The (Not So) Easy Journey Towards Financial Freedom

You see topics on financial independence, financial freedom and early retirement scattered all over the internet. These terms are interchangeable and all means the same thing - you no longer have to toil over work because you can now have enough passive income to cover your expenses.

Some may have the misguided thinking that to achieve financial freedom, a healthy five-figure income is necessary.

No doubt, your path there will be expedited with a higher salary, but all else equal, it does not necessarily guarantee financial freedom. Self-discipline and proper planning will help you a lot further than your earning power when it comes to financial management and securing a nest egg.

Not convinced? Just think of all those star athletes or celebrities who have earned millions of dollars but yet filed for bankruptcy. Does Mike Tyson or Elton John sound familiar?

How can this happen, you wonder. Well, many factors played a part, one such being the lifestyle. It’s a fact, people do have the tendency to increase their spending as their earnings increases. There’s no harm in increasing your expenses if you have the resources but it does affect your ability to expand your net worth and attain financial independence.

Start Planning

What you should do first would be to start thinking about your future, instead of chasing after all of today’s luxuries. This is the trap that many people fall into as there are many opportunities for spending money every day. Some get so caught up in their current lifestyle that they fail to plan for their future.

Why not enjoy today while still planning for your finances? Take some time out and start planning:

  • “I will pay off my student loans within a year”

You can achieve that by setting another goal:

  • “I will keep my expenses below $2,000 a month”

And how exactly do you do that? That’s right, more goals:

  • “Pack lunch to work”

  • “Eat out less often”

This is merely an example. Your goals could be anything you aim to achieve financially. The main point here is to start thinking, start setting and start working towards it.

Increase Cash Flow

It’s a boring topic, trust me, I know. But it is almost impossible to achieve financial freedom if you can’t commit to spending less than you earn. It doesn’t matter if you make $5,000 a month or $20,000 a month, fact is your bank account will still be empty if you don’t make the habit to save.

To get things started, you got to first understand where your money goes. When you know where your dollars are being spent, you can separate them into essential and frivolous expenses, where some of the latter can be cut out.

Once you have got that all figured out, you can begin to make some lifestyle changes. I can’t tell you for sure what lifestyle changes may mean for you, but here are some ideas to get you started:

  • Start selling unnecessary stuff you own on Carousell

  • Stop buying things that you won’t use (that’s right, I am talking about that treadmill you own at home)

  • Get that MasterChef in you going and start eating at home

  • Stop paying for retail prices when there are discounts available (think Lazada and Zalora)

As you start making little change towards your lifestyle, you may see additional savings every month. Start investing in your future and on yourself before consuming today.

Investing / Pay Off Debts

What do you do now that you have additional savings? It might be a tough call between the two since some people prefer to be debt free, while others would like to secure their nest egg. Depending on your preferences, you may choose to pay off all your debts first or speak to a financial consultant to find out how else you can better invest your money to achieve financial freedom, and yes, success.

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