WHY I QUIT MY JOB

A former colleague asked me if I missed my former workplace. I get similar questions from my former colleagues often. My response has been consistent. “No, I do not miss the workplace”. I miss the people but not the place. I prefer the current version of my life.

I loved the work content and had great colleagues. My job exposed me to a whole lot of stuff. I am grateful for the experience. That does not make me wish to go back to it.

My family has always seen employment as a temporary arrangement. We needed the jobs to build what would make them optional. The initial plan was to quit at 35. I was fortunate to  get an opportunity to take a break at 35 but went back a few years later. That was an opportunity for us to prepare for my resignation. As my partner put it, “we will know for sure if our strategy works when one of us quits and works on building something for the family”. So, I did. Our main goal was to create opportunities for ourselves and our children. Which we did and continue doing.

Before I quit my job.
We have always been a couple that is focused on working towards a comfortable and sustainable lifestyle. This was a decision that we made when we got married. As a result, we tried a lot of options to build a family real estate business that we can both retire to. We also intensified on other investments. Most importantly, even when I had a job, my studies were aigned with our family goals. I enrolled for a Masters in Real Estate, just to get a deeper understanding of the business. This changed the way we did things going forward and helped us identify our niche.

Climbing the corporate ladder was never a priority. We both sought opportunities that would empower us to take better business decisions. Creating opportunities for our children was at the centre of our building. A life partner that is a visionary and support is invaluable.

Preparing to quit.
Our siblings have always known how much planning we put into our family's lifestyle goals. We always put our dreams down and work towards achieving them. Our main goal was building wealth to fully own our time. Having time for family and time to do whatever gave us joy. This is what shaped our financial goals. We wanted to own our TIME.

We have always detailed our dreams, ambitions, needs, wants, our priorities and our strategy. Financial education became a priority. We have learnt about finances and discussed so much that we got completely aligned. In preparing for one of us to quit we did the following:

• We saved and invested more and more. In the process we kept learning about the higher return assets.
• Our spending was well thought. We prioritised family health, good education and great food. We love our food.
• We stayed out of debt. This was strangely never difficult for us. When we started on our journey, a lot of sacrifices were made.
• We taught ourselves about different kinds of investments. Books helped a lot. We bought a couple of business books every single month.
• We worked on our mindset and attitude towards money. We both do not come from money. We believed that it was possible for us to change this and do better for our children and the next generation.
• We prepared ourselves to take risks. This is probably the most difficult step. But that is what education is for. We had read about successful people and their strategies. If only information was as freely available as it is today.
• We specialized and diversified at the same time. I'll repeat, nothing beats education in this journey.
• We set timelines for achieving our family goals. This is the most important step in my opinion. To this day, we track our progress, set more goals and timelines.
• We are completely transparent and accountable to each one another as a family. Our lifestyle is aligned with our goals.

After quitting.
We are probably among the most predictable people. We pretty much stick to our decisions. We took steps to ensure that we survive on one salary and our then small rental income. Our other sources of income were even lower at the time. My primary assignment was to increase the business income. I had the time and space to implement whatever I thought would yield results. I presented the strategies to the family and we worked together to see them through.

One of the areas in which we grew our income was in making improvements on the assets that we already owned. We changed the use of land, refurbished, invested in stocks, sold stuff here and there, etc.

Our monthly activities have always included reviewing our finances and deciding on a way forward. Quarterly, I give a financial report to the family. The report is on all our assets and net worth. The value goes up and down. But what matters is really, the income that assets generate. 

I can easily say that I quit my job to serve my family. 

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QUESTIONS TO ASK TO ACHIEVE FINANCIAL INDEPENDENCE

Individuals who achieve their financial goals embark on continuous financial planning and attaining financial education. Personal finance education is widely available, thanks to the internet. There is no excuse!

With most individuals the initial goal is gaining financial independence so that one owns their time. Sustainable financial freedom buys a dream lifestyle and a legacy to leave behind. The ultimate goal is to live and live truly. The way I work on my goals is through having daily activities that keep me where I am and motivate me to building more. One needs to craft a programme that ensures active building and maintenance. Goals drive us from watching our lives passing by, to taking full control. Every lifestyle choice and decision is informed by the size of ones dream.

