3 Steps To Create Your Financial Fortress

Never become a victim of circumstance again. Learn how to structure your financial life in the most defensive way possible.

Photo by Jörg Angeli on Unsplash

Structuring your life in such a manner that limits vulnerabilities should be something you require of yourself. This is especially true when we relate it to your finances. Structure your life so that something like the rise of gas prices doesn’t turn you into one of those people complaining on Facebook about how this is all Biden or Trump’s fault. Structure your financial life in such a way that recessions simply do not apply to you. Create a cushion large enough where a job layoff doesn’t become a stressful calculation on whether or not you’re able to pay your bills next month.

I aim to share some money philosophies that can help you create a moat around your financial health. Build your financial fortress of solicitude so that no outside forces can threaten your kingdom.

Step #1 — Double Your Savings

The most common budgeting professionals out there will tell you to have at least 3–6 months worth of expenses saved. While this is definitely a good tip, I propose something different. Instead, found that doubling this amount to 6–12 months makes a huge difference. Is it the most fiscally responsible thing to do? No — since that money is likely better off in the stock market. However, having 6–12 months worth of savings personally propelled me to the utmost level of confidence.

Getting laid off from a job meant that I can be unemployed for 12 months of the year and still pay my mortgage and groceries. Having 12 months worth of savings meant that I could take risks at work; I could take time to apply myself to new areas and try to tasks because the weight of the repercussions mattered a lot less. I didn’t fear what the results of my risk taking was because I had the cash there to back me up.

Having this cash cushion saved meant I was also able to take advantage of opportunities when they arrived. Plane tickets to Aruba half off their normal prices? I’m going without hesitation. You see a sale in the stock market? Time to invest. Having a large cash cushion, larger than what you actually need, flips a switch in your brain to operate at a level with much more confidence.

Step #2 — Avoid Monthly Payments

I don’t care how cool the new Tesla is, what kind of travel package it is, or how cool that new iPhone is, there’s no reason to be making payments on these things. If you have to take up a monthly payment on the item, odds are that you can’t afford it. Besides the obvious part of over extending yourself with too many monthly payments, the idea here is that you give yourself options when you avoid monthly payments. Some people find themselves in a situation where they literally cannot call off of work when they’re sick because they need the money to pay for their batch of upcoming payments.

This is especially true for cars. People love over-doing it with their car. Paying an exuberant amount of money for a car that you only drive back and forth to work is plain old stupid. The average payment for a new car is $700 a month! That’s $8,400 a year to drive to work and sit in traffic dummy.

Eliminating the monthly payments leave you with an excess amount of cash every month. This excess is where wealth building happens. This excess amount of cash should be allocated towards things that pay you and separate your earning potential from your physical time and labor. For this, I personally pursue building a portfolio of dividend stocks but for you it may be different.

Step #3 — Separate Your Time From Your Money

Now this is the hardest step when building your financial moat but it’s definitely the most important. I already mentioned dividend stocks but I do think it’s the easiest route that people can go to achieving this step. There’s almost no barrier to entry and you can start with as little as $1. Investing into dividend stocks is how I managed to grow my base level of passive income up to $1,500 per month on average. This $1,500 in monthly passive income can go towards my bills, food, trips, or be reinvested every single month.

While it doesn’t have to be dividend stocks, there are other ways to disconnect your time from your earning potential. For example, a product based business can sell products for you online regardless of whether or not you are awake. There are plenty of online stores pulling in annual revenues that are large enough to replace jobs. This is especially true when you have a busy that is automated to an extent. While I cannot give you a specific blueprint on how to start a business you are interested in, you get the idea. Products can be created once and then sold indefinitely which makes this one of the best business models still actively pursued by many people across the world.

Once you reach completion of these three steps, you’ll notice how confident you become everyday. You will no longer get stressed by forces outside of your control because of the moat you’ve built.

Thanks for reading! I can be found over on Seeking Alpha