{"id":39,"date":"2023-08-01T20:39:24","date_gmt":"2023-08-02T00:39:24","guid":{"rendered":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/?post_type=chapter&#038;p=39"},"modified":"2024-11-19T05:35:25","modified_gmt":"2024-11-19T10:35:25","slug":"road-to-financial-independence","status":"publish","type":"chapter","link":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/chapter\/road-to-financial-independence\/","title":{"raw":"Road to Financial Independence","rendered":"Road to Financial Independence"},"content":{"raw":"Achieving [pb_glossary id=\"242\"]financial freedom[\/pb_glossary] is not only about calculating the numbers and making the right financial choices.\u00a0 It is also grounded in your attitudes, behaviours, and relationship with money.\u00a0 Think back to instances where you may have learned about money or have been exposed to others' beliefs about affluence.\u00a0 All these past experiences have shaped your attitude towards wealth, influenced your primary spending habits, and changed your assessment of financial well-being.\r\n\r\nThere are many common limiting principles with money that you may have heard:\r\n<ul>\r\n \t<li>We will never be able to afford that, so why bother trying.<\/li>\r\n \t<li>Only the rich can obtain financial freedom.<\/li>\r\n \t<li>A higher salary will bring more happiness.<\/li>\r\n \t<li>It\u2019s useless to think about savings and investing when I am young.<\/li>\r\n<\/ul>\r\nPersonal finance is not a subject traditionally taught in the formal educational system.\u00a0 The road to financial independence starts with the right [pb_glossary id=\"33\"]money mindset[\/pb_glossary].\u00a0 Replacing limiting beliefs with a positive outlook will help to transform your relationship with money.\u00a0 A more empowered approach will assist you in taking consistent and realistic action steps.\u00a0 [pb_glossary id=\"254\"]Financial independence[\/pb_glossary] as a skilled trade worker is achievable, but it\u2019s important to shift your beliefs about money to align with your financial goals.\r\n\r\nMany people fall into the mindset of being a <em>Consumer or<\/em> a <em>Borrower,<\/em> impeding progress towards financial control<em>.<\/em>\u00a0 Outlined are examples of two trades workers with typical <em>Consumer<\/em> and <em>Borrower<\/em> money mentalities.\r\n<div class=\"textbox textbox--examples\"><header class=\"textbox__header\">\r\n<p class=\"textbox__title\">Example: <strong>Consumer<\/strong><\/p>\r\n\r\n<\/header>\r\n<div class=\"textbox__content\">\r\n\r\nIsabella is a journeyperson who works up in a camp north of Fort McMurray, Alberta.\u00a0 Isabella is scheduled on a rotation basis of 14\/7, meaning 14 days working 10 hours a day and then 7 days off.\u00a0 As Isabella is willing to work long hours up at a remote camp location, her remuneration package is approximately twice the salary she would be earning at a similar role in her local city.\u00a0 It\u2019s physically demanding work and Isabella rewards herself every paycheck as she has worked extremely hard each rotation at camp.\u00a0 Every time Isabella gets her pay, it\u2019s quickly spent on lifestyle items such as clothes, lease payments on her newer vehicle, and the latest electronic gadgets.\u00a0 Isabella spends most of her entire paycheck on her comfortable lifestyle at home.\u00a0 It will be difficult for Isabella to become financially independent with her current consumption spending habits.\u00a0 Isabella uses her entire paycheck without any regards to saving for an emergency financial situation or without any long-term financial goals in mind. Isabella has the attitude that one can always make more money, and indulging on the extra material items will bring her happiness now.\u00a0 For <em>Consumers<\/em>, saving for the future is not a priority.\r\n\r\n<\/div>\r\n<\/div>\r\n<div class=\"textbox textbox--examples\"><header class=\"textbox__header\">\r\n<p class=\"textbox__title\">Example: <strong>Borrower<\/strong><\/p>\r\n\r\n<\/header>\r\n<div class=\"textbox__content\">\r\n\r\nGreg is a trade worker who has lots of work opportunities during the summer construction season.\u00a0 Every autumn, there is a 2-3 month shortage of work for Greg.\u00a0 If Greg has an emergency (eg. car repair) during the off season, a credit card is used to cover the balance owing.\u00a0 Greg has some funds from summer work that will cover the first month of downtime, but Greg usually also takes a vacation and borrows money to meet further expenses during the remaining gap in employment.\u00a0 Greg has to consistently take short term loans until the next pay day.\u00a0 Financial freedom for Greg is more challenging as Greg has a lifestyle beyond his means.\u00a0 Greg is of the belief that one can always borrow more money to cover any personal lifestyle choices.