5 Modules for Financial Freedom

(How You Build Wealth, Part 2 of 2)

Last post in part one of this series, we discussed how to beat your burn rate – getting to the point where you are taking in more money than you’re letting out.  Let’s continue the discussion with part two, exploring the 5 modules for building wealth.

Module One: Hone Your Critical Thinking Skills.

If you’re already a critical thinker, move on to step two.  But if you struggle separating emotion from logic, are prone to believe conspiracy theories, or have difficulty with linear, lateral, creative, or contrarian thinking – you have to find and blow up the mind viruses that are limiting your thinking process.  Herd thinking will keep you sick, broke, and ignorant.  Be willing to be different and don’t look for approval from external sources.  (And don’t fall prey to being an automatic contrarian either.  That makes you just as gullible as the herd thinkers and actually easier to manipulate.)   

Start an ongoing learning program with the intent to develop your critical thinking skills.  Find or create a mastermind group of critical thinkers.  Follow brilliant creative thinkers and smart intellectuals (not all are smart) on social media.  Some suggestions: Naval Ravikant, Ava Duvernay, Richard Dawkins, Shonda Rhimes, Ben Hunt, Michael Shermer, Balaji Srinivasan, Sam Harris, Jamie Foxx, Oprah, Paul Graham, Patrick Collison, Ben Horowitz, Marc Andreesen, Lex Fridman, Elizabeth Gilbert, and Jordan Peterson.  These are just a few off the top of my head in a hot minute.  I have literally dozens of others I study for insights.  Turn your social media feed into a university for enlightenment, not political rants and screeds 

I didn’t include links for the people above, because different people use different platforms, and I didn’t want it to be easy or automatic for you.  Search them out and evaluate.  (And if you chafe at following someone because you don’t like them or disagree with their politics, you’ve read 2,800 words and missed the point entirely.)   

Depending on the current state of your thinking ability, there are a few of my books you’ll find helpful in this area.  If you have worthiness issues and/or guilt about being wealthy, read Accept Your Abundance before you do anything else.  If you want to learn how to peek around the corner and recognize the type of businesses that offer breakout growth potential in the future, read Risky Is the New Safe.  If you need a sizzling jolt of creative thinking stimulation, check out Mad Genius.  And for literally everyone reading this, pre-order my upcoming book Radical Rebirth... 

Radical Rebirth is the culmination of my life’s work, creating “the through line” tying together all of the relevant issues of a prosperous life: how you inadvertently fall into acting out other people’s story for your life, the way mind viruses are created, why they cause you to develop self-sabotaging beliefs, how marketers, governments and other bad actors use your beliefs to manipulate you, the best ways to locate and eviscerate those limiting beliefs, and finally, manifest the life you really want.  The book will show you how to kill off the old you and create the highest possible version of yourself.  It’s not focused on building net worth, but it will help you develop a philosophy for life that will make you rich in all areas, including financially. It’s the book I’ve been wanting to write for ten years but didn’t have the chops to do until now. 

Module Two: Develop Your Financial Literacy

If you’ve gotten this far in the essay, you’re already 70 percent there.  You don’t need to be an accountant, banker, psychic, captain of industry, or even an entrepreneur to become wealthy.  What you do need is a:

• Friendly relationship with money
• Commitment to funding your investment pool every month
• Basic understanding of a Profit & Loss (P&L) statement
• General understanding of how investing and markets work

Your relationship with money is critical.  If you think money is bad or rich people are evil, you’ll continually self-sabotage anything you do in the financial arena.  Like everything else in our universe, at its ultimate level, money is energy vibrations which can be attracted or repelled.  It’s important you appreciate and respect money.  You should view money as an important and helpful resource that helps you build your financial freedom and security, not associate it with negative energy like envy or jealousy.  

Here's a fun and quick little test for you…

Look at the money in your wallet, pocket, or purse right now.  Is it ordered in denominational order, all facing one way, the right-side up?  Same thing for your credit and debit cards.  Are your checkbook entries written neatly, with the check number and date for each one?  If not, you’re disrespecting money and are probably repelling it from your life. 

Don’t try and keep up with the day traders and professional investors.  They devote all of their working hours to the subject and you can’t duplicate that. You just need a big picture understanding.  (Or do what I do.  Get a friend like Art Jonak who devotes many hours to researching companies, studying stock market filings, and P&L statements and chat them up about what they see happening.)  

Don’t study the finance gurus who are all about slashing expenses: no dining out, Starbucks is forbidden, make your own soap, etc. They’re coming from a poverty, fear-based consciousness.  I’d much rather you focus on earning more instead of living like a monk.  (Unless of course you would like to be a monk, then have at it.) 

Some good people in the space to study are Dave Ramsey, Suze Orman, and Ramit Sethi.  All three offer common sense approaches geared toward the average person, not complicated investment formulas more appropriate for a Wall Street trader.   

