Outcome>Income

Most people fail to realize that in life, it's not how much money you make. It's how much money you keep - Robert Kiyosaki

“Imagine awakening to the soft light of Saturday morning, the sound of laughter and the sweet aroma of breakfast wafting from the kitchen. Your partner and children, beaming with excitement, present a tray filled with locally-sourced tropical fruits, a fluffy omelette infused with indigenous herbs, and warm, flaky bread from the local bakery. Accompanying it all is a freshly brewed cup of tea, invigorating you as you begin your day. 
After a rejuvenating shower, you step out, ready to embrace the day. Your trusted chauffeur is already waiting, prepared to transport you wherever you desire. Maybe it's a bustling market in Lagos, a serene beach in Cape Town, or a vibrant artisan workshop in Marrakech. 
When you return in the evening, the house is filled with tranquillity. The chef has prepared a light snack, a passionfruit sorbet tantalizing your taste buds. Your bed, adorned with fresh sheets by your diligent housekeeper, beckons invitingly, promising a night of restful sleep. Outside, the garden has been groomed into a verdant oasis, the air filled with the fragrance of fresh bloom. Under your watchful gaze, your children play, their joyful activities underscored by the rhythmic melodies of Koffi Olomide filtering from the speakers. The enticing aroma of dinner in preparation fills the air, signalling the close of another day in your haven of contentment.
As the chef bids you farewell for the day, he teases your palate with decadent desserts chilling in the fridge: a velvety chocolate mousse, a tangy lemon tart, and a creamy tiramisu. He inquires if the same breakfast will grace your table tomorrow, leaving you to anticipate another day of culinary delight.
You call your children in, their faces flushed from their outdoor adventures, to set the table. After all, even in a life of ease, manners must be instilled. Then, as the sun dips below the horizon and the stars begin their vigil, you settle in for a night of comfort, surrounded by family and blessed with the best life can offer.” 

The above is an excerpt of one of the first articles on this substack. Aside from demonstrating my heavy use of thesaurus.com and Grammarly, I was depicting the typical life of someone who has essentially mastered personal finance: Financial Independence (FI).

In today’s Diaspora Dollars Principles, I want to simplify FI more by distilling it into two phases: wealth accumulation and preservation.

Photo by Fanick Atchia on Unsplash

Wealth Accumulation

“The world is split into two groups: those who don’t know how to start making money and those who don’t know when to stop.”

-Unknown

The world runs on money wealth accumulation. Since the concept of currency was invented, there has always been someone who has always wanted more than others. Some may call it human nature. Some may call it greed. Regardless, this pursuit of competitiveness amongst each other has yielded immense production, value, and innovation. Albeit, it is a double-edged sword as it has also resulted in massive inequality, oppression, and destruction.

But let's keep it positive. Many of us want to live comfortable lives. To achieve this, society has created a system where you can only have a comfortable life if you have more wealth than the average person (so much for keeping it positive).

Many of us are caught up in the pursuit of money, which consumes most of our lives and contradicts the purpose of seeking wealth: to lead a comfortable life.

I am not here to tell you how to make money. Why should I? I am not wealthy enough (YET), and there are literally people making millions on TikTok counting grains of rice or acting like AI NPCs. We live in a world of abundance: everything and anything is out there for the taking.

And yet, wealth accumulation isn't everything

I want to emphasize this point: your earning capacity plays a massive role in achieving wealth and a decent standard of living. However, it is not the sole factor. High income alone does not guarantee financial stability. Personal bankruptcy can still occur due to poor financial management, excessive spending, or unforeseen circumstances. For example, 78% of professional athletes go broke after retirement despite earning millions. This highlights the importance of wealth preservation alongside wealth accumulation.

Ironically, the two athletes depicted (Lebron James and Kevin Durant) are among some of the wealthiest athletes in the world, and they have very impressive investment portfolios.

Wealth Preservation

"Some people work to live, and other people live to work."

Jarod Kintz

Most people understand wealth accumulation, as everyone wants to make money. However, people tend to dismiss the fact that wealth preservation matters just as much, if not more, than accumulating wealth.

Consider this scenario:

Person A earns $60,000/year, spends $50000, and saves $10000.

Person B, on the other hand, earns $100,000, but spends $95,000 and saves $5,000. Keeping these factors the same over a decade, who is wealthier?

It's clear that Person A ($100,000) is wealthier, as they save double what Person B ($50,000) saves, even though Person B has a higher income. This is a classic example of why saving money is as important as making money.

In the personal finance world, particularly in the FI space, it is not uncommon to see people with average incomes retire early with large savings/investment portfolios, as they understand how to accumulate and preserve wealth.

Wealth accumulation and preservation are not entirely independent of each other; they occur concurrently. However, there is a significant emphasis on accumulation at certain stages of life and on preservation at others. If you don't handle wealth preservation well, you might find yourself stuck in the accumulation phase forever, constantly chasing money without truly enjoying the fruits of your labour.

I discuss how to achieve FI in this post, but to sum it up:

• Live within your means

• Avoid lifestyle inflation as you increase your income

• Opt to invest your money in diversified assets

  • Identify your FI number via the 25x rule

There is more than one way to skin a cat

There are many additional ways to accumulate and preserve wealth; your mission is to identify what works best for you and execute it. Remember, the goal is to work to truly live your life, not just to accumulate money endlessly.

Taking Action Towards FI

1. Set Clear Goals: Define what financial independence means to you. Forget money: what would you do TODAY and for the next 100 years if money was not a concern? Is it retiring early, having the freedom to travel, or simply reducing financial stress? Write down your goals and break them into smaller, achievable milestones.

2. Create a Financial Plan: Develop a comprehensive financial plan that includes budgeting, saving, investing, and debt management. Use tools and resources like budgeting apps, financial advisors, or online courses to guide you.

3. Educate Yourself: Continuously educate yourself about personal finance. Read books, follow finance blogs (*cough cough* Diaspora Dollars), listen to podcasts, and stay informed about economic trends and investment opportunities.

4. Automate Your Finances: Set up automatic transfers to your savings and investment accounts. Automating your finances ensures consistency and helps you stay disciplined.

5. Network and Learn from Others: Join communities or groups focused on financial independence. Networking with like-minded individuals can provide support, motivation, and valuable insights.

6. Regularly Review and Adjust: Periodically review your financial plan and progress. Make adjustments as needed based on changes in your life circumstances, goals, and the economic environment.

Remember, the journey to financial independence is personal and unique. What works for one person may not work for another. Stay flexible, patient, and committed to your goals.