stage where you can afford everything you want in life. I am absolutely certain Asante will do that.
Related: How to House Hack and Live Rent Free