There’s one behaviour or pattern that I notice amongst all investors that flounder and fail to achieve their financial and lifestyle goals, and that’s future clarity.
Not being crystal clear about your vision for achieving wealth makes it near impossible to achieve financial freedom.
While I’m not a particularly strong person when it comes to the concept of goal setting, I understand the value of having a vision.
These principles also apply to future clarity around wealth building.
What this fundamentally means is that when you focus in on what you want, you start to see lots of the same types of opportunities. And not having a clear idea of what you want is the number 1 reason why property investors fail.
For example, if you want to buy a green Mini, suddenly you start seeing green Minis everywhere because it’s now part of your general awareness.
If you aren’t giving shape or clarity around the decisions and actions you take, it’s hard to achieve the results you want in the shortest possible time.
Which leads me to another key part of future clarity: effectiveness. It’s not enough to know you need to achieve wealth and financial freedom goals; it’s also about getting there with the highest degree of efficiency.
I see people accidentally de-railing their efforts when they don’t have one of these pieces properly mapped out all the time.
So I want to share with you three mistakes before sharing the four steps I use to ensure you’re on the right path to achieving future clarity around your wealth journey.
Mistake #1: Lack of Minimum Effective Dose
From a pharmacological perspective, a minimum effective dose is the amount of a drug that produces the desired response in most patients.
When it comes to wealth building, the M.E.D. is all about knowing what the minimum amount of energy is required towards your investing efforts to produce the desired outcome you want.
After working with hundreds of investors, what I find most common is that people are either under or over-administering the effective minimum dose.
What this means is that they’re either:
- Pumping too hard and starving their lifestyle; or
- Executing decisions too slow and not putting enough into their investing
Most investors are either over-shooting or falling short of what’s required with their investment activity.
Mistake #2: Flying Blind
I’ll use the pharmacological example once again.
Just like how clinical trials for vaccines require an understanding of what condition it’s looking to cure, investors need to have a clear vision of what their ideal future looks like.
What inevitably happens is that they’re not making informed decisions because they don’t know what the finish line looks like.
Bill Copeland says:
“The trouble with not having a goal is that you can spend your life running up and down the field and never score.”
And the same is true of wealth.
Of the investors I’ve worked with, not having goals usually means investors end up on the proverbial endless wealth treadmill trying to achieve passive income and increase their net worth, but don’t know why and what the end game looks like.
Mistake #3: No Investing Compass
If you don’t know where your true north is, then how can you decide on taking your first steps towards where you need to go?
Are you trying to build capital assets?
Are you trying to build a style of passive income?
Are you looking to retire by 40?
The problem with the current investing climate isn’t scarcity, but instead, over-abundance.
As someone who suffered from this years ago, I found out singlehandedly how much that can set you back.
I find investors suffering from shiny object syndrome and getting sucked into different investment opportunities that distract them from what they need to achieve.
And the ultimate price they pay when they don’t have a clear true north is that they’re spraying and praying that the decisions they make will get them to where they want to go.
Having future clarity means you have a crystal clear vision about your future and what it takes for you to achieve exactly what you want.
And the biggest benefit of it? Is that you can discriminate when choosing which investment opportunities you need to choose and to avoid the ones that are a distraction.
As investors, what we want is confidence – knowing that taking a dollar out of our pocket today will help achieve the returns and outcomes we want tomorrow.
So now that you understand what the most common mistakes are, you can move towards the four key elements you need to have greater future clarity in your wealth-building journey.
Element #1: Having a Clear Wealth Timeline
Imagine drawing a straight line where on the left is earmarked “today” and on the right is a pre-determined point in time in the future.
As an investor, you need to be clear about the results you want to achieve so that when you build your plans, you know what annual outcomes are required to ensure you’re on the right path.
Given that everyone’s idea of financial freedom is different, it’s even more important not to apply someone else’s timeline towards yours. Some people are content with achieving their goals at 65, while others want to reach it much earlier.
Regardless of what it is for you, make sure you understand when you want to reach these goals and reverse engineer everything from there to give yourself an idea of what your yearly results need to look like.
Element #2: Avoid Loose & Fuzzy Aspirations
In my experience, most investors have loose and fuzzy aspirations that they can’t translate into concrete figures.
If you can’t tangibly establish your aspirations, it becomes next to impossible to get granular about your actions and to measure accordingly.
You need to assess what conditions need to be present for you to establish when financial freedom has been achieved clearly.
This means answers like playing golf on a Monday and spending time with your kids aren’t the right aspirations. While they’re important, they’re not tangible and measurable.
Think about what three minimum conditions need to be present for you to be categorically financially free. Meaning:
A + B + C = Financial Freedom
As an investor, you need to uncover what’s appropriate for you.
For example, these conditions may be when:
- Your house is paid off
- Your kids’ university money is set aside
- You have X amount of passive income, or
- When you have X amount of capital
Whatever your conditions are, make sure it’s clear and measurable so that you can identify once you’ve reached it.
Element #3: Having Milestones To Avoid Financial Duress
Having milestones in place is a recognition that you don’t linearly build wealth.
Some things occur throughout life that can impact your capacity to build wealth that requires you to set aside additional money and are important to you.
This means you need to ensure you pre-empt and map out what these are so that there are minimal nasty and unexpected surprises along that way that cause financial stress.
I don’t know any investor out there who doesn’t have big-ticket items that require them to be financially prepared.
This might mean:
- Taking a sabbatical
- Your spouse or partner is going to take time off
- Supporting your children with education or their own property
- Supporting an elderly parent
Whatever the case may be, carefully accounting and mapping for these instances will ensure you don’t have to liquidate an asset or put a significant hole in your plans because you simply failed to account for them.
Self-insure yourself by rolling this into your plan.
Element #4: Establishing a Realistic Baseline
This is the final and cornerstone part of creating a robust wealth-building plan.
This is all about having a detailed understanding of the true cost of your lifestyle today that’s realistic.
You need to examine your relative capacity to invest and your ability to achieve goals. So this means identifying areas in the way you handle money that needs to be tweaked to help you either create more surplus or more oxygen into your lifestyle because you’ve been staring too much. Think – minimum effective dose.
Every investor I work with goes through an exercise with me where we explore their capacity to set aside dividends, funds or surplus to help fuel their investing activities.
Naturally, as income is the fuel to make things go faster, having a high income significantly helps with this.
Firstly, I ask them how much they put aside consistently every month.
Then I tell them to also share with me their daily spending. We then conduct a detailed analysis based on auditing their discretionary and non-discretionary spending.
Finally, I reconcile this with the income they have and what they’ve told me.
More often than not, we find discrepancies and the majority of the time, their ability to create surplus is lower than what they estimate.
What this highlights is that there’s often something that’s not being accounted for.
And what’s important to understand is that it’s not about judging your actions but instead, more about figuring out how to strengthen your stewardship around money management.
Also, from a legacy viewpoint, it’s about teaching family and friends about how to look after money.
I realised many years ago that if people understand money management and the concepts around building great future clarity in wealth, we’d be a significantly healthier nation economically.
Key Takeaways
If you can get all four elements right, you’re already going to be miles ahead of most investors who flounder because they take actions on investment decisions that don’t align with their goals and aspirations.
Future clarity has always been about shining the torch on what you want in the future.
If you can be concrete about this, you’re going to be far more likely to hit those goals rather than the fuzzy and loose ideas many investors currently have.
If you’re interested in working with me and want to find out more about how the Freedom Warrior program can help set you on the path to faster financial freedom, get in touch with me today.
