Probability and financial success intertwines. In a mathematical sense, life is a probability function. The probability of an outcome increases or decreases base on your actions. As such, when you see someone achieving success, it is important to understand that luck had little to nothing to do with it. It is all a probability function and that individual may have taken requisite action to increase their probability of achieving that success. There is also a very low chance, but a chance nonetheless, that such an individual did absolutely nothing and achieved this success.
This reality does not take away from the fact that others may have helped this individual to achieve his goals. Those who aided the individual played a role in increasing the individual’s probability of achieving their goals. In the same vain, the individual achieving the success may have taken action to be around those individuals who aided him in achieving the success achieved. Again, this could be summed up as taking action to increase the chances of success – putting yourself in position to take advantage of opportunities.
The Lottery
Let us look at the example of winning the lottery. We all have a chance of winning the lottery. There is a probability of winning even if we do not actively go out and purchase a lottery ticket. The probability is very low of course. But, you can theoretically win the lottery without buying a lottery ticket. Consider the fact that you may find a lottery ticket on the side of the street that happens to be the lucky numbers. You may also be gifted a winning ticket.
Note, the probability of any of the above two scenarios happening is very low. We must accept the fact that the odds that you will win the lottery without purchasing a lottery ticket is infinitesimally small, however, you still have a chance.
Now, suppose you buy 1 lottery ticket, the probability of you winning the lottery will now increase substantially. Your odds of winning will be 1 in 292,201,338. If you would like to increase these odds further, you can purchase a second ticket to now have an odds of 2 in 292,201,338.
The Financial Game
The financial game is the same. We are all born with a probability of having financial independence. If you born into a wealthy family, you may have a higher probability of this result than someone born in poverty. However, there is a probability that those born wealthy may end in poverty and those born in poverty may end in wealth. Every action you take increases or decreases your probability of getting a result.
What Can You Do To Increase Your Probability?
To increase your probability of financial independence, I have a secret. Ready, it is the same boring list that you have heard before, live below your means, save, invest, and repeat.
Your probability of living below your means is increased by having a higher salary, maximizing your time and spending less. How do you increase your probability of having a higher salary? You gain an education, you start a business, you invest. How do you spend less? You cut unnecessary expensive and limit debt.
The same two factors (living below your means and spending less) will also increase your probability of saving and investing. The more you save, the more you will have to invest. It is a feedforward cycle. This is also the reason the rich gets richer.
The second you begin to take action in this regard, your probability of financial independence increases. On the other hand, the opposite is true. Earning less and spending more will undoubtably decrease your odds of living below your means, saving and investing. These actions will undoubtably decrease your odds of financial independence and stability.
Action Plan
If you want to have a financially secured life, there are steps you can take to increase your probability of achieving that result. Live below your means, save, invest, and repeat. Take steps to increase your chance of financial independence.
Conclusion
Probability and financial success intertwines. In a mathematical sense, life is a probability function. The probability of an outcome increases or decreases base on your actions. As such, when you see someone achieving success, it is important to understand that luck had little to nothing to do with it. It is all a probability function and that individual may have taken requisite action to increase their probability of achieving that success. Journey to financial independence by taking simple steps that increases your probability of financial success.
Follow me on Twitter @JoToFI_com
Follow me on Instagram @JoToFI_com