3 Surprisingly Simple Rules You Need To Follow To Achieve Financial Freedom, According To A 30-Year-Old Self-Made Millionaire
Take the first step toward complete financial freedom.
Svitlana Sokolova | Shutterstock Financial freedom — the ability to make life choices without fearing for the future of your finances — is a dream most people hope to achieve in their lifetime.
Nicole Victoria, a 33-year-old self-made millionaire and money coach, shared three rules to help anyone take control over their finances and reach this practically universal goal. Her suggestions may not be what you expect.
Here are 3 surprisingly simple rules you need to follow to achieve financial freedom, according to a self-made millionaire:
1. Being good with money isn't what you know; it's how you behave
"Knowledge will only take you so far until you can learn how to get out of your own way so you can actually apply it," Victoria explained.
Knowledge may be power, but without action, knowledge is useless. You can learn everything there is to know about finances, read every business book, and listen to countless investment podcasts, but until you apply the information, nothing will change or improve.
“Think about it this way,” Victoria said. “We all know that vaping is bad for us, that we should eat more vegetables. We know that drinking alcohol makes us feel like crap. But we still do it. Simply knowing something isn't enough ... You can know everything there is to know about money and still be broke.”
So if you were looking for a sign to take action, get your finances in order, and implement new money practices, this is it!
“Remember, people don't decide their futures,” Victoria added. "They decide their habits, and their habits decide their futures.”
2. Evaluate everything you buy based on how many hours it took to earn the money to pay for it
Imagine you earn $20 at your job, and you have your eye on a $100 bag. While this may sound like a steal, consider that it's 5 hours of work. Is it still worth it?
Money doesn't just fall into our hands; we have to work for it. So when you contemplate purchasing an item, don't just think about the dollar amount at face value. Think about what you had to do to earn that money, how many hours you worked for it, and how many ungrateful customers you put up with.
"The money sitting in your bank account isn't 'money,' it's a physical representation of hours of your life," Victoria stressed. "You're trading your most limited resource — your life — for money and then letting that money, aka your life, fly away like it's nothing."
Is that unnecessary purchase worth it when you remember all the other things you could've been doing instead of working? Probably not.
3. Stop falling for the 'Man in the Car' paradox
According to Morgan Housel, author of "The Psychology of Money," the Man in the Car paradox states that when people see someone in a cool car, they don't think the person driving it looks cool.
Rather, they think that if they were to drive the same car, others would perceive them as cool.
Essentially, people want to signal their status and wealth through material possessions, believing that others will admire them. This is a paradox because they believe that items such as an expensive car will command attention and admiration while signaling neither of these things for the person they saw in the expensive car in the first place.
If you're making a hefty purchase, it should be for yourself, not so that other people might think you're cool.
"You need to learn that material possessions are not status symbols and signs of success," Victoria said. "What good is a luxury car if it just drives you into debt?"
Much like the first rule, action matters. Knowing these rules alone won't help you achieve financial success, it is implementing them in your life that will.
Sahlah Syeda is a writer for YourTango who covers entertainment, news, and human interest topics.