Finding your financial true north is the first step you should take as an investor. In order for you to become successful you need to know what success looks like.
Hi and welcome to the 30 day property journey. Over the next 30 days I’m going to provide you with a bunch of different activities that you can do to become a more confident investor and more confident to go out and purchase your first investment property.
I’m a firm believer in the fact that your long-term success is only achieved one day at a time and that’s why this is broken up into thirty different days. You can listen to each of these one day at a time, complete the activities and become a more confident investor.
The goal is not to buy a property by the end to these thirty days but it’s just to learn more about the property market, learn more about yourself and your investment strategy and get used to talking to people like real estate agents and mortgage brokers and other people in the industry.
Finding Your Financial True North
Today we are talking about setting your financial true north. If you have never heard that term before don’t worry I invented it. You are going to get some clarity into what your financial true north is and where you want to go financially.
Your “financial true north” is a long-term vision or long-term goal of what you want to achieve financially and what you want your life to look like.
So you might go out and say, oh I want to be a billionaire. But if you look at the billionaires in the world you can see that they actually work really hard.
Richard Branson has hundreds of companies, the Virgin Brand is massive. Bill Gates started and ran Microsoft and worked himself to the bone for many years.
These guys have work insanely hard and are insanely smart and is that a lifestyle that you really want? To be working full time to be hustling, grinding it out in order to make this money? Chances are, that’s not for most of us.
A lot of us probably want to spend that time with our friends and family. We want to have the time to do the things that we enjoy. Yes we want to pursue a life and a career that is going to make a difference in the world, but are we going to do it at the level of a billionaire? Probably not.
So it’s important when setting your financial true north to be realistic about what you want to achieve and what you want your life to look like.
The Easiest Way To Set Your First Financial True North
I found the easiest way to set your financial true north is to actually look at the income that you’re generating now.
Chances are you live a pretty good life. You can pay your rent, you’ve got some spare time on the weekend, you got enough money to buy yourself a computer or an iPhone or some sort of fun device like that.
I found the easiest way to set your financial true north is to simply take the income you earn now and aim to then turn that into passive income.
So for me, my financial true north is to achieve $60,000 in passive income which works out to $5,000 per month.
Your financial true north will probably change over time because at the end of the day once you have achieved this passive income or financial freedom you probably are not going to want to stop there.
For me, when I achieve $60,000 in passive income, yes I’ll technically be considered financially free. But that will the time where I can quit working for the sake of working and I I can look at other ways of generating income and growing that income.
Consider The Lifestyle Your Want…Realistically
It’s important when considering your financial true north to also look at the lifestyle that you want. Do you want to be working hard? Do you want to be not working at all? Do you want to do some part time work? What exactly do you want your life to look like?
For me I want to earn $60,000 in passive income. I do want to continue working a bit on the side so whether that be working on my properties or working on other businesses that’s fine. What I don’t want is intense work levels (eg. working 12-hour days, not having enough energy to spend time with my kids or not having the mental focus to really be there for my wife). That’s something that I want to avoid.
I know there are property deals out there where you can develop property and bring in builders and project managers and you can make good money out if it. But that’s not something I really want to pursue because that’s doesn’t match up with the lifestyle that I’m going for.
I love the fact that you can purchase a positive cash flow property, that it generates a passive income for me from the get-go. You can spend some time and go in and do some renovations on it to bring up the value or to bring up the rental income. But then you can leave it and just let it do its thing and you can move on to the next thing. It’s no wonder I love positive cash flow properties.
So go ahead and think about your life and your financial true north and what you want it to be.
Again, be realistic and one of the easiest way to do it is simply to look at what you are earning now and then just use that as a baseline for passive income that you want to achieve. But obviously everyone is different so choose your own financial true north whatever you feel is right for you.
Your Financial True North Will Change How You Invest In Property
One of the reasons that it’s very important to choose your financial true north is that it’s going to affect the way you look at property investment strategies and it’s also going to affect the way you look at different types of investment properties.
Like I just spoke about with development versus positive cash flow you can say that my true north has led me down the road of positive cash flow property and away from the really hectic sort of development lifestyle.
Even though there’s great money in that and it could move me towards my financial goals of $60,000 a year, it doesn’t really match up with the lifestyle that I want. So for me, my financial true north has really led me down one path and I’m guessing that is probably going to do the same for you.
It becomes really effective when you start looking at different properties that you might want to invest in.
You could begin to do the cash flow analysis and then ask “is this property actually going to move me towards my financial true north or is it actually going to take me on a side path?”
In that way you can really assess properties based on what you want to achieve financially and it means that the property you purchase is more likely to move you towards where you want to be.
I have seen so many people purchase property without really giving any thought about what it’s going to help them achieve financially or where they want to go financially. They get stuck with that property.
They might own it and in five years time it hasn’t really done anything and they haven’t really moved forward even though they have spent all this money and purchased a property.
So understanding your true north allows you to assess properties better and allows you to assess financial strategies better so that you have a better chance of actually achieving something significant in your life.
Having a financial true north is a key step to moving towards purchasing property and being successful in the property market. So go ahead and do the activity.
- Look at your income or what you want your true north to be.
- Write it down somewhere so that you can remember it and make it part of where you want to go.
Tomorrow we’re going to be looking at finding out how much you can actually borrow so that we can get a better indication on where you are in the market and what sort of properties you will be looking at. Sure you can do research and you can learn about property by looking at anything but if you can understand exactly how much you can borrow and you can look at properties within your price range well you can really get an accurate representation of what you next step might be. So that’s going to be pretty exciting tomorrow.
Today’s episode is brought to you by my new eBook The Essential Guide To Buying Your First Property Australia.
If you want to get access to the 21 steps that it takes to purchase your first investment property as well as checklists and worksheets to really minimise that overwhelmed that comes with trying to learn about property investing then grab your copy today. It’s going to be a great asset to you. There are so many people who purchases already so thank you to everyone who has purchased that and who is enjoying that content.