Transform Your 9-5 Job into a Life of Freedom Through Discipline

For most people, a 9-5 is just part of everyday life. You get up, dress up, go to work, go home, and repeat this cycle for 40 years. For most people, their 9-5 will be the first asset they possess to convert active income into passive income. Worst of all, is that most people don't know the power of 9-5 and how it can be used as a weapon to create financial independence. Don't sleep on this superpower of transforming your 9-5 into freedom through discipline. 

Download the tool on our website for free and calculate the power of your 9-5.

Discipline and your 9-5  

In previous articles, we discussed the impact of savings rate on your financial independence. If you increase your savings rate your time to financial independence decreases and vice versa. When working a 9-5, your income is the only “lever you can pull” to increase your savings rate. The other characteristic we all have is discipline, some have more than others, but those who learn discipline with their savings are well rewarded. Saving diligently over years without touching your investment, proves your discipline level and ensures financial independence. 

The problem with most people, when it comes to investing, is we touch the investment and disturb the compounding interest effect. If you understand finance and you're using the money to purchase better or other income-generating assets then it's a form of discipline. Using your investment to purchase a new car is not such a good form of discipline.

Most people can be financially free

The power of compounding interest is extremely powerful! If most people understood how compounding interest affects everyday life, we would have many more financially independent people retiring today. I believe that most people can achieve financial independence by following good personal finance principles and investing diligently. 

Imagine we had an automatic setting to save 25% from the first job we do and consistently save and invest 25% for years to come, we will all be wealthy. We built a tool to illustrate the power of your 9-5 and how wealthy you could be given your income level and some applying some discipline. This tool just shows how much earning power you have as a family or individual by looking at your 9-5.

Let's do some examples. The first one is a magical genie example to create a dreamlike scenario and the second is a realistic example. 

Magical genie example: Person 1 starts working at the age of 20 with an R20 000 after-tax salary. The salary increases in line with inflation each year and person 1 works for 50 years. The power of person 1’s 9-5 in today's value is R4 022 846(See first image below) Imagine person 1 could rub a magical genie lamp and the genie gives person 1 all this money upfront on day 1 of their working career. It would be much easier to save 25% and use the rest on whatever you want right? 

Let's see in the next section what this 25% would be worth if invested for 50 years. 

Implementation of discipline 

Let's say person 1 chose to invest 25% of the lump sum that the magical genie gave them when person 1 started working. Let's assume the funds were invested in a fund providing a return of 10% per year. Let's calculate how much person 1 would have if they invested until their retirement age. 

Person 1: 

Person 1 invests R1 005 711 (R4 022 846 x 25%) at a rate of 10% for 50 years. We use a 6% long-term inflation rate to get to a lump sum amount in today's value of R6 409 353! It's really easy to see that with the magical genie option, person 1 can replace his income 100% and be financially independent within 40 years (see first image below) 

Now let's have a look at a realistic example: 

In our realistic scenario, if person 1 invested 25% of their salary (R5000) from the first month of working the result would have been exactly the same! One can implement investing discipline by creating debit orders that automate the investment process and live by the motto of paying yourself first by investing first and living off the rest. This will recreate the magical scenario, by applying some investing discipline. 

Please see the two graphs below, the first one is proof of the lump sum(magical genie) being invested and the other is the monthly(realistic) amount invested over the same term. In both scenarios, person 1 can replace 100% of their income according to the 4% rule and live financially independent without the use of a magical genie, but applying discipline to their investments.

Summary

Getting caught up in daily life should not distract you from your investment goals. Ensure you know how much you need to reach financial independence and then laser focus on that savings rate and automate your investment. Whether you receive the lump sum amount upfront in our magical genie example or if you save diligently monthly such as in the realistic example, both end up with the same result! Use your example in the tool and play around with your savings rate to see how long it will take you to reach financial independence. Download the tool on our website for free and calculate the power of your 9-5.

If you want to find out more about becoming financially independent, please see our free course. If you want a blueprint toward financial independence, you can enrol in our Stages to financial independence course.

Onward to Financial Independence 

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