It takes time to build a second income - and starting now ensures that we're not part of the 94% of people who can't retire or who are having to drastically reduce their living expenses or get their children to pay for them in their retirement years.

Lisa Linfield shares her long term goals for her second income stream and how she plans to 'glide' into retirement... and why 'forced retirement' from corporates is such a challenge to so many 60 year olds.

Show notes

• Financial Freedom is the ability to choose where, when and IF you want to work.

• You're able to do this if you have enough passive income to generate the monthly income

• Only 6% of people are able to retire at the same level of income they had before they retired

• The heartbreak of telling people they are part of the 94% that can't retire and will need to drastically cut their expenses

• The advantage of starting a second income NOW

• The challenge of a forced retirement when employed by a corporate

• The great opportunity of 'gliding into retirement'

• Why I started Working Women's Wealth

• My La-La Land goals - and I share my ultimate dream (YIKES!!!!) - the ultimate act of courage to voice it publically!

• The first goal to achieve

• The key to success

• Living our best lives possible is the reason why we are brave enough to live our dreamswhy

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Transcript

Speaker 1:         00:00       Welcome to Working Women's Wealth, where we discuss what it takes to build real wealth in a way normal humans can understand. Here's your host, Lisa Linfield.

Lisa Linfield:     00:21       Hello, everybody, and welcome to Working Women's Wealth. I hope you've had a great week, and that things are going your way. And I thank you for investing in your future to learn more about money, learn more about how you make and generate it, but most importantly, learn more about how to live your best life possible.

Two weeks ago, we chatted about passive income and financial freedom. And I'll remind you that the concepts were as follows: Financial freedom, the term that everyone bend is around the place, is being able to choose what you do, how you spend your time, when you do things, and with whom you do it. You're not bound to physically being in an office working 9-5, or physically be constrained to any location or any place. You can choose where you want to be. That's financial freedom.

In order to do that, however, we said that you needed to create enough passive income to replace your salary, and we discussed that passive income, unless it's from a trust fund, or your parents, really requires work. It's not passive. It doesn't mean that it's the absence of work and the absence of effort. It means that you're not constrained by your time, that you're not constrained by selling time for money, either in a corporate job, or the example we used was if you were a doctor or a dentist, you physically needed your patients to be present in order to earn your money. So you don't sell time, and you're not constrained by time to physically be with someone as they buy your product, rent your flat, or do the work that they're doing in the company that you're invested in.

So these concepts of passive income and financial freedom is something that I'd like to chat a little bit more about, and why I believe that everybody, no matter what your age, including kids, including people who are retired already, it doesn't matter your age, I believe everybody needs a second stream of income. And the reason why is that one of the hardest portions of my job as a wealth manager or financial advisor is telling someone that is already retired that they're going to run out of money. Often, people come to me because they're not happy with their advisor that they currently have, and I think they have a sense inside their tummy that it's not all as they think it should be. And they come to me, and they ask for my opinion. And I look at how much money they need to live, and I have to have the terrible job of saying to them, "I'm terribly sorry, you're going to run out of money in three and a half years time."

I keep asking many more wiser, older, experienced advisors, how you have that conversation. And I can't find a better way to have it, besides to tell it straight, "There will be no more money at this rate of you using your expenses." And the question always is, "Well, then how much do I need to drop my expenses by in order to not run out of money?" And really, I almost cannot find an exception in my memory bank of people who don't turn around and say, "Well, that's impossible. I'm just going to have to die in four years time." And the challenge with this is that we really don't determine our path. We really don't determine when we die. We could drop and die tomorrow, but we could also live for another 30 years. And then the question is, who is going to support you for the next 26 years?

So the answer often, is that most people that retire, in fact, the statistics show 94% of people who retire will not be able to live the same life that they currently have. And I know having gone from a large paying corporate job to being self-employed, that it takes a long time to be able to cut your expenses. John and I did the exercise when we kind of made the decision that this is something we wanted to do, and we had a first round of cuts, and we thought we could never cut anymore and that this was drastic. And we went for a few months, and then worked out that, goodness me, we're going to need to cut a lot more. And then we went through a next round of cut, and a next round of cut. And each month, we have to really challenge ourselves as to, is this expense something that we can afford?

This morning we had a conversation that the last time I took Emma's bike into have its punctures fixed it cost me 560 rand. And I said to John, "Love, this weekend I'd really like you to fix the punctures because I don't want to spend another 560 rand." In the old days in my corporate job, I would have just taken it. I don't want to have to have that conversation. I would have just taken it off to the bike shop, and had the punctures fixed, and paid over the 560 rand. So cutting your expenses and cutting them as drastically as most people will need to cut them in order to retire, is a really difficult thing to do.

