The Road to Financial Freedom – How will you get there?
What would you do if you didn’t have to look at the price tag because you have financial freedom? What would you do if you were in the situation where you could buy whatever you want, help people when they need help, and go to places that you had not seen or have enjoyed in the past without any worry of finances.
That is the dream that a lot of people including myself strive for. So why is that it is often the case that many of us don’t reach to the dream?
Is it because we have not got what it takes? Do we lack the knowledge? Is society against us or is just that you don’t get on well at work and you are not climbing that corporate ladder?
I believe that often it starts with your finances and how you manage them.
Firstly, if you dream of financial independence you need to understand your current situation to see where the gaps are.
Remove unhealthy debt and have a systematic approach to how you save this will enable you to build wealth and have money to invest, the best system that I have come across is to split your income in the following way
Money for necessities 55%
Funds for Learning 10%
Funds for Entertainment 10%
Long term savings to spend 10%
Funds for Investment 10%
Give away/charity 5%
Money for Necessities
To gain the financial freedom you will of course have to budget your spending so that you can enable yourself to split your income into the above amounts. If you find that your living expenses are more than 55% of your earnings then you will need to find ways to reduce this down.
Find ways to remove unnecessary spend by removing subscriptions to things that you no longer need, for example Netflix, Prime, Canva, Apps.
You may also look at your grocery list, you should try to remove all those extras like chocolates and crisps or try shopping with shop brand products, as they are often cheaper but made by the same companies that produce the premium products.
Ultimately you need to cut this down and pay off debts so that you can be at the 55% level for all living requirements.
Funds for Learning
Learning keeps your mind engaged and body active and supports the journey to financial freedom. It helps you get new and knowledge-based perspectives on the world around you. It helps you gain new experiences, trains your brain to handle a wide range of challenges, and keeps your neural pathways active. All these factors combine to keep you healthy.
A new door of opportunity will always open for you. New streams of income are very important, especially now that most economies of the world are facing financial hardships. It’s also important to earn extra money to save income for retirement. It increases your adaptability, notes that the willingness to learn new skills increases your confidence and nurtures a growth mindset. That helps you grow as a person and a professional.
Learning increases your likability, knowing something that other people don’t help you to relate better with your colleagues at work. It also helps you gain respect and admiration among your peers. Professional development makes you relevant even when new graduates join your profession.
You need to keep up to date with technological changes otherwise your employer will replace you at the first chance they get. Note that the labour market is constantly changing, the economy keeps evolving, and technological advances are sweeping through all sectors of the economy.
These days, expanding your knowledge and skill base is more requirement than choice. If you don’t know what to study or which learning opportunities are at your disposal, try looking into the things you’re curious about.
Ask yourself, “What have I been interested in or passionate about since childhood?” Answer that and you’ll discover the learning journey you should pursue.
Funds for Entertainment
We should not forget to enjoy ourselves. If we stayed in the house and never went out or did the things that we enjoy the most and only saved all the money we could we would have a pretty boring time and would probably not maintain the status quo for long before falling back into a world without saving.
Keep 10% of your income for entertainment. This includes holidays, date night, going to the cinema, eating out and just doing things you enjoy. You will feel a sense that it’s not all work. Work and save and make the process a whole lot more enjoyable.
Long term savings to spend
on the way to financial freedom, we still need things to buy so should consider saving for that purpose.
Funds to save long term but also spend is so that we can replace the car when it breaks down without getting a loan, or it could be for that new television or laptop that you have always wanted. This way when you save rather than get items on credit, you will not be paying off loans with expensive APR attached to them.
Give away and Charity
If you have a safe, clean space to sleep at night, access to electricity and clean water, food on the table each day, clothing in decent condition, and a means of affordable transportation to earn an income, you are already better off than many others around the world.
Give something back, when we are willing to let go of what we claim as “ours” we open ourselves up to the realization that nothing in this life is truly ours. We entered this world with nothing, and we will leave with nothing. We are really just stewards of everything we think we “own” in this life.
It can be difficult to open our hands and hearts and freely give away what we’ve worked so hard to earn. But if you are closed off to helping others, how will you honour the help you received throughout your life? How will you be open to receiving when the need arises?
Funds for Investment
Finally, you need to save and invest. This is the key to financial freedom, without which you will not be able to reach the dream of not worrying about money.
The money that you put into this pot will be what you save for investing and growing your wealth. You may want to invest in long term shares, property, residual income sources or network marketing.
The most important thing is that you leverage your investment to grow your wealth.
Conclusion
If you don’t start now you never will so take the first step and assess your finances.
Set meaningful goals and stick to them.
Start saving your money and look for ways to reduce your spending
Build your wealth and grow it wisely
Dream big and believe you can do it.