The financial freedom journey is both psychological and emotional. Never expect it to be about numbers, checks and balances. You are training you mindset to shift. This is why one has to keep recalling why they or their parents and grandparents were in the predicament they were in. The journey forward necessitates a look behind. Change the way you feel about wealth and then:

Take a closer look at what you already have and your current resources.
What assets do you have? Do you have equity that can buy more assets? Do you have sufficient income to build more equity? Do you need extra income to fast track your journey to financial independence?

Examine the external environment. Can you build protection against risk and uncertainties? Where is the economy moving? Are you well diversified across asset classes to manage risk? Are you diversified geographically to mitigate local risk?

Protection against inflation. The current global inflation situation requires thorough planning. Is the buying power of your equity growing with inflation? Are you invested in the above inflation assets? Do yu have investments that are specifically meant to act as a hedge against increases in prices of goods and services? If not, your money could be losing value and declining with time.

Tax structure. Do you understand the basics on tax laws? Are you not paying more tax than necessary? Are your assets having tax benefits? Do you know how to take advantage of the tax benefits to continuously reduce your tax bill? Do you know how to file your taxes?

Financial freedom. What is your ultimate dream? Have you set timelines to achieve your financial goals? Do you set smaller goals for the year/ quarter/ month/ week? Have you drafted a clear plan? When do you want to retire and live in your own terms?

Money pits. Where does your money go every month? Do you scrutinize your bank statement to find your answers? Are you not paying too much for a home or a car? Have you set a plan to reduce or eliminate your debt? Consumer debt will delay achieving a goal. As a principle, I do not keep any debt, except for the rental property mortgages. Take charge!

Family and money. Does your family talk about money? Are your family conversations around money positive? Does your family know your financial goals? Do you know their financial goals? Do you keep each other accountable? How often do you update each other on your individual progresses?

Current vs future lifestyle. Are you clear on what you earn and how you spend it? Can you maintain your current lifestyle for the rest of your life? If not, scaling down could be your solution.

Personal Roadmap. How often do you check where you are in your financial independence journey?

How are these questions helping in your wealth creation journey? Have you started yet? Ask us any questions. Please share the article.

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WEALTH BUILDING: THE WHY

This is a “wealth building secrets” series. In the previous post we looked at how to create wealth. Wealth creators continuously learn from their own financial independence journey, other people’s financial freedom journeys and from the financial environment around them. Personal finances are actively managed. This is why:

• Unfortunate Periods. The recent pandemic taught us that things can and do change drastically from time to time. Unfortunate and unexpected events such as these require proper planning. An emergency fund comes to mind. Never be caught unawares. Most importantly, the constant effort to change our circumstances for the better can never be replaced. In great times we prepare for the not-so-great events. The culture of saving and investing should be maintained. Even if this time proved to be your worst, learn from it and be assured that there will be better times to grow again.

• Economic Cycles. The economy in its nature fluctuates. There are periods of economic expansion and economic contraction. The changes are positive during the periods of expansion with higher employment rates and high consumer spending. During the contraction periods even interest rates are not favourable. We are not in control of the economic conditions, but we can try and manage the impact. During the expansion period, we invest as much as we can to take advantage of the growth that happens in the corporate world. We buy stocks and other investments and take advantage of the favourable economic environment. The contraction periods like recession and depression are guaranteed. Those are the times when we tap into the reserves to get some relief. Always store as much of your harvest as you can in the reserves. I tell my 19-year-old to invest 50 percent of his income. And when he gets unexpected monetary gifts, he often invests 80 percent. Because the culture needs to be cultivated.
  
  

• Changes in Economic Factors. Economic factors constantly change. These include interest rates, policies by government, tax, inflation, employment, etc. All these factors are not in our control but determine how our investments perform. We look at the economic history to predict where these are going. Often, the pattern does not change. But no one knows without any doubt how the economy is going to behave. Our efforts to build our wealth to survive the storms should be constant. We save and invest irrespective of the economic conditions. We do this because of the uncertainty.

• Changes in Government Policy. Policies such as monetary and fiscal policy will keep changing and thus affect the personal finance decisions of individuals. Interest rates and tax are some of the factors that government will keep changing to stabilise the economy. A lot of these policy changes can discourage saving and investing. But there are some that favour the investors like the tax-free savings account. This is one tool that should be maxed every year. Keep informed in order to identify what profits your portfolio and what does not. A financial plan should be flexible to allow the changes as new laws get introduced. Strategies change with the change in the environment but building wealth is constant. We actively manage our personal finances to lower the costs that come with the policy changes and maximise the gains.