So what for me is the answer? And it's the reason why I implore all of my friends, and all of you out there, start a second income. Start a second curve of revenue because it takes time to build a second income. It doesn't matter if you decide that that second income is a rental property. It's going to take you time to save the money for the deposit. It's going to take you time to build up enough rental properties to be able to replace your income. It's a curve. It's just that curve that start low and slow in the beginning, but then rises exponentially as you grow.

I was listening to a talk at the Investment Conference for the investment community as part of my further education just literally two days ago, where one of the company showed a graph that says through a person's lifetime, 84% of the growth on their money comes after they've retired. And I looked at it, and even the speaker said, when I first heard that statistic, I had to go back into the spreadsheet and check all of the numbers. But it's true because the reality of taking money and growing it, whether it be in rental properties, whether it be in anything, is that it takes time.

When you first buy a rental property, you have to make sure that you can afford the levies, and you can afford the interest cost on the debt, and all of these other things. Over time, your rent goes up with inflation. So whilst the money you owe the bank for the mortgage stays the same, your income gets more, and more, and more. And so you build enough buffer between how much you owe the bank and how much you're earning that you can start saving for the next property. And the next property, you can reach that quicker because now you have the income from the first property growing at such a rate that you can pay off the second property quicker.

So all of these things take time. And that's why for every one of you, I wish that you can create a second income in something you love doing, so that over time, it'll build and grow, and then by the time you get to retirement, if what you've saved can afford you half the lifestyle, then the revenue from your second income stream can give you the other half, and on many times, it's a difference between being able to afford health insurance or not. I remember a couple of years ago, I was employing au pair to help out when I was working full time. And I had decided that I wanted more experienced ladies who had actually retired and had their own children, and had experience with managing children and being there for kids. And I interviewed a woman and I said, "Why, once you've retired, are you now coming back to work as an au pair?" And she turned to me and she said, "I hadn't factored into my equation of retirement, into my calculations, the costs that were paid by my company."

So her company had first paid towards a pension, which obviously she didn't need now, and then paid towards her medical aid and other health insurance costs. The challenge was, she had a disabled son, so she needed to have a private medical health insurance for her and her son to make sure that they were able to afford the care that he needed, and she hadn't put that in equation. So literally, her answer was, "I'm working to afford health insurance." And I don't want any of us to be in that position. I want to make sure that everyone out there has a second revenue stream that they're slowly working on behind the scenes, and it does take work. But if you're committed to the vision of the life you want to lead, then that helps you get through anything.

I'm setting up two businesses at the moment as you all know. Over the last 18 months, I started, first, my wealth management business, and then about six, seven months ago, I started working Women's Wealth. And the reason why I started these businesses was that I had a clear vision of what I wanted my now to be, and what I wanted my future to be. In a corporate, you get hoofed out the retirement age, and I was in banking and my husband was in banking ... oh, financial services, and both of us would have been hoofed out within one year of each other. And my experience, even at that stage, of people getting hoofed out of companies was that they all had one common comment, "I'm not ready to retire yet. I still got my best years in me. I still want to give and work, and I'm too young to retire." And at 60, you are too young to retire. And the challenge for them was the lack of choice. I looked at this picture of people going through this phase with a lack of choice as to how they could live their life, and thought to myself, "I don't want to be that. I want to choose a life that I can, what they call, glide into retirement, that maybe at 60, I start cutting down an hour or two a week, and 61, maybe a day a week, that I glide into retirement, that I don't have some company's hefty boot on my butt that forces me into retirement." And so I started looking around to set up these businesses. And for me, Working Women's Wealth is my passion. I have a goal to teach a million women about money before I die. And I wanted to do that, and I realized that in my wealth management business, I wasn't going to be able to do it because you work one-on-one with a client. And if I work one-on-one with people, I'd need to teach 30,000 of them every single year about money in order to make sure that I hit my personal lifelong target. And so Working Women's Wealth was set up as my education piece, and it is my education piece. And I have a long term goal that in la-la land, I will be able to build a speaking career off the back of Working Women's, that I have a vision of being able to speak to an audience of 5000, 10,000 people at every single session that I talk, and by then, be able to reach my target of 30,000 women a year that I'm able to educate, which will obviously be a lot more because in the beginning, I'm not going to be able to do that.

