I’ve spent over 25 years in the world of finance as a accountant and licensed CPA, working with middle-income individuals, and many high income earners. And through the years, I’ve identified the mistakes people consistently make in their day-to-day lives that are keeping them in the rat race while stopping them from becoming financially secure and independent.
But here’s the thing – living in the rat race is always a choice. We may feel trapped, but there are proven steps we can take to break free from this never ending hamster wheel of unhappiness.
It all starts with shifting our mindset and having a plan. We must define success on our own terms, and have the courage to pursue our passions, even if it means taking risks.
Now, let’s dive into my top 5 tips that will help you plan your escape from the rat race.
TIP #1 – Spend Below Your Means
Tip #1 is going to sound cliche and you have probably heard it a million times, but it is super powerful and totally unavoidable. If you don’t get this one right, you will be forever stuck in the rate race. Tip #1 is Spend Below Your Means.
In order to spend below our means, we must start with a budget. And to create a realistic budget, I suggest that you take the following 3 steps:
Step #1 – Identify Needs and Wants
For Step #1, I encourage you to differentiate between your true needs and wants. Take some time to prioritize your essential expenses while being mindful of discretionary spending. Essential expenses include items like housing, transportation, utilities, existing credit cards, and student loans.
Some examples of non-essential items or activities often include eating out, entertainment, shopping for fun, extravagant gifts, online purchases and the list goes on.
Step #2 – Track Everything
Step #2 is again simple, but powerful. Track all of your spending. Take a few months to track every single expense, no matter how small, to help identify areas where you can cut back spending.
Step #3 – Start Saving and Stop Buying
Step #3 for creating your budget is stop buying and start saving. Developing healthy financial habits, such as saving a portion of each paycheck and avoiding impulse purchases, is key to long-term financial stability.
To get started, and it may not sound like much, start by saving $1,000 in an emergency fund. This is a great way to kick start your nest egg while building the good habit of saving money rather than spending everything you make.
TIP #2 – Avoid the Joneses
Now that we have our budget in place, it’s on to Step #2 for escaping the rat race, which is to stop keeping up with the Joneses.
One of the biggest purchases you can make above your means, that might impress your friends, is buying a car, especially a nice shiny new one.
And in today’s world, auto dealerships are experts at selling you over priced cars all in the name of easy monthly payments.
At first, the monthly payment seems manageable, however within a few months the car no longer looks quite as nice, your friends are back to staring at their phones, and just think, once you drove the vehicle off the car lot, it’s no longer worth what you paid for it. Talk about a let down.
And as if that weren’t bad enough, with the high prices of cars these days, you are likely to be stuck with that payment for the next 6 years.
Making decisions like this is a fast track to losing your freedom! Instead of getting out of your dead-end job, you just signed up for 6 more years in the rat race. Well, at least you will ride in style.
Tip #3 – Manage Your Time
Tip #3 and this is often the toughest lesson to learn, especially for our penny pinchers. Your time is your most valuable commodity, and you must manage it well.
Do you insist on doing everything yourself? If so, you will certainly feel like you’re in the middle of the rat race.
Your time is so valuable, in fact it’s irreplaceable.
If you try to save money by not hiring help or investing in the right tools, you are guilty of wasting your time.
Consider how the wealthy handle their time. To protect their time, wealthy people tend to have a full team of people who are doing most if not all of the work for them. Now, most of them did not start with a large team.
Instead, they started with getting just a little help to free themselves up so they could focus on the things that gave them the biggest return on their money and time.
Just recently, I discussed this with an owner of a roofing company who spends a good bit of their time on their clients’ roofs, rather than hire someone who will handle this for her.
Imagine if she falls or hurts herself, not only will her company suffer, but now she will have to find some help while in a panic. This could possibly spell the end of her business.
As you can see in this example, wanting to do it all yourself can be very costly.
Now I want to leave you with this, you know, sometimes we underestimate the value of our own time. We get caught up in doing everything ourselves, thinking it’s the most efficient way to operate.
But here’s the thing: your time is precious, and spending it on tasks that could be delegated might not be the best use of your resources.
That’s why I strongly encourage you consider hiring people to help you. Whether it’s outsourcing simple tasks or bringing on experts to handle specific aspects of your projects, investing in assistance can free up your time to focus on what truly matters.
Trust me, the relief and productivity gains you’ll experience are worth every penny spent. It’s not just about getting things done; it’s about optimizing your efficiency and maximizing your potential.
