3 steps for Corporate Athlete’s to achieve financial freedom.
Financial freedom isn’t just for entrepreneurs and side hustlers – corporate athletes (defined as someone who earns a paycheck from an employer) can get there too, but the tactics are slightly different. Being a corporate athlete takes up most of your daytime working hours so we need to do as much as we can go automate the process and get out of the way. Below are the 4 steps that are critical to achieving financial freedom as a corporate athlete.
- Calculate your “number” and stick to it: It’s important to know what your financial freedom number is before setting your plan. To do this, I set up a simple spreadsheet to understand what my estimated costs are in the future (don’t forget to assume inflation!) and how much I’d need from my investments to afford my lifestyle. I can then back into how much I would need to contribute to my investments each year (making sure it was a realistic goal). This topic alone deserves at least one full blog post. Something to keep in mind for the future is that most people I talk to who have achieved their “number” have a hard time stopping – it’s human nature to always want more. It’s critical to know how much is enough.
- Set up automatic investing accounts: This is the easiest step – you just need to set it up once and get out of the way. Setting up automatic deposits into your investment accounts is an absolute must for any busy corporate athlete. The most popular is the 401k which deducts from your paycheck, but I also recommend having a taxable brokerage that automatically invests since the 401k max is ~$22k per year (check the exact limits by a simply Google search “Max 401k contribution [year]). Most analysis I’ve seen suggests investing at least 20% of your salary, if not more, if you want to achieve financial freedom faster than 65 years old. There are smarter people out there who will tell you where to invest your money, but I recommend following Warren Buffet’s advice and investing in a low cost index fund that tracks the market (e.g. S&P 500 etc). Only check your brokerage account every 6 months if you are at risk of FOMO. You just want to make sure everything is continuing to invest (and not sit in cash) and make sure your dividends continue to reinvest, too.
- Reinvest (most) salary increases and bonuses: This is the most important rule and also the hardest. The corporate lifestyle (at least in my experience) does everything it can to suck money out of you – fancy clothes and cars, expensive meals, vacations etc. In my experience, it’s VERY easy to let your lifestyle creep up as you start to make more money each year. In my experience, I didn’t even realize it was creeping up, slowly over the years, until I analyzed how my spending had changed over a 5 year time period and realized that I too had fallen victim to lifestyle creep. That’s not to say we shouldn’t enjoy ourselves and reward ourselves for a well-earned salary increase or bonus, but setting aside most into your investment accounts is important if you want to achieve financial freedom.
- Be Patient: Too often we read about people who achieve financial freedom overnight, but that likely won’t be the case for the corporate athlete. Patience is important, but difficult– it’s hard to stay focused on goals that may be years or even a decade away when it’s so easy to get pulled into spending money for short term gratification. I’ve seen all sorts of hacks to stay focused on long term goals. There are a lot of books on the topic too, but for me the most helpful tactic is to read out loud my long term goals each Sunday night before I make my to do list for the week. While I know them by heart anyways, the act of reading them out loud is my weekly reminder and keeps me on track.
