Introduction
Do you know about Grant Sabatier, the author of the book “Financial Freedom”? If not, that’s okay. In this blog, you will learn about his life lessons that helped him grow his finances from $2 to $1 million. According to leaks, his current net worth is more than $10 million. For an average person who is dependent on a job and has no business or startup idea, dreaming of becoming a millionaire seems very difficult, right? But maybe it’s not that difficult. Let’s find out what Grant Sabatier has to say about this.
Why he wanted financial freedom
Grant, while talking about himself, says that when he was looking at his bank accounts, he was shocked and disheartened to see that he had only $0.72 in one account and $2.26 in another. With just that much money, he went back to his parents’ house. Grant also mentions that, while he isn’t sure about other countries, in his country, if a child still lives with their parents at the age of 24-25, they are considered a loser. Yes, you guessed it right, Grant is from America. In most developed nations, it’s similar; to prove your capability, you have to move out of your parents’ house, live independently, and create your own world.
Anyway, let’s get back to our topic. Grant also considered himself a loser because, every night at dinner, his parents would always ask him, “Did you get a job?” And to this question, he had to lower his eyes and say, “No, I haven’t found one yet; I’m still looking.” He submitted his CV to over 200 companies, but he didn’t receive a reply from any of them. One day, frustrated with everything, he went to a field, lay down, and started thinking. He had studied at a good university, passed with good grades, and even got a high-paying job despite not wanting to. He took the job because his dad insisted, saying that even if he didn’t enjoy it now, he would eventually start liking it. But despite all this, he was still stuck in that situation, wondering why and how he got there. Why didn’t he even have $3 in his account, while many of his friends, who didn’t go to good colleges or get good grades, were in a better situation than him?
His resolution for financial freedom
At that moment, he resolved that no matter what, he would have $1 million in his account and achieve financial freedom. He knew that to get different results, he would have to do something different, but he didn’t know what that was. He worked very hard for five years, reading every personal finance book he could get his hands on. During this time, he did various jobs, even started two companies, and finally, after five years, he had $1 million in his account, not counting his properties and other assets.
His book on financial freedom
Grant wrote a book explaining how he went from $2.85 to $1 million, sharing what he did and what we should do to achieve financial freedom. So today’s blog is about that book and what exactly Grant did to make this seemingly impossible feat possible.
Seven stages for financial freedom
First stage of financial freedom
Grant noticed and wrote in his book that if someone wants to achieve financial freedom, they need to go through seven stages. The first stage is clarity. Clarity means knowing what your current financial position is and where you want to take it. For example, Grant knew his financial position was less than $3, and he wanted to reach $1 million. We will discuss what needs to be done to reach that desirable position later on.
Second stage for financial freedom
After clarity, the second stage is self-sufficiency. This stage means being self-sufficient and not dependent on anyone else, like your parents or friends. Yes, this is the stage where, even if you are earning $1,000 and spending the same amount, being self-sufficient is what matters.
Now that we have become self-sufficient, what if we lose our job or the source of income that made us self-sufficient disappears? That’s where our third goal comes in, which we call the breathing room. According to this stage, we should save enough money in our account to remain self-sufficient for at least 3-4 months without any income.
Third stage for financial freedom
The next stage, according to Grant, is the stability stage. In this stage, you have paid off all your debts, and you have enough money saved to cover your expenses for six months without any income.
5th 6th and 7th Stages for financial freedom
Now let’s talk about the 5th, 6th, and 7th stages. Grant calls the 5th stage the flexibility stage. According to him, at this stage, you have enough money to cover your expenses for two years without any income.
The 6th stage is called financial independence. At this stage, you no longer need to work for your regular expenses because your investments generate enough income that you don’t need to do any additional work. Grant reached this stage just five years after starting his journey. He also mentions that at this stage, you work not to cover expenses but to pursue hobbies and activities you enjoy.
Finally, the 7th stage, which Grant calls abundant wealth, is the ultimate stage of financial freedom. At this stage, you have earned so much money that you can’t spend it all in your lifetime, even if you lead a normal or elite lifestyle. At this point, your focus shifts entirely to your family, hobbies, and health, without any worry about earning money.
Now, after reading about the seven stages of financial freedom, we all have one question in mind: How do we achieve this? What exactly do we need to do to become financially free? This is the most interesting part of this blog, my friends. So, let’s find out how we can achieve this. For this, I will give you some awesome thinking models.
Thinking model 1
Let’s start with my favorite thinking model, which is Thinking Model No. 1: “Time is more valuable than money.”
Okay, let me ask you something. If a 90-year-old man offers you $20 million in exchange for your youth, would you give him your life and become 90 years old yourself? Of course not. Why? Because what would you do with that money at the age of 90? You wouldn’t be able to travel properly, enjoy life, or do the things you love. Plus, it’s possible that you might pass away the very next month.
This is the thinking model that every wealthy person follows—they always make life decisions in terms of time, not money.
Now you might ask, “How?” So let’s analyze some situations. The founder and CEO of Cred says that if you know how much your income is per hour, you might prefer not to waste 30 minutes on the internet and instead use that time more productively. For example, if you know your income is $100 per hour, would you spend 30 minutes online to save $20 with a discount? Probably not.