\u00a0 For <em>Borrowers<\/em>, taking on increased debt is the easiest way to deal with immediate financial shortfalls.\r\n\r\n<\/div>\r\n<\/div>\r\n&nbsp;\r\n\r\nIt takes a real long-term shift in mindset for one with either the <em>Consumer<\/em> or <em>Borrower<\/em> mentality to change their habits.\u00a0 Another typical employment scenario with skilled trade workers is when an individual has a pension with their employer.\u00a0 <em>Pension Entitled Holders<\/em> have a great base of future passive income.\u00a0 However, having total trust and reliance on that one income source may not be sufficient to meet their prospective money goals.\r\n<div class=\"textbox textbox--examples\"><header class=\"textbox__header\">\r\n<p class=\"textbox__title\">Example: <strong>Pension Entitled Holders<\/strong><\/p>\r\n\r\n<\/header>\r\n<div class=\"textbox__content\">\r\n\r\nJanice has been working for a trade union as an industrial mechanic (millwright) for 15 years since becoming a trade apprentice.\u00a0 The trades union provides Janice with a [pb_glossary id=\"332\"]defined contribution pension plan[\/pb_glossary] as one of the many benefits.\u00a0 Janice has been making mandatory contributions as part of the plan throughout employment, and the employer has matched some of the contributions up to a prescribed annual amount each year.\u00a0 Janice plans to retire in 10-12 years, with this pension plan as her primary funding of her day-to-day living expenses.\u00a0 Janice believes and trusts that the pension plan assets will provide sufficient perpetual funding for her financial freedom lifestyle.\u00a0 Janice is solely reliant on this employment pension plan.\u00a0<span style=\"color: #000000\"> However, with a defined contribution benefit plan, there is no guarantee of the amount that will be available to Janice upon retirement.\u00a0<\/span> For <em>Pension Entitled Holders<\/em>, it is important to understand how your particular pension works to accordingly match your money mindset and expectations.\u00a0 Janice may realize that solely counting on her pension plan to fund lifestyle commitments may not be sufficient.\u00a0 Various types of employment pension plans will be discussed further in <a href=\"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/part\/vii-saving-for-the-future\/\" target=\"_blank\" rel=\"noopener\"><em>Chapter 7 \u2013 Saving for the Future<\/em><\/a>.\r\n\r\n<\/div>\r\n<\/div>\r\n&nbsp;\r\n\r\nThe journey towards financial freedom is almost always not one of overnight success.\u00a0 It is imperative to note that everyone is at different points in their financial journey.\u00a0 Each individual will put emphasis and importance on different demands.\u00a0 Many people find themselves not knowing where to start when it comes to finances.\u00a0 This resource handbook will help transform your relationship with money as a trades worker, enabling you to make empowered decisions and take action steps that propel you towards your monetary goals.\r\n\r\nThroughout the resource, it will be emphasized that on the road to financial independence\r\n<h4 style=\"text-align: center\"><span style=\"color: #0000ff\"><em><strong>\"It's not how much one makes, but how much one is able to keep.\"<\/strong><\/em><\/span><\/h4>","rendered":"<p>Achieving <a class=\"glossary-term\" aria-haspopup=\"dialog\" aria-describedby=\"definition\" href=\"#term_39_242\">financial freedom<\/a> is not only about calculating the numbers and making the right financial choices.\u00a0 It is also grounded in your attitudes, behaviours, and relationship with money.\u00a0 Think back to instances where you may have learned about money or have been exposed to others&#8217; beliefs about affluence.\u00a0 All these past experiences have shaped your attitude towards wealth, influenced your primary spending habits, and changed your assessment of financial well-being.<\/p>\n<p>There are many common limiting principles with money that you may have heard:<\/p>\n<ul>\n<li>We will never be able to afford that, so why bother trying.<\/li>\n<li>Only the rich can obtain financial freedom.<\/li>\n<li>A higher salary will bring more happiness.<\/li>\n<li>It\u2019s useless to think about savings and investing when I am young.<\/li>\n<\/ul>\n<p>Personal finance is not a subject traditionally taught in the formal educational system.\u00a0 The road to financial independence starts with the right <a class=\"glossary-term\" aria-haspopup=\"dialog\" aria-describedby=\"definition\" href=\"#term_39_33\">money mindset<\/a>.\u00a0 Replacing limiting beliefs with a positive outlook will help to transform your relationship with money.\u00a0 A more empowered approach will assist you in taking consistent and realistic action steps.