• Globalisation. Have you noticed how the international events affect how we do things? We suddenly think in dollars. Our finances are shrinking due to the decreasing and fluctuating values of our currencies. We also experience the world in international currencies. Also, more concerning is that the crisis that happens in other parts of the world manages to hit at the individual's wallet in a different territory. Case in point, the conflicts between foreign countries. There is a case for a geographically diversified portfolio. Personaly, my family typically invests in local stocks, Asia, US and other emerging markets. Geographical diversification does help in minimising risk. Developed markets give more stability whilst the developing markets usually provide higher returns. Do try to keep up to date with the global markets.

What is the “WHY” of your wealth creation journey? Have you started yet? Ask us any questions. Please share the article.

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BUILDING WEALTH

For most people building wealth sounds like mission impossible. This is not because of the complexity of it but the lack of know-how, commitment and consistency. Wealth creation is an ongoing exercise and a journey that requires intent. A shift in the mindset is mandatory as one needs to choose a completely different way of life to what is familiar. The following are the essential steps to take to gain control of one’s finances:

• Know What you Own. Everyone who actively seeks financial freedom knows exactly what they own. They take stock of own assets and liabilities. The starting point is making a list of all the assets, income and all liabilities. This will assist in drawing the strategy for growing the assets and reducing the unwanted liabilities using the income earned. This is also known as determining your portfolio.
• Asset Allocation. To gain financial independence, one also needs to cushion whatever assets they have. We do not want to lose what we already own. The cushion can be in a form of portfolio diversification. The point above is about determining one’s actual portfolio. And right now, we are balancing it to ensure that the assets are spread across various asset classes i.e., cash, bonds, real estate, stocks, commodities, etc. This is known as asset allocation. Asset allocation is always based on one’s age. Younger individuals can afford a higher risk whilst those closer to retirement take lower risk and therefore, lower returns.

  

  Image by Mbini Kutta of SafeInvestingSA
  
  

• Tax Avoidance. Taxation is one of the biggest bills we pay annually. Tax avoidance is a legal way of reducing annual taxes. Good asset allocation ensures that the tax bill is minimised. The wealth creators always pay as little tax as required by the law. One has to understand taxation and tax benefits of various asset classes.
• Balancing the Portfolio. Within each asset class there is always room for improvement. There are constant changes in the world of investing. Individuals that are seeking financial freedom are constantly shifting their assets around to maximise the returns. Right now, we have a real estate heavy portfolio at 56% with stocks at only 12%. We are trying to get our stocks to a similar value as our real estate assets. Our focus is on growing both local and offshore stocks. We are also set on growing our retail bonds.
• Lifestyle at Retirement. Retirement is also to be taken into consideration, as the lifestyle may need to be maintained. Downscaling should be for reasons other than insufficient funds. Some people prefer to retire early and others enjoy the kind of work that they do. The main reason people embark on seeking financial independence is to be able to do what they want with their lives without the need to get income from sources outside their assets. That helps in buying options like early retirement or slowing down by working part time. Being stuck at a job one does not want can pose a huge health risk.
• Debt Reduction. Most people that I have assisted with finances struggled with making a choice between debt reduction and asset accumulation. One needs to understand the reason they find themselves in debt and why they need to get rid of it. Consumer debt will always pose a risk on achieving financial freedom. In most cases the returns on investment are lower than the cost of debt. Eliminating consumer debt is an investment on its own. Always keep this in mind.
• Wealth Transfer. One of the most important aspects of building wealth is preparing the heirs for wealth transfer. This requires a lot of continuous knowledge transfer and mentoring. Your children have to understand most of what you know and do to build your wealth. It is a matter of passing a baton.
• Influence and Association. Finally, the company we keep will always be a factor. To ensure that we stay on course, we have to surround ourselves with like minded individuals. Fortunately for us, we live in the world with abundance of knowledge and social media with individuals that share similar goals. The more of personal finance we consume, the better are our choices.

How far are you in your wealth creation journey? Have you started building welth yet? Ask us any question. And please share the article.

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