Matthew Klan - Freedom First: Escape the Income Trap, Unlock Your Potential and Be Financially Free, Now

MATTHEW KLAN

First published in 2020 by John Wiley & Sons Australia, Ltd 42 McDougall St, Milton Qld 4064

Office also in Melbourne

Matthew Klan 2020

The moral rights of the author have been asserted

ISBN: 978-0-730-38167-9

A Cataloguing in Publication record for this book is available from the U.S. Library of Congress.

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All inquiries should be made to the publisher at the address above.

Freedom First is a registered trademark of WEALTH CREATION TECHNOLOGIES PTY LTD

Dominant Value, Motivation Equation, Values Audit, Freedom Escape Velocity, Freedom First Wealth Creation Formula, Income Trap, Freedom Quadrant, Straight Line Thinking and all associated concepts, brands, names, and illustrations are TM of WEALTH CREATION TECHNOLOGIES PTY LTD.

The Freedom First concept and related concepts were developed by Matthew Klan in 2007 and shared and tested from 2007-2019.

Cover design by Wiley

Cover image vvvita/Shutterstock

Disclaimer

The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based on the information in this publication.

For my family.

You make freedom worth fighting for.

Do you want to be financially free?

Plenty of people will answer yes; but what if I told you that weve been going about it backwards all along?

Decades ago in what feels like another life, I achieved what many people nowadays consider the ultimate: Id studied hard, gotten into a good university and graduated with a professional degree that promised me a good career.

And then I made a decision I didnt really understand the importance of at the time, one that would shape my life from then on. Having achieved what society told me I should desire the security of a good job, a secure pay cheque, with the promise of a secure retirement I threw it all away and chose my freedom instead.

At the time, many people told me I was crazy. What was I thinking giving up not just a job but a career, and the guarantee of financial security? But I sensed back then what many people are starting to realise now: that the promise of security was only an illusion. I couldnt bear the thought of spending a lifetime working a job, hoping at best that at the end of many years I might be able to stop perhaps in comfort, perhaps not.

When I first quit my job I wasnt rich.

I didnt have enough passive income to buy back all of my time or enough capital saved to do the same before I chose to do something different.

I could see that the path I was on wasnt going to buy back my time for another 40 years, and even then there was no guarantee. Id known retirees who worked their whole life to buy back their time and still werent financially free.

They had become dependent on the stock market, dependent on their pensions and, despite working hard their whole lives, they had only ever really learned one strategy, one skill for creating wealth: work and save. And if circumstances changed after retirement, derailing their carefully laid plans, then they had run out of time to repeat that strategy all over again.

I saw that it was more important to get onto a new path first, rather than just try to race to the end of the same path sooner: the path where you need to be rich, or at least moderately well off first, if you want to be financially free.

Because thats what both responsible financial planning advice as well as get-rich-quick advice tells us to do

You probably think that there is no similarity between responsible financial planning and get-rich-quick thinking. Most people think theyre polar opposites: working hard and saving is the responsible path, while trying to get rich quick is the irresponsible path.

But when it comes to financial freedom they are both the same path: rich, then free!

Those who have low time preference and an aversion to risk travel on the path more slowly, while those with high time preference and tolerance to risk try to race down the path more quickly!

But the speed you travel at is irrelevant if you are heading in the wrong direction.

If you want to become rich so you can be financially free, you need to start by getting free first.

Freedom First is not about replacing all of your income before you can quit your job; its not about building up your passive income or building up enough equity which pays you income before you can be free.

Its not about getting financially free in three to five years, instead of 30 years. Its not about getting financially free fast.

Freedom First is about getting free first.

Freedom First is a principle.

People say they want to get rich so that they can finally be free

I say you need to get free if you want to get rich in the first place.

The freer you get, the richer youll become.

Although it might sound radical, the idea that freedom is necessary for the creation of wealth is not new: plenty of economists have pointed out the relationship between freedom and wealth when it comes to a nations prosperity. American economist Brian S Wesbury has said, When freedom prevails, the ingenuity and inventiveness of people creates incredible wealth.

But when it comes to an individuals ability to produce wealth, this incredible relationship has been ignored.

One of the greatest pains to human nature is the pain of a new idea.

Walter Bagehot

Perhaps it has always been more profitable to sell people security, rather than freedom?

Saying you want to get free, then doing everything in your power to do the opposite going into debt, chasing security, locking away your money, tying yourself down and becoming dependent on a job and on the market for decades at a time is insanity.

Those who would give up essential liberty to purchase a little temporary security deserve neither liberty nor security.

Benjamin Franklin

Its obvious in hindsight that if you want to get completely free financially, the way to do that is to start by getting a little freer first, and growing from there.

Plenty of people have gotten rich, only to discover they are not free.