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The notion of financial freedom is a rather recent one that appeared as a reaction to a phenomenon of modern society, the Rat Race. The phenomenon became more pronounced at the beginning of the 21st century following the multiplication of blogs dedicated to financial freedom and the 2008 crisis.
The definition of financial freedom is something that will change from one individual to another. Globally, it is the ability for an individual to no longer be dependent on a job for a living, to do what really interests them in life, and to be themselves.
In my opinion, you can be financially free while having a job, but only if you can manage your time as you wish. Because in life, the most precious resource you have is the time you have at your disposal.
Being able to use your time as you wish is something essential.
The flaws in the current system make even the best strategies for managing your personal finances unworkable
To do this, you will have to learn how to properly manage your personal finances. Indeed, you work hard to try to save money that will allow you to one day perhaps reach that financial freedom.
Unfortunately, in the current monetary and financial system, you can’t just save the fruits of your labor. There are several reasons for this. The first is the constant debasement of fiat currencies. The COVID-19 crisis showed that central banks will do anything to save the current system.
This means printing as much fiat money out of thin air as they deem necessary.
As an example, the Fed has printed more than 4,000 billion dollars out of thin air in a few months. That’s nearly 25% of all U.S. dollars in circulation in April 2021. All in just one year. Such monetary inflation has disastrous consequences for your savings.
It devalues it a little more and more.
The current system dictates the rules of the game, and you can only suffer
To try to beat this monetary inflation decided by a minority of people not representative of the people, you will have to invest. With interest rates currently close to zero, you will naturally turn to the stock market. As you will understand sooner or later, it is the Fed that dictates the game.
Indeed, when the Fed decides to raise interest rates, you will gradually have to leave the stock market and buy government bonds again.
In short, you are playing a risky game with ever-changing rules that are decided by a powerful few. Yet the right to save without fear of currency devaluation is an essential human right. The current system is not able to protect it.
Another problem with the current system is that your money is not really yours. You will be surprised when you read this. You think that the money in your bank account is yours because you earned it by working hard. It’s true that in theory, it’s yours.
But in reality, it is yours only if you follow the arbitrary rules set by private banks. If you want to make a transaction with someone on the other side of the world for more than a limit set by the bank, you will have to answer to the bank.
Worse, the bank could absolutely prohibit you from making that transaction.
The bank may also decide to seize the fruits of your labor if the government demands it. And what about the minimum bank reserve lowered to zero by the Fed for U.S. banks since the beginning of the COVID-19 pandemic in March 2020.
What Is the Reserve Requirement Rate for Banks?
I don’t think many people have reacted when reading that the Fed was lowering the reserve requirement for banks to zero for the simple reason that it doesn’t speak to ordinary people.
A lot of people don’t know what that means. Thinking that these are still technical matters in the banking world, the majority of people preferred to move on.
This is a mistake, and you should always try to go beyond what the powerful people at the head of the fiat system want you to know.
So first of all, I’m going to explain to you what this famous reserve requirement rate is for banks. This rate is the percentage of what the banks have to keep in cash when a customer deposits in their institution.
Let’s take the example of the 10% rate that the Fed has been asking the banks to apply until now before these changes.
Adam is going to deposit $1,000 in the bank. At the same time, the bank can then loan $900 to Nathan. With that $900 loan, Nathan will buy a smartphone from Syara. Syara will then have $900 that she will put in the bank.
With this amount of $900, the bank will be able to grant a loan of $810 to Rachida.
This mechanism puts the fruits of your labor at risk
Needless to continue, I think you understand the mechanism. With $1,000 initially deposited, the bank is then able to make up to $9,000 in bank loans.
To make you understand better, this is equivalent to creating $9,000 of debt.
This all sounds very nice. Now, let’s imagine that the $9,000 of money comes to be withdrawn at the same time by the depositors. The bank would not be able to pay $9,000 since it really only has $1,000.
The bank would therefore go straight to bankruptcy.
However, the system is based on the principle that as people who have taken out loans pay back, the money will be available to the depositaries again. Furthermore, it is based on the principle that not everyone will withdraw all their money at the same time.