\u00a0 <a class=\"glossary-term\" aria-haspopup=\"dialog\" aria-describedby=\"definition\" href=\"#term_39_254\">Financial independence<\/a> as a skilled trade worker is achievable, but it\u2019s important to shift your beliefs about money to align with your financial goals.<\/p>\n<p>Many people fall into the mindset of being a <em>Consumer or<\/em> a <em>Borrower,<\/em> impeding progress towards financial control<em>.<\/em>\u00a0 Outlined are examples of two trades workers with typical <em>Consumer<\/em> and <em>Borrower<\/em> money mentalities.<\/p>\n<div class=\"textbox textbox--examples\">\n<header class=\"textbox__header\">\n<p class=\"textbox__title\">Example: <strong>Consumer<\/strong><\/p>\n<\/header>\n<div class=\"textbox__content\">\n<p>Isabella is a journeyperson who works up in a camp north of Fort McMurray, Alberta.\u00a0 Isabella is scheduled on a rotation basis of 14\/7, meaning 14 days working 10 hours a day and then 7 days off.\u00a0 As Isabella is willing to work long hours up at a remote camp location, her remuneration package is approximately twice the salary she would be earning at a similar role in her local city.\u00a0 It\u2019s physically demanding work and Isabella rewards herself every paycheck as she has worked extremely hard each rotation at camp.\u00a0 Every time Isabella gets her pay, it\u2019s quickly spent on lifestyle items such as clothes, lease payments on her newer vehicle, and the latest electronic gadgets.\u00a0 Isabella spends most of her entire paycheck on her comfortable lifestyle at home.\u00a0 It will be difficult for Isabella to become financially independent with her current consumption spending habits.\u00a0 Isabella uses her entire paycheck without any regards to saving for an emergency financial situation or without any long-term financial goals in mind. Isabella has the attitude that one can always make more money, and indulging on the extra material items will bring her happiness now.\u00a0 For <em>Consumers<\/em>, saving for the future is not a priority.<\/p>\n<\/div>\n<\/div>\n<div class=\"textbox textbox--examples\">\n<header class=\"textbox__header\">\n<p class=\"textbox__title\">Example: <strong>Borrower<\/strong><\/p>\n<\/header>\n<div class=\"textbox__content\">\n<p>Greg is a trade worker who has lots of work opportunities during the summer construction season.\u00a0 Every autumn, there is a 2-3 month shortage of work for Greg.\u00a0 If Greg has an emergency (eg. car repair) during the off season, a credit card is used to cover the balance owing.\u00a0 Greg has some funds from summer work that will cover the first month of downtime, but Greg usually also takes a vacation and borrows money to meet further expenses during the remaining gap in employment.\u00a0 Greg has to consistently take short term loans until the next pay day.\u00a0 Financial freedom for Greg is more challenging as Greg has a lifestyle beyond his means.\u00a0 Greg is of the belief that one can always borrow more money to cover any personal lifestyle choices.\u00a0 For <em>Borrowers<\/em>, taking on increased debt is the easiest way to deal with immediate financial shortfalls.<\/p>\n<\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<p>It takes a real long-term shift in mindset for one with either the <em>Consumer<\/em> or <em>Borrower<\/em> mentality to change their habits.\u00a0 Another typical employment scenario with skilled trade workers is when an individual has a pension with their employer.\u00a0 <em>Pension Entitled Holders<\/em> have a great base of future passive income.\u00a0 However, having total trust and reliance on that one income source may not be sufficient to meet their prospective money goals.<\/p>\n<div class=\"textbox textbox--examples\">\n<header class=\"textbox__header\">\n<p class=\"textbox__title\">Example: <strong>Pension Entitled Holders<\/strong><\/p>\n<\/header>\n<div class=\"textbox__content\">\n<p>Janice has been working for a trade union as an industrial mechanic (millwright) for 15 years since becoming a trade apprentice.\u00a0 The trades union provides Janice with a <a class=\"glossary-term\" aria-haspopup=\"dialog\" aria-describedby=\"definition\" href=\"#term_39_332\">defined contribution pension plan<\/a> as one of the many benefits.\u00a0 Janice has been making mandatory contributions as part of the plan throughout employment, and the employer has matched some of the contributions up to a prescribed annual amount each year.\u00a0 Janice plans to retire in 10-12 years, with this pension plan as her primary funding of her day-to-day living expenses.\u00a0 Janice believes and trusts that the pension plan assets will provide sufficient perpetual funding for her financial freedom lifestyle.\u00a0 Janice is solely reliant on this employment pension plan.\u00a0<span style=\"color: #000000\"> However, with a defined contribution benefit plan, there is no guarantee of the amount that will be available to Janice upon retirement.