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In 2010, at the age of 24, Grant Sabatier woke up one morning and decided to check his bank account. With all of his accounts combined, he had $2.26 to his name. In that moment, he realised he needed to make some changes… Some big changes!
So, Grant threw himself into learning about all matters personal finance related. From budgeting, to investing, to side hustles; he read and read and read…
5 years later, Grant had amassed a net worth of over $1M. In his first book, Financial Freedom, Grant outlines how he achieved such a huge milestone in such a short timeframe; and how you can do it too.
Throughout the 14 chapters of the book, Grant covers topics such as the benefits and detriments of compound interest, living for free, launching profitable side hustles, and accelerating your wealth.
If your interested in investing, financial independence, early retirement… Or just simply being financially comfortable, then these three chapters are really worth studying:
- Chapter 2: Time Is More Valuable Than Money – “Why You Can and Should “Retire” Early.
- Chapter 6: Is It Worth It? – “11 Ways To Think About Money Before You Buy Anything”.
- Chapter 12: More Than Enough – “How to Live Off Your Investments for the Rest of Your Life”.
My Favourite Parts Of Financial Freedom
Compound Interest Is God And The Devil In One
Albert Einstein has been quoted as saying “compound interest is the eighth wonder of the world”… And, as Grant points out, there’s a reason for it!
Throughout Chapter 2, Grant outlines the importance of compound interest on securing your future lifestyle. In particular, he discusses the importance of maintaining the growth potential of your investments by not withdrawing from your principal, nor all of your returns.
As Grant outlines, if you invest $1,000,000, with an interest rate of 7%; after one year you’ll have $1,000,070. If you then withdraw $40,000 to live off, you’ll still have $1,000,030 to earn interest on and will therefore earn $72,100 in the second year, rather than $70,000 if you had withdrawn all of your returns from the first year.
Essentially, by only withdrawing a percentage of your returns each year, you’ll continue to grow your wealth despite withdrawing living costs.
Contrastingly, the impact of compound interest on your lost money is also huge. On page 225, Grant demonstrates the MASSIVE difference a fee of 0.04% vs 2.2% can have on your investment returns over a lifetime… You’ll be shocked, I’m sure!
Minimising The Impacts of Inflation
As a budding seeker of financial independence myself, understanding the impact of inflation on future living costs is of huge interest to me. However, you know what is even more exciting?! Minimising, or avoiding altogether, the impacts of inflation on your future lifestyle.
In the book, Grant discusses the impact of inflation on conventional retirement calculators and how the results make it seem like you’ll never be able to retire, due to inflation alone. However, what these conventional calculators don’t take into consideration is your ability to reduce the impact of inflation through future proofing yourself.
Inflation affects a lot of things in life such as the cost of housing, food and activities. For the most part, we can pretty much assume that these things will just keep getting more expensive in the future. Consequently, the money needed to live today will be different to that needed in 10, 20 or 40 years’ time.
Therefore, in order to ensure we can live comfortably in retirement in the future, we factor this into our retirement figures through making extra contributions to our retirement accounts and investing this money so that we can reap the rewards of compound interest.
However, as Grant raises, there are ways to minimise the impacts of inflation and therefore make retirement seem not so impossible after all. Owning your own home is a good place to start, as if you already own your own home, you’re future proofed from rising housing costs.
Self-sustainability is another way to help minimise the impact of inflation in the future. Learning to DIY a range of things from growing your own food, house maintenance and renovation, to building your own furniture will help to minimise the growing costs of goods and services in the future.
Money is limitless, time is not:
Conventional retirement ideals are premised on the basis that money is scarce. Consequently, you work until your mid-60’s, or more, so you can afford to live out your remaining years not in poverty. As a result of the perception that money is scarce, most personal finance resources focus on cutting back and saving every penny you can.
However, in contrast to this traditional approach, Grant raises that money is only scarce if you don’t try to make more of it. Instead, Grant’s focus is on diversifying your income streams, getting paid the highest possible amount for your work and maximising compounding returns from a young age. By focusing on this instead, you free up time and are able to use that time to do the things you want, rather than the things you have to.
Focus Intensely and Learn To Say No:
One of the biggest struggles in anyone’s financial independence journey is learning to say no to situations which are detrimental to your journey.
Whether it’s after-work drinks with work colleagues or spending your weekends watching tv marathons with your partner; in order to succeed, you need to learn to say no.
Learn To Chill As Hard As You Hustle:
One of the biggest problems people experience on the road to financial independence is burn out. However, you’re no good to anyone (including yourself and your bank account) when you’re burnt out.
Consequently, it’s critically important to look after your health by taking the time to relax and give yourself a break from hustling. Take this time regularly; and ensure you spend time doing things you love away from work or your side hustles.
The content of Financial Freedom can be summarised by what Grant refers to as “The rules of the game”; namely:
- spend less money;
- make more money;
- minimise your taxes; and
- invest as much as you can.
However, the real joy of the book is not necessarily the information provided (which is golden, I must say), but is the simple, straight forward manner in which it is presented. Financial Freedom explains rather complex financial topics in a way that most people can easily understand; ensuring that Grant’s message can penetrate even the most financially illiterate of us.
The only downside of the book is that it is aimed at a US audience. This means that there are several chapters, which get into the specifics of retirement account types, taxation benefits and other schemes that are only applicable to US citizens, reducing its universal appeal.
However, despite this, If you’re seeking financial independence, Financial Freedom is a fantastic resource to get you started on your journey. It outlines the steps required to achieve financial independence, from start to finish, in just over 300 pages. It’s a read well worth the price tag… And, it might even change your life!
The Flawed Consumer review: Financial Freedom by Grant Sabatier 8/10.
Financial Freedom is available in Australia through online retailers such as Amazon and at book stores such as Dymocks from Tuesday 5 February 2019.