There is another advantage of it, and in la-la land, I'll get paid for these amazing discussions and talks with women, and I will be flown to these amazing venues. So when a company or someone has a corporate event in Hawaii, they'll fly me from South Africa to Hawaii to go and speak and pay me to speak. And in that, I will earn an income in my retirement, and I will get to do what they call academic tourism. I'll get to be paid to go to amazing places and give amazing speeches, and I don't even want it in my retirement. I've promised John that by eight years time, I'll be able to take him on business class to some amazing location because that's where I'm speaking.

So I don't have a plan that requires money now. I have a plan that acknowledges, it's going to take time for me to build this business, it's going to take time for people to want to pay for me to speak in their conferences in Hawaii, and not just corporate conferences in South Africa. So it's going to take time, and it's going to take investment. But that will accelerate because you just need one or two great conferences, and then you get invited to speak at another conference, and another, and another. And from that, you build your audience. And by the way, you can hold me accountable that one of the other things I have in la-la land is a dream that one day I will speak at Davos, so the equivalent of Davos on how you teach women who are uneducated about money, and the impact that it can make in the poorest of economies. So you can all hold me accountable to that la-la land dream, but that would be at the serious pinnacle of a lot of work and a lot of momentum to build this company. And that's the thing is that it does take work, it does take time, and it does take investment to build these retirement, or long-term goals and dreams. I invest every single month quite a bit of my own personal money in editing the podcast because I have decided that it's not the best use of my time. I'd rather be serving my clients, than spending a lot of time editing. It's not my gift, and it's not my love. And so I choose to outsource that. And so my goal in the short term is that I need to make enough speaking engagements to earn enough money to cover the costs of the podcast, and the advertising, and all the other things around it.

In November, I landed my first paid for speaking job, and it didn't pay a lot of money, but it was the first. And the thing about the first is that it means that, as one of my oldest friend says, the first part of any form of entrepreneurship is sell one thing to one person once for one dollar, and repeat. And that's it. You're not an entrepreneur, you're not on your path to being able to be financially free unless you sell that one thing to one person once, and repeat. And so I know that I'm starting from humble beginnings, but I have done a lot of speaking in the past just in a corporate environment. And this is something that I need to build, and it will take time, but I'll invest it. But it comes down to how badly do you want it? And that really is the key crucial factor.

There are so many times when I point people to my article on Six Ways To Make Money that's on my blog, workingwomenswealth.com. And I point them to that article, and the ways are in their line of reference, so transcribing. If you're an assistant, you can transcribe. If you're a graphic designer, there are many sites that you can offer your graphic designer services to. If you are slightly computer oriented, you can do testing on websites. But all of these things require you to start building a track record. They require you to get likes and reviews in order for other people to choose you, because we are essentially moving into an explicit world of you want validation by other people, that this person is the best transcriber, or the best website taster, or the best whatever it is. And so it takes time for people to rate and review you, and for you to build up in the search engines. So when someone says, "I want a transcriber," your name comes up first.

I've sent these things to friends, to listeners, to many different people. And often a few months later, I'll ask them, "Did you do that?" And the answer comes back, "Well, you know, I'm very tired when I get home from work. I can't wake up early. Life's very hectic," and all that kind of stuff. And the underlying issue is you don't want it badly enough. It's also timing, and I truly get that. I started at university in my (in inverted commas) "free time" once my twins were three years old. I would never have been able to have started before they were three years old, because I literally went through the first three years of twins in semi days. So I get truly that there is timing. But for many people, it's a question of how badly do you want it?

I had the great benefit this half term of being able to work from our house at the river whilst my girls are playing outside. And normally, I would not have been able to do that because I would have been corporately employed. And so for me, the ability to create second income streams that can replace your income is enormously important. It's enormously important that we all live our best lives possible, that we all do the things that make us happy. Why? Because when we're operating from a great space, we are better mothers, we are better employees, we are better wives, we are better everything. And so I urge all of you today, know that it's going to take time, but slowly build that second revenue stream. Don't find yourself in retirement with not enough money. And if possible, build a second revenue stream early enough that you can retire with your health in place to do all of the things that you love doing.

I'm Lisa Linfield, and I was hoping to ask you a favor, which was that if you enjoy these podcasts, please could you rate them and review them on iTunes? Because that helps to make sure that my show gets ranked higher, and I don't need to then pay for the advertising to make this accessible to other people out there, and I really want to teach a million women about wealth. And by just taking a few short minutes to rate it and review it, will enable me to let more people know about the work that we're doing here. Have a great week. Take care. Cheers.