TIP #4 – Invest in Yourself
Tip #4 for escaping the Middle Class is Invest in Yourself.
With this tip we will be taking a page from Warren Buffet, one of the most successful investors in the world. When asked what is one’s best investment opportunity, Buffet often cites investing in one’s own personal skill set as the best tool to increase one’s net worth.
And by increasing your net worth, you will have more control when it comes to where you work and how much you get paid.
Now, many will argue that accessing podcasts and youtube videos for free suffices, when it comes to learning and self improvement. In fact, they question the very need to pay for expertise when so much free information is already available.
However, true learning tailored to your individual needs demands more than just readily available information prepared for the masses. Embracing continuous education and skill enhancement is imperative to navigate the ever-evolving professional landscape.
For example, as someone with 25 years of business experience, I now recognize the value of investing in coaches to refine my business strategies and service delivery. While the expense may seem daunting at times, the return on investment consistently exceeds my expectations, often doubling my initial cost.
Now with that being said, here are my 4 simple steps to help you invest in yourself and escape the rat race.
Step #1 – Identify Market Demand
Firstly, identify the skills that are in demand in your field or industry. This might involve researching current job postings, speaking with professionals in your field, or consulting industry reports. Based on these discussions, you can narrow down exactly what you might need to learn in order to move forward.
Step #2 – Find the Right Course, Mentor or School
Once you’ve identified the skills you need, it’s on to Step #2.
For step #2, you must consider the various avenues for acquiring the skills you need. Online courses, on-the-job training, mentorships, online colleges, and certifications are excellent options for learning new skills.
Many of these institutions will offer payment options to make your education more affordable too.
Whatever you do, don’t skimp on investing when it comes to learning your profession, because it can cost you many times over in the long run.
Step #3 – Attend Workshops & Conferences
Step #3. Attend workshops and conferences.
There is massive value in attending networking events, conferences, and seminars, where you can learn from industry experts while gaining insights into emerging trends.
And besides learning at these events, you never know what important connections you will make in your industry. The next person you meet just might help you land your dream job.
Step #4 – Be A Life Learner
Lastly, Step #4 is to always be a life learner.
Remember that skill development is an ongoing process. No matter how advanced you are in your profession, there is always something to learn.
To stay relevant, we should remain curious and proactive about learning, continuously seeking out new opportunities to expand your knowledge and expertise.
By investing in skill development, you’ll not only enhance your employability or business, but also position yourself for long-term success in today’s fast-changing business environment.
Now let’s get back to my top 5 tips for escaping the rat race.
Tip #5 – Buying the Latest and Greatest
Lastly, Tip #5 for escaping the rat race is Stop Buying the Latest and Greatest.
In todays’ world, there is always some new gadget to mesmerize the geek in all of us. But with today’s new technology, changes and innovations occur so fast that it is best to purchase them when you absolutely need it.
We must resist the temptation to upgrade technology simply because it’s new or trending. Buying the latest gadgets or devices without considering whether they’re truly needed can be a complete waste of money, and may do nothing more than add unnecessary distraction and clutter to our lives.
For example, if you’re considering buying the latest cell phone because the camera is slightly better, ask yourself, do you really need the camera to only get slightly better pictures? Does it really matter?
For our influencers out there, will it really get you more followers on Instagram or Tik Tok if you buy that expensive camera? Perhaps learning more about composition and lighting will take your photos to the next level.
When purchasing technology only you can decide if the new device will genuinely enhance your productivity, efficiency, or quality of life.
But remember, my advice to you is to only purchase technology that is meaningful and purposeful. Otherwise, it’s a waste of your money. It’s just one more thing that’s keeping you stuck in the rat race.
And if you’re not sure if the purchase is right for you, there is wisdom in waiting. Delaying purchases allows you to take advantage of price drops, promotions, or further advancements in technology.
By delaying your purchase, you will ensure that you get the best value for your money. So, before rushing to buy the latest gadget, ask yourself whether it aligns with your needs and priorities, and whether it will truly provide long-term benefits.
Let’s Talk
Now, if you don’t already know me, my name’s Sonia Narvaez. I’m a licensed CPA and wealth building strategist with over 25 years experience.
If you have any questions about how to take advantage of the latest tax savings strategies, don’t hesitate to contact us.
To get your FREE complimentary consultation with a member of my team, simply click the scheduling link in the description below, and pick the time that works best for you.
We would love help and meet with you.