6 steps to attaining financial independence

The economy may be looking rosy for several local industries, such as mining, technology and construction, but a flailing property market and worldwide economic uncertainty appear to be creating angst in the average Australian household.

In fact, according to the latest NAB Consumer Anxiety Index, Australians are more anxious about their finances today than they have been in years.

Dr John Demartini is a world-renowned investment consultant and human behaviour specialist. He maintains that uncertain economic conditions need not lead to financial anxiety.

“If you’re anxious about your finances, that means three things: firstly, you don’t have a strategy behind your personal wealth; secondly, you aren’t managing your money; and lastly, you are probably setting fantasy financial goals for yourself,” he said. 

According to Dr Demartini, the biggest challenge Australians face in building wealth is the pervasive financial fantasy of the “rich-list lifestyle”.

“Most people don’t sign up for proper wealth; they chase the ​lifestyle ​they think they want – the luxury cars, holidays and fancy houses. But that rich-and-famous lifestyle is not wealth,” he said. 

“If you value the ​lifestyle ​of the rich – the spending and the acquisition – but don’t value the saving and investing and studying that it actually takes to build wealth… then you’re not truly interested in financial independence.”

Dr Demartini offers six steps that he says are necessary for attaining financial independence:

1. Have the dedication to build a business and serve people

“People must have a work ethic and serve people. One way to build wealth is to come up with a product, a service or idea that serves others and get paid for it. A good economy works through people having a work ethic and helping people. And your wealth will build from profiting from serving others, and ​saving ​a portion of that profit.”

2. Value your saving in order to build wealth

“If you never save, then you’ll have to work your whole life for money. If you begin to save, your money will begin to work for you. People who work for other people, who never save, pay the most taxes and stay broke. People who begin to save get to a middle class. People who save and then know how to invest and build a fortune, use other people’s money to make the most money, and pay the least taxes.”

3. Build wealth by managing your money wisely

“Calculate how much time you spend doing each of your tasks, and the value of your time on each task. Then, look at hiring somebody to release the lower-priority things that are burdening you and get on with doing what is most inspiring to you, activities that produce more income in less time.
Every time you do that, you increase your savings.”

4. Master the art of investing to build your wealth

“Retaining the money you have saved is key. An investor is somebody who does enough of the math to calculate that something is going to work in their favour. They are not speculating, they are not gambling, they are making sure that numbers work on their behalf. They are patient, waiting for the right investment, not impulsive and not emotional.”

5. Choose an amount of wealth scaled to your vision and dream

If you have a clearly defined goal, then you are more likely to get there. If you know that you want to live a lifestyle costing $1 million per year and the average return is 6 per cent, that means that you need $16.6 million saved, getting 6 per cent (plus 5 per cent or 6 per cent inflation) to sustain that lifestyle, otherwise it is a fantasy. Don’t work with arbitrary number; find a very specific number and formulate a strategy on what it would take to get there.”

6. Have a bigger cause in order to build wealth

“You will accumulate more wealth if you have a bigger cause. Ask yourself what is the benefit, value and service to me of creating a legacy of wealth, acquiring such a fortune that I live a legacy with it, a contribution back to the world? Any human being that truly has an ambition to build wealth can do it.”

Most importantly, Dr Demartini suggests carefully appraising the financial choices you make.

“Too often, people want a get-rich-quick fix. They chase the fantasy. But that’s not investing, it’s gambling,” he said. “True wealth-building is boring. If you’re excited, you’re screwing it up.”

Dr John Demartini is considered one of the leading authorities on human behaviour, leadership and wealth-building. He has been a welcomed guest on Larry King Live, a contributor to Oprah Magazine, and featured in the international phenomena The Secret.