How To Achieve Financial Freedom (For Creatives)

 

Growing up in Lagos Nigeria, it’s amazing how the rich and the poor live in reckless proximity, in the western clime the rich will consider such closeness suicidal as evidenced by the distance between the government housing projects and the highbrow residential areas. The detriments of such hobnobbing are pretty obvious but on a flip note, serves as a daily reminder that one must work hard and give whatever it takes to achieve financial freedom.

The African youth has been cheated, battered and described as unambitious by an older generation whose greed, cluelessness, corruption and shamelessness have brought the entire continent to her knees. In spite of all these the African youth has shown resilience, innovation and creativity with the little resources accessible particularly in the creative and tech industries.

To achieve financial freedom certain work ethics, financial practices, and behavioural modifications have to be imbibed, but that is a topic for another day. For now, let’s discuss a logical and tested way to achieve the freedom to afford most of our needs and wants and leave a legacy for our children born and unborn.

Savings Culture for Financial Freedom

Now, this is old and needs not be over flogged but we could use a constant reminder about developing a savings culture. Savings come in handy in the rainy days and could help when you need that important piece of equipment for your creative business.

Spending Culture for Financial Freedom

In a time when swag and “packaging” appears to be everything, there is a tendency for us to get our priorities wrong and develop a self-destructive spending habit. According to Robert Kiyosaki an American entrepreneur and respected financial teacher, the bulk of our earnings should go to the purchase of assets and not liabilities. He has a rather simple but unconventional definition of liabilities and assets. Simply put:

Asset – As defined by Kiyosaki, an asset is anything that you acquire that puts money into your pocket. Assets are what the rich use to generate wealth over time. They come in many forms, including real estate, businesses that don’t require you to work at them, and stocks and bonds.
Liability – Any acquisition which takes money out of your pocket. Rich Dad, Poor Dad examines how many people consider owning a house as an asset, while Kiyosaki views a house as a liability. Homeowners don’t always take into account the cost of maintenance for the house, the fact that the mortgage may not be paid off by the time they want to move again, and the fact that houses can depreciate in value.

Cash Flow Quadrant

To discuss the cash flow quadrant hypothetically: Say you’re a graphic artist for instance and you look for gigs, execute and deliver for a paycheck,  you fall under the self-employed category since you have an active income source that is totally reliant on your effort and time. On the other hand, if you’re a designer / creative director working for an ad agency earning an attractive income, you fall under the employee category since you sell your skill and time for a paycheck. These two categories are on the left side of the quadrant, unfortunately, this side of the quadrant hardly ever leads to financial freedom because your bosses plan is to make himself rich and not you. Coupled with the fact that hardly do people get rich off their own time alone.

On the right side of the quadrant, we have the Graphic designer who has grown from being a self-employed to a production studio owner with a 10 man production team dealing in print, web design, video editing and animation. The production studio is entirely driven by a business system autonomous of his time or skill. This individual is the business owner, because his livelihood is not dependent on his time alone but predominantly on other peoples, and his livelihood is powered by a business system.

Finally, we have the production studio owner who has generated some residual income and has delved into investments in Real Estate, Stock exchange, Online retail e.t.c. This individual is on the highway to financial freedom and is called an Investor. No matter our area of speciality we must aim to transit to the right side of the quadrant, in another post I’ll be discussing an applicable transition plan devoid of the capital intensity that appears to be the biggest stumbling block preventing us from crossing the bridge.

Notice the progression? It’s meant to give you an applicable idea, no matter your area of creativity this kind of progression can lead you to the life of your dreams. We don’t have to know it all, but we need to make the first move that’ll spark the fire.

Do you know of any success stories of how a creative has successfully transitioned to the B and I quadrant or have you made such a transition yourself? Please let us know how it was achieved by leaving a comment bellow.