Steps to Financial Freedom

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(I) Meaning of financial freedom

No matter of whether you just graduated from university or accumulated plenty of working experiences in the employment market, people nowadays are so eager to achieve financial freedom as early as possible.

What does financial freedom mean to you? Is it necessary to be rich or having a lot of money? Is it equal to retirement? Is it a dream that you cannot make it coming true?

The consequence of being financially free is that you can live the life you want without the hassles and pressure of your finances. It allows you to do what you want because you have more control of your finances. It becomes your ideal life.

To achieve financial freedom, it’s actually not necessary for you to be rich at the moment. As soon as you have enough residual income, you can live the way you want without worrying about different basic expenses.

It’s also not referring to retirement at the moment. As soon as your passive income exceeds your expenses, you can choose the kind of lifestyle that you dream for yourself and pursue your passion whereas it can bring you unlimited happiness and freedom. As everyone may come from different background, it’s not so difficult to achieve financial freedom. It’s actually not a dream if you can start your journey by following the steps to financial independence below.

(II) Steps to financial freedom

1. Save more and spend smartly

You should create habit of saving up at least one-third of your monthly income. If you pay one-third of your income to your parents, you should have two-third left. Half of it is strictly not allowed to cash out for spending whereas the remaining part of income should be wisely spent.

If you can save as much of your monthly income as possible, it can speed up the target of being financially free. If you can start saving for the future, you can invest earlier and learn to invest wisely so that the power of compounding effect is more significant.

When you’re making purchase, it should not be judged by the brand only. Instead, you should compare price, durability and functionality. By making comparison via different online portals, it would help you to judge whether the product or service is worth the cost.

When paying through credit card, you should be aware of the high interest rate for late payment. Please set alert for settling payment online especially if you hold multiple credit cards. It’s also getting popular for some new payment methods. For example, merchants intend to attract you to buy the product now and receive it immediately while paying for it at a later stage. It’s a type of installment loan and you’ll be billed to your credit card with interest and handling fee for late payment.

It would become your debt if you cannot handle it well. Please be reminded to set alert and it can avoid growing debt. Hence, please think twice before making purchase and get smarter when using your credit card rather than resulting in unnecessary burden.

2. Invest and bank wisely

When you’ve saved up some money, you should try to grow your money rather than keeping in a savings account. Before starting investment, please perform research for different types of investment products that suit you and understand the underlying risks involved.

You should diversify your investment by considering stock and investment fund purchase. For stock trading, depending on your age, you can be more aggressive for the first 20 years of employment.

After the mid of 40s, a relatively high percentage should be allocated for investment funds with low to medium risks for securing the investment return. The market is sometimes fluctuating and you should keep track of the performance and make necessary adjustment. Please be reminded to consult the investment advisor.

For banking wisely, using digital banking is very common now. In fact, you may not aware of some value-added services that can increase your efficiency. You may have performed fund transfer, bill payment and stocks purchase at mobile banking.

Some banks offer online chatting service for supporting customer enquiries conveniently. Whenever you encounter problems, you can just have text chat with the bank anytