When I speak to friends working for large corporations I often ask why they havent moved on or opted for contracting or considered starting their own business.
The answers are normally the same across the board.
I have a mortgage… Its risky.. I dont have enough experience.. Its not secure..
I think this is a problem with 90% of employees. Their idea of security is a regular paycheck from their employer and each time the employee review comes around they hope for a payrise.. It may be 1% , it might be 0% but they are happy to stay year after year with the security.
One of the first steps involved in generating wealth is to think outside the box. Think about increasing inbound income and decreasing outbound income.
Ok, we all have to start somewhere. Theres nothing to stop us working in a full time job and making someone else rich (as long as you set milestones and know when you will be moving on). When you are in a regular job you can slowly build up funds to enable you to make a break. You need to put away money for security to back you up and cover your outgoings for at least 6 months.
There are other ways of building up your security fund.
- If you own a property and have spare rooms you could consider renting these rooms out to bring in additional income. This cash can go into your safety fund.
- Sell any items you dont need via Ebay, local papers or car boot sales.
- If you are renting then downsize to a smaller, cheaper property so you can stash away more cash into your safety fund.
- Research the most economical routes into work. If you are close enough, walk or cycle to save fuel costs.
- Use your skills outside work to generate cash. For example an IT consultant could offer services in their local area to fix, maintain and upgrade pc’s. Add this cash to your safety fund. At the same time this could help you to slowly build up a client base and help towards the next step of financial security – to start your own business.
- Live below your means. This doesnt need to be a permanent arrangement but it is required to enable you to reach financial freedom.
This wont be an overnight exercise by any means. You will however slowly adapt to these changes allowing you to save a higher percentage of your income each month.
Work out exactly what you need each month to cover all required payments.
In other words. Mortgage + council tax and house insurance. Include costs such as car insurance presuming u want to keep your car once you quit your job. Write this total figure down. Then work out roughly how much you spend on food each month and add this to the total. If your partner covers some of your total expenses then you can minus their contribution from the total. You are left with your monthly survival figure. Now multiply this total by 6. This is the minimum amount of savings you will need before you can quit your job and start the quest for financial freedom. Ideally you will need more than this to cover costs such as advertising and registering your business etc.
Once you have the security of 6-12 months of survival money you can take a small risk by quitting your job and starting out on your own.
The required figure will obviously need to be higher if you cant work from home. You can also set yourself a stop limit. For example if your business isnt generating any income in the first 3 months you could have a contingency plan arranged. One would be to convert your mortgage to a buy-to-let interest only mortgage and rent your house out. Move in with your family if they have space and continue to work hard with your business. This one example is obviously dependent on your personal circumstances. Other examples would be to rent out rooms in your house to cover your mortgage with your partner covering the other half or to sell assets such as your car or other items of value in your home.
Working for someone else isnt secure. I know people who have been working for the same company for 20 years. A person serving a company for such a long period must be safe.. NO.. I know people who have been made redundant with this many years of service. After all the employee is not in control. The business owner is in control.
Please read and digest and start your journey to financial freedom.
Theres a great article here over at the wealth junkie that explains why working for someone else is not as secure as you may think.