Module Three: Create Your “Get Out of Debt” Plan

Debt is one of the most serious threats to your prosperity you will face. It’s a prison best left as soon as possible.  It makes no sense to invest $1,000 that is getting you an eight percent return trying to grow wealth, while you have $10,000 in credit card debt that you’re paying 27 percent interest on.  I’ve blogged on this topic before so won’t repeat it here.  If you are in debt, bookmark these three posts to read later:

• Eliminating Credit Card Debt
• Paying Off Your Car Loan
• Retiring Your Mortgage

Module Four: Set Up Your Investment Trading Accounts

Now it’s time to get sexy.  Let’s explore how you can build a portfolio that continually grows your wealth, allowing you to wake up every morning wealthier than when you went to sleep the night before. 

Now it’s time to advance your financial literacy to a higher level of wisdom.  Earlier I suggested some money experts to follow who are geared for everyday people as opposed to Wall Street investors.  But there are a couple people with Wall Street cred you should look at: partners Warren Buffet and Charlie Munger.  And Charlie’s book, Poor Charlie’s Almanack is the absolute must read tome on investing.  It’s important you have a rudimentary understanding of the investment world and Charlie’s book will give you that. (Not because he’s going to teach you how to read an S1 statement.  You can learn that in a YouTube video.  Charlie’s magnificent gift is his insight into human behavior – why humans are causing the markets to do what they’re doing.)

As mentioned earlier, if you’re working a regular job or business, you’re never going to keep up with all the developing investor news and stock market insiders.  That’s all they do all day, every day.  So you have to be discerning and work clever.  Remember those scenes in “Billions” when Taylor Mason is working with brilliant computer programming “quants?”  Quant is short for quantitative analyst, a person who uses computer algorithms and complex mathematical and statistical modeling to predict investing returns.  You’re not going to beat the quants. 

But you can put them to work for you…

I strongly recommend you set up a Wealthfront account.  Wealthfront is a money management company that uses technology to keep your money working for maximum leverage at all times.   You basically put your money on autopilot and the software will optimize your money across your spending, savings, and investments.  It creates a dashboard that allows you to see your financial situation at a glance. 

If you use my link here, you can get your first $5,000 managed for free, for life.  You can connect your account with Paypal, Apple Pay, Google Pay, Cash App and Venmo, and get up to $1 million of FDIC insurance.  I recommend you use your Wealthfront account to manage most or all of your low-risk, moderate-risk pool. 

That leaves your high-risk/reward pool.  If you do the work in the first two modules – and you feel comfortable doing it – then I recommend setting up a trading account with the Robin Hood app.  This is another service I just adore, as it allows you to harness technology to take an active role in growing your wealth. 

Most of my investments are on autopilot, but I like having a Robin Hood account to purchase individual stocks.  You can even buy Bitcoin on the app now.  So when you see a company you think is going to crush, you can invest in some shares and just hang on.  As you’ll see in the next module, I don’t believe in daily wheeling and dealing.  When I find a great company, well-managed, that has great upside growth potential (Examples: Square or Shopify), I buy shares expecting to hold them for five or 10 years.  Sometimes I even set up a recurring automatic order to buy a certain number of shares per month.  I’m couldn’t care less about the daily ups or downs of the stock ticker and never check it.  Only buy stocks in companies that you expect to perform well over the long term.  In this category you’re looking for opportunities to 5X or even 25X your investment over time. (And the outlier cases where you earn even more.) If you use my link here to set up a Robin Hood account, you’ll receive one share of a random stock, like Apple, Visa, or Microsoft.  It only takes a few minutes to set up and then you’re able to execute trades instantly.

Module Five: Monitor Don’t Micro-Manage

Remember, you’re not trying to be a day trader or make a full-time job for yourself.  The goal here is to set up a framework that puts your money to work creating more money, not give yourself another full-time job.  Set up your plan and stick with it.  

Do not check your investments every day or even every week.  That makes you develop an itchy trigger finger. Don’t sign up for daily alerts on your phone or be jumping in and out of investments every time there’s a bump in the road.  Here’s my strategy that I encourage you to adopt…

Set up a dashboard on one of the apps and check your “personal P&L statement” monthly.  If you are technology challenged, you literally can do this on the back of an envelope.  On the left side, list your positive assets: equity in your home, money in the bank, amount of your portfolio, etc.  On the right side, list your outstanding debts: credit cards, mortgage remaining, car payments remaining, etc.  In 20 minutes or less you can get a rough tally of your P&L.  You want to be lowering the debt and raising your net worth every month. 

Then evaluate and modify your plan semi-annually.  Did the CEO founder of one of your hot companies leave?  Has something disrupted a marketplace that lowers the growth potential of something in your portfolio?  Has something disrupted a marketplace that raises the growth potential of something in your portfolio?  Modify what you need, maybe rebalance your portfolio to reflect the progress you've made, and go back to your day job.  Once you set this process in place, you’ll wake up every morning wealthier than when you went to sleep the night before.

Peace,

- RG

P.S. Based on the feedback I've been receiving on the last post and this one, I've written a follow up essay, about killing off poverty consciousness. You can read it here.