{"id":8024,"date":"2014-08-23T10:58:55","date_gmt":"2014-08-23T08:58:55","guid":{"rendered":"https:\/\/responsive.jozikids.co.za\/zaparents\/?p=8024"},"modified":"2022-06-22T09:34:12","modified_gmt":"2022-06-22T07:34:12","slug":"financial-freedom-for-parents-is-that-even-a-thing","status":"publish","type":"post","link":"https:\/\/www.jozikids.co.za\/blog\/lifestyle\/finance\/financial-freedom-for-parents-is-that-even-a-thing\/","title":{"rendered":"Financial freedom for parents (is that even a thing?)"},"content":{"rendered":"

<\/i><\/i><\/i>It was with no small measure of trepidation that I rsvp\u2019ed for Dr John Demartini\u2019s talk on achieving financial freedom.<\/p>\n

For one thing, it was in the evening \u2013 ruling out my involvement, after a long day\u2019s work, in bath-time and bed-time. For another, Demartini looks exactly like one of those twangy Texan quacks<\/span> motivational speakers who are always being caricatured in TV comedies. And for a third, I anticipated a roomful of Joburg\u2019s financial down-and-outs \u2013 hardly scintillating sunset company.<\/p>\n

Turns out I have a thing or two to learn about financial independence. Turns out Demartini is<\/em> Texan and twangy, but not what I expected. And \u2013 yes \u2013 events after 6pm are shit if there isn\u2019t wine. (There wasn\u2019t.)<\/p>\n

10 key ideas for creating a financial legacy for your child:<\/h2>\n

1. When we think about the kind of money that would give us the kind of lifestyle we dream of, we don\u2019t think in real numbers. We fantasise. Which explains why less than 1% of people in the world achieve financial independence.<\/p>\n

2. Financial freedom is only possible when your passive income (money that comes in without any effort from you) exceeds your active income (money you work to earn). What those numbers are, obviously, depends on you.<\/p>\n

3. Real goals have a higher probability of being achieved. So if you apply a concrete figure to your net worth (assets minus liabilities), and then deduct that figure from the Rand amount you\u2019d need (considering interest and inflation) to exceed your active income, you have something to work with. A \u2018magic number\u2019, if you will. (Mine\u2019s so big it makes me weak to think of it.)<\/p>\n

4. Forget the lottery: 78% of lottery winners meet a really nasty end.<\/p>\n

5. Inflation is a real bastard \u2013 but he\u2019s a bastard you\u2019d better get to know and understand. According to the Law of 72, the cost of living doubles every 9 years. If you don\u2019t factor that into your planning, you\u2019re stuffed. (Demartini used another, more colourful word, which I\u2019ll refrain from repeating here.)<\/p>\n

6. Never borrow money to buy anything that costs you more than it generates.<\/p>\n

7. The reason the rich get richer is that money goes where it\u2019s appreciated and respected. So if you\u2019re serious about generating wealth, read everything you can, talk to people who are knowledgeable and study the tricks and techniques of the successfully rich. This self-study is a full-time hobby. Note: I promised myself, as a first step, that I\u2019d tidy my wallet. I haven\u2019t done so yet.<\/p>\n

8. Save more than you think you can afford, and add 10% to that every month or, at least, every three months. Forever. Demartini says that every time you increase your savings, your income expands to accommodate it. (The habit of saving is actually more important than how much you save \u2013 but you still need to up the amount regularly to make that \u2018liquid cash cushion\u2019 grow.)<\/p>\n

As an aside: Demartini calls this the FAST: Forced Accelerated Saving Technique. Which is only one of a litany of incredibly cheesy phrases he uses to make varied points: \u2018make stressings into blessings\u2019; \u2018turn your piggy bank into a biggie bank\u2019; and so on. At first I was skeptical, but the man is American \u2013 so let\u2019s excuse him his trite little homilies and look to the substance, shall we?<\/em><\/p>\n

9. Once your cushion is sufficiently large (Demartini recommends six months worth of income in liquid cash), it\u2019s time to invest. But don\u2019t necessarily run straight to the experts with your moolla. Educate yourself<\/em> instead.<\/p>\n

10. And once you\u2019re in the market, stay there long enough to leverage the \u2018mean\u2019 \u2013 i.e. the average that applies over the long term, irrespective of ups and downs. Demartini says that, if you do this, \u2018You\u2019ll be rewarded by the habit, not by being a genius.\u2019 And I guess he would know since, if he\u2019s to be believed, he has exceptional homes all over the world, millions upon millions of dollars and a rep for having cracked his magic number in his 30s.<\/p>\n

So, there you have it folks. My version of what I understood from Dr D last night. Use it; don\u2019t use it. But whatever you do, remember this little adage: \u2018If you live in a fantasy world financially, you\u2019re in for a nightmare.\u2019 Is this guy metaphorical or what?<\/p>\n

This article was originally written for Jozikids by Tiffany Markman in 2014.<\/em><\/p>\n

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