Financial freedom anyone? Ever seen a movie where you want to be the man with the jets and Ferrari? You know like having it all like Christian Grey (from the movie Fifty Shades of Grey) or being a “Boss man” like Bobby Axelrod from (The TV show Billions)? Everybody wants to make money, fast and free without taking any risks and that’s OK. We weren’t all made to be risk takers especially when it comes to money… I’m not! Financial Freedom is the goal if you don’t want to be broke and wishing to be a movie character all your life.
The feeling of being broke in the middle of the month is all too familiar. Having to wait until the end of the month to buy something you want will make you feel restricted. The saying “Money is a good servant but a bad master” becomes more accurate when applied to real life. The over-reliance on pocket money or a salary has pushed people who need immediate cash to resort to credit cards and different forms of loans to meet these needs. This only feeds the cycle and leaves people in debt and even more dependent than before on money.
The Route to Financial Freedom
With personal finances, the goal is to gain the financial freedom to do as you please with your money and not be slaves to it. Below are proven principles needed to free yourself and gain control of your finances (whether it’s your pocket money or “free money”) on the way to freedom.
Practice Financial Awareness
To be financially aware is to take responsibility for your choices, it’s not everyday “I’m so broke and I don’t even know what I spent the money on” (just two weeks into the month). It is essential to maintain control over your finances in order to attain financial freedom. How can you do this? Firstly, figure out your expenses. What everyday purchases take the major part of your money? If you are able to determine your spending patterns, you will be able to design a working budget to fit your lifestyle.
Secondly, aim to clear out your debt. Debt places a burden on the debtor and can cause stress and embarrassment, why not just clear out your debt – as slowly as your budget will allow- and experience that freedom that comes with knowing all the money you currently have belongs to you. After we have clearing out your debt, in order to not return to that situation, especially when it is a debt for liabilities, it is important to live below your means. Spend less than you earn.
Pay Yourself First
This means to make sure that each time you get your pocket money, salary or gains from your small business, you are first going to take a part of it and put into something that helps you grow financially whether it is reinvesting into your business or saving for the rainy day. This could come in the form of a savings account, investing in stocks/securities, money market etc. in order to help make this easier, it is advised to set up a direct debit or a standing order to your main account and a savings account where money is paid to the latter on the same day you receive your wages.
Be an Investor and Not Just a Consumer
This could also fall into underpaying yourself first. Savings are great and all but we all know the interest rates on them are crazy low, so if you are really serious about growing your money, you should get into investing. Knowing that you should invest/buy assets is one thing, but actually knowing which instruments to invest in is a whole different ball game. It is necessary to understand the various markets available for investments, it is also important to understand your attitude towards risk – whether you are risk-averse or a risk taker- and match your portfolio to that attitude.
As mentioned earlier, knowledge of the various types of investment instruments can be daunting to someone who has never been involved in such a thing but thankfully there are various tools to help with that. You see, investing isn’t all about buying stocks and losing money like you see in movies and TV shows, it is way broader than that and easy to understand too. The market can accommodate and cater for your needs. Whether you are a risk taker or not, whether you have millions or not. It’s just like going to the market to buy food stuff. But if you cannot handle this, please seek professional help from verified financial and investment experts.
Becoming an investor as opposed to constantly spending your money buying things that lose value quickly is one of the keys to earning passive income which ultimately leads to financial freedom. We will share more about this in the next article.
About The Writer
Benedicta Omoruyi is a professional security and investment officer(CIS), marketer and technical evangelist for InfoWARE Limited. She is a fierce writer, content creator, investment enthusiast and advocate, and an all round creative female.