Knowledge is Financial Power: What you need to know to achieve your financial dreams

“Knowledge is power” – this quote has famously been used in the context of health, education, and many other aspects of our society. Through my own wealth building journey, I have come to realise just how critical knowledge is in making financial dreams come true.

In fact, did you know that in life, everyone has the potential to achieve financial independence? If you follow a consistent, well-informed financial strategy from early adulthood, you are guaranteed to be able to achieve some level of financial freedom by retirement.

But what does one need to know?

There are four tiers of knowledge that are required to achieve financial success:

  • Know your current financial position.
    • Where does your hard earned money go? Someone earning minimum wage, approx. $31,000 per year, will still earn $1.1 million over a working life. Saving and investing a chunk of this pie alone would give you a nice asset base to retire on.
    • Know what your current level of debt is. Debt can be a hindrance to your wealth building journey and is an important factor to consider when writing your strategy.
    • What are your assets and investments?
  • Know what your dream financial position will be in the future.
    • Knowing your dream financial position will motivate you along your journey. Do you want a comfortable retirement, the perfect house, a Ferrari, your own Caribbean Island? Knowing what the end-game is will help you understand the required game plan. Ultimately, there needs to be an end-game, otherwise, why take the journey at all.
  • Know what the route is to get to your dream financial position.
    • Remember, what gets measured gets achieved: set yourself measurable short-term, medium-term, and long-term goals. The quantifiable feedback will only help motivate you towards success.
    • The wealth building phase is fun. Make it your personal hobby/project/pass-time to plan, manage and perfect your financial strategy.
  • Know what you will do once you achieve your dreams.
    • After a spirited and constructive journey there will inevitably come a time when your goals will be achieved. It is important to know what the next step is.
    • At this point in time, you need to know how to best enjoy the fruits of your labour, but not to abuse it. Losing wealth is a lot easier than gaining it.
    • It is important to give yourself a supplementary goals to keep direction in your life. Especially, after setting great behavioural patterns during your wealth building journey.
    • There is no greater sense of pride than achieving a long-term goal. The journey is as rewarding as the payoff. So make sure
    • Nothing else gives you the same feeling of validated, earned pride than achieving a financial goal. The journey is as rewarding as the payoff at the end. So make sure you know how to make that payoff count.

There is no greater sense of pride than achieving a long-term goal. The journey is as rewarding as the payoff. So why waste time? Take your first step towards your financial goal today so that you can live your dream tomorrow.

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