Time is expensive than money
This is what our first model teaches us: Time is much more valuable than money. If you learn to utilize your time effectively, nothing can stop you from reaching great heights.
But you might be thinking, “We’ve always been told that ‘every drop fills the bucket,’ meaning that if we save money, we’ll become financially better off, right?” Actually, research shows that our brain works on a single thought process. If you constantly think about how to save money, you won’t be able to think about how to earn more money. Your focus will be on saving money rather than making more of it.
To free myself from this mindset, I say that if you want to save money by cutting costs, go ahead and do it. However, keep in mind that gradually, as you focus on saving time, you might let go of the habit of constantly saving money. Here, saving time means using that time to gain financial knowledge.
Model number 2 for financial freedom
Now let’s talk about Model 2. This model is very important for us humans because, obviously, no one else can do it for us. This model is called “What is your number?” It means you need to determine the amount you need to become financially free.
Trinity study
For now, let’s base our number on the Trinity Study. According to the Trinity Study, you need to save 25 times your annual expenditure and then invest that money in index funds or similar funds so that it continues to grow. The amazing thing is that, theoretically, it has been found that if you withdraw 4% of that money annually for your entire life, the principal amount will never run out.
Example
Let’s understand this with an example. Suppose you need around $10,000 per month to comfortably cover your expenses and also want that money to grow with inflation. This means you need a total of $120,000 annually. According to the Trinity Study, you need to save 25 times this amount, which is around $3 million. Now, we need to divide this amount into two parts: the first part of $1.5 million will go into a fixed deposit (FD), and the second part of $1.5 million will be invested in index funds to grow.
The FD amount can be used freely for the next 12 years, and it will be zero at the end of those 12 years. The second amount invested in index funds will grow to approximately $8 million, assuming a 15% return. After 12 years, when the FD amount is exhausted, you will have only the index fund amount left, which will have grown to $8 million.
Now, divide this index fund amount into two parts: $4 million into an FD and the other $4 million will remain invested in the index funds. This setup will give you $333,000 annually for the next 12 years, covering your monthly expenses, while the other part in index funds continues to grow at a 15% rate and will become approximately $22 million at the end of the next 12 years. This process will continue indefinitely, ensuring your financial stability.
Questions arises regarding financial freedom
I know that after this theory, you might have many questions. The first question would be, “What if we don’t get a 15% return from the index fund, or if the market is down after 12 years and the returns are low?” Yes, you are right. This is just an approximate number. However, it can be reasonably accurate. If you want a separate and detailed blog on index funds, you can comment, and I will definitely write one.
Now, the most important question that must have come to your mind, and it came to mine too, is: Where do we get this $3 million from? It’s not a small amount. The next three models will focus on how to actually accumulate this $3 million.
Model 4 for financial freedom
Now, the next model the writer talks about is called “Compounding Can Make You Financially Free Earlier.” In simple terms, this means if we want to achieve financial freedom quickly, we need to save money and use the power of compounding to grow it. I know many of you might be thinking that in the first point, I said we should focus more on time than on saving money. Here, the author says we don’t need to save on everything.
The author explains that we humans mainly spend the most money on three things and that we should think about saving money on these things. The three things the author mentions are housing, food, and cars. According to the author, if we live in a modest home or choose a house in a remote area for some time, we can save a lot of money. If we invest those saved funds properly and let them compound, we can achieve financial freedom much faster. The same applies to cars and food. If we avoid eating out at restaurants regularly and instead have meals at home with family, we can save a significant amount of money.
So now you understand where and how much to save, so you can invest the saved money and let it grow through compounding to reach financial freedom sooner.
Model 5 for financial freedom
The next method to quickly generate the amount needed for financial freedom is Model Number 4, which is called “Make Money with a Side Business.” The author invested in real estate to achieve financial freedom and shares two ways to make money in real estate. The first is called flipping, which means buying a property at a low price, doing some renovations, and then selling it at a higher price. The second way is through rental income, which involves buying a house on loan and then renting it out. The rent income can be used to pay off the loan, and eventually, the house will be yours while still generating rental income without any additional expenses.
The author also talks about hustling with a job as a way to make money quickly. They share a story about a guy who earns $600,000 annually from his job, but in the last two years, he has made 5 times that amount through side hustles. This has allowed him to achieve financial freedom much faster than anyone could imagine. The author explains that this guy used to walk his neighbor’s dog for $25 an hour. After a few days, he started getting calls from other neighbors to walk their dogs. So, he created an app where dog owners and students or people who want to earn money by walking dogs can register and earn money, while the guy earns a commission. Through this idea, he makes more than $2.5 million a year. Using this example, the author emphasizes that we should always have a side business to generate additional income, which can then be invested to make more money.
The author combined their side business in real estate with their main business and job. You can also start with this combination if you want.
Conclusion
We all understand the importance of being financially free, especially for our well-being and peace of mind. Many of you reading this article might have faced situations similar to Grant Sabatier’s or are trying to avoid such challenges. That’s why it’s crucial to listen to Grant’s advice and learn from his life journey. By following his insights and strategies, you too can achieve financial freedom.