To ensure this, the banks obviously have the power to prohibit withdrawals at any time in the event of a serious crisis.
Bitcoin is a paradigm shift that involves updating the famous 50/20/30 rule
The fruit of your labor that you think is safe in your bank accounts isn’t really. That’s where Bitcoin brings a totally new solution. A solution that protects the interests of the people, because Bitcoin is the people’s money backed by the people.
In 2006, Elizabeth Warren, who was not yet a U.S. Senator, wrote a book called “All Your Worth: The Ultimate Lifetime Money Plan”. In her book, Elizabeth Warren put forward a basic rule of thumb for managing your personal finances to achieve sufficient financial freedom over time.
This rule has been popularized as the “50/20/30 rule”.
The 50/20/30 rule advocates the following allocation of your after-tax income:
- 50% for your needs. This includes bills, repayment of any loans, food, health expenses, …
- 30% for what you want. This includes things that are not essential, but that make you happy: outings, clothes, a new smartphone, …
- 20% for saving. This includes the money you will put in your bank account and the money you will invest in the stock market for example.
This rule is very interesting, but as I have shown you before, it is inoperative in the current monetary and financial system for several reasons.
Bitcoin is a total game-changer for those who want to achieve true financial freedom
On the other hand, you can use a similar approach if you opt for the Bitcoin system. Bitcoin is an accumulation game for years to come. The more BTC you accumulate, the better your money future will be. This is one of the ten great lessons that Bitcoin has taught us in its first twelve years of existence.
The day you understand this, you will de facto adopt a more minimalist lifestyle. Bitcoin makes you aware of one essential thing: the consumer society pushes you to buy a lot of useless things. You fall into this trap by following fashions and trends first, but second, because you understand that saving is not in your best interest with a system where debasement is incessant.
With Bitcoin, that debasement no longer exists. The supply of Bitcoin is hard-capped at 21 million units.
So you have the guarantee that 1 BTC bought today will still be worth 1 BTC in 21 million units in 10, 20, or 50 years. This essential guarantee is at the heart of the promise Bitcoin gives you. No one has any interest in seeing that change, and that’s what all Bitcoiners will continue to fight for in the future.
With Bitcoin, you have access to the best savings technology in the world.
The best solution is to adopt the Bitcoin 40/15/45 rule
It would be a shame not to take advantage of it. Since Bitcoin will teach you to cut back on what you want, you will be able to apply the Bitcoin 40/15/45 rule. You can of course change these ratios, but this seems like a good compromise.
With the 40%, you can pay for everything you need. This goes from 50 to 40% because with Bitcoin you will have understood that debt is the worst thing in the world. In fact, you will no longer fall into the debt trap. You will wait until you have enough money to buy what you want.
The remaining 15% is what you really want. I’m not talking about what society wants you to buy with your American dollars, but what you want. By acting on your own desires, you will quickly realize that what you want is at most 15% of your income.
And eventually, you will find yourself able to put 45% of your income into the Bitcoin system each month. This may sound like a lot of money, but it’s a lot less dangerous than putting 20% into bank accounts or the stock market.
The 45% of your income that you will save in the Bitcoin system will only increase in value over time because the demand for Bitcoin will only grow in the future. At least that’s my strongest belief, and why I adopted this 40/15/45 Bitcoin rule.
I adopted this rule because I have absolute confidence in Bitcoin and the monetary revolution it embodies.
Final Thoughts
As the price of Bitcoin rises, I’ll be one step closer to that famous financial freedom that people dream about. It will be real because I will be able to use my BTC at any time as I wish. My BTC will not be under the risk of being confiscated by the powerful people at the head of the current system.
In short, I will be able to enjoy true financial freedom by living my life on my own terms. This is the ideal to which all Bitcoiners aspire. It’s the ideal you can strive for if you make the choice you must make to go with the Bitcoin plan.
As always, it will be up to you to make the best choice for your future regarding money. For me, the choice is made and it starts with a B.
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