\u00a0<\/span> For <em>Pension Entitled Holders<\/em>, it is important to understand how your particular pension works to accordingly match your money mindset and expectations.\u00a0 Janice may realize that solely counting on her pension plan to fund lifestyle commitments may not be sufficient.\u00a0 Various types of employment pension plans will be discussed further in <a href=\"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/part\/vii-saving-for-the-future\/\" target=\"_blank\" rel=\"noopener\"><em>Chapter 7 \u2013 Saving for the Future<\/em><\/a>.<\/p>\n<\/div>\n<\/div>\n<p>&nbsp;<\/p>\n<p>The journey towards financial freedom is almost always not one of overnight success.\u00a0 It is imperative to note that everyone is at different points in their financial journey.\u00a0 Each individual will put emphasis and importance on different demands.\u00a0 Many people find themselves not knowing where to start when it comes to finances.\u00a0 This resource handbook will help transform your relationship with money as a trades worker, enabling you to make empowered decisions and take action steps that propel you towards your monetary goals.<\/p>\n<p>Throughout the resource, it will be emphasized that on the road to financial independence<\/p>\n<h4 style=\"text-align: center\"><span style=\"color: #0000ff\"><em><strong>&#8220;It&#8217;s not how much one makes, but how much one is able to keep.&#8221;<\/strong><\/em><\/span><\/h4>\n<div class=\"glossary\"><span class=\"screen-reader-text\" id=\"definition\">definition<\/span><template id=\"term_39_242\"><div class=\"glossary__definition\" role=\"dialog\" data-id=\"term_39_242\"><div tabindex=\"-1\"><p>the state of having enough assets or passive income sources to cover one\u2019s living expenses perpetuity without support from further employment.\u00a0 Also called financial independence<\/p>\n<\/div><button><span aria-hidden=\"true\">&times;<\/span><span class=\"screen-reader-text\">Close definition<\/span><\/button><\/div><\/template><template id=\"term_39_33\"><div class=\"glossary__definition\" role=\"dialog\" data-id=\"term_39_33\"><div tabindex=\"-1\"><p>a person\u2019s unique set of core beliefs about money and the attitudes associated with it<\/p>\n<\/div><button><span aria-hidden=\"true\">&times;<\/span><span class=\"screen-reader-text\">Close definition<\/span><\/button><\/div><\/template><template id=\"term_39_254\"><div class=\"glossary__definition\" role=\"dialog\" data-id=\"term_39_254\"><div tabindex=\"-1\"><p>the state of having enough assets and\/or passive income sources to cover one\u2019s living expenses in perpetuity, without support from further employment.<\/p>\n<\/div><button><span aria-hidden=\"true\">&times;<\/span><span class=\"screen-reader-text\">Close definition<\/span><\/button><\/div><\/template><template id=\"term_39_332\"><div class=\"glossary__definition\" role=\"dialog\" data-id=\"term_39_332\"><div tabindex=\"-1\"><p>a retirement plan, where an employee typically remits a fixed amount or percentage of their paycheck to fund their retirement. The employer may make a prescribed matching contribution amount to the plan as an added benefit.\u00a0 The contributions are invested on your behalf, but there is no certainty on how much your pension will be worth upon retirement.<\/p>\n<\/div><button><span aria-hidden=\"true\">&times;<\/span><span class=\"screen-reader-text\">Close definition<\/span><\/button><\/div><\/template><\/div>","protected":false},"author":1780,"menu_order":1,"template":"","meta":{"pb_show_title":"on","pb_short_title":"Road to Financial Independence","pb_subtitle":"","pb_authors":["anne-lee"],"pb_section_license":"cc-by-nc-nd"},"chapter-type":[48],"contributor":[61],"license":[58],"class_list":["post-39","chapter","type-chapter","status-publish","hentry","chapter-type-standard","contributor-anne-lee","license-cc-by-nc-nd"],"part":153,"_links":{"self":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters\/39","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/users\/1780"}],"version-history":[{"count":24,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters\/39\/revisions"}],"predecessor-version":[{"id":1248,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters\/39\/revisions\/1248"}],"part":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/parts\/153"}],"metadata":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapters\/39\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/media?parent=39"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/pressbooks\/v2\/chapter-type?post=39"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/contributor?post=39"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.bccampus.ca\/financialfreedomfortrades\/wp-json\/wp\/v2\/license?post=39"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}