Do you think that your money multiply manifolds just by investing in a few schemes, investments? Well, you won’t be entirely wrong if your answer is yes. But it might not be enough to help you achieve a life that you could live on your own terms, have time freedom, and more importantly financial freedom.
That’s where Tim Ferriss’ “freedom multiplier” comes into play. The entrepreneur, and the bestselling author of ‘The 4-Hour Workweek’ argues that the true assessment of how your money is multiplying on a practical basis depends on the number of ‘Ws’ you have control over in your life.
You must know certain things about your money, growing it, making it work hard for you to see the growth on a practical level. Being financially rich and having the ability to live like a millionaire are fundamentally two very different things, Ferriss states in his book ‘The 4-Hour Workweek’.
Financial lesson on building real wealth, achieving 'freedom multiplier'
According to Ferriss, the ‘Ws’ that one must have control over in their lives are what, where, when, and whom.
He has famously said that “money is multiplied in practical value depending on the number of W’s you control in your life: what you do, when you do it, where you do it and with whom you do it. I call this the ‘freedom multiplier’.”
Explaining this, he suggests that a $500,000-per-year investment banker is less “powerful” than the employed new rich (NR) who works ¼ the hours for $40,000. Why? Because he has complete freedom of when, where, and how to live. “The former’s $500,000 may be worth less than $40,000 and the latter’s $40,000 worth more than $500,000 when we run the numbers and look at the lifestyle output of their money,” he explains, putting emphasis on lifestyle over bank balance.
What, where, when, whom: Taking control of the W’s in your life for building real wealth
For some, it is just about “more money” which would make things right for them. Their goals are arbitrary moving targets like a few crores in the bank, some more in their investment portfolio etc. But what they never think about is achieving freedom, which gives you the power to choose.
Ferriss describes options (the ability to choose) as the real power.
While money can buy you things, you would still need to create options to enjoy that wealth. So, before mindlessly parking your money in any random scheme or idea you hear or read about on the internet, analyse your short and long-term goals, and then automate your finances accordingly. Basically, know WHAT do to!
Devise plans to make your money last, so you can enjoy it longer. Keep an emergency fund in place, put your money in assets that help it multiply practically. Basically, know WHERE your money is going!
Look for ways to invest where you can get real returns with a proper timeline in mind. Knowing the WHEN of your finances can help you prepare for any uncertainties or sudden shocks that might disrupt your budget.
The WHERE can simply be about the places, things, activities you wish to spend your money. Save for that international trip you have been waiting for or the skydiving you had long planned to do.
Rich no longer means having big bucks in your bank account, instead, as Ferriss notes, the ‘new rich’ “are those who abandon the deferred-life plan and create luxury lifestyles in the present using the currency of the New Rich: time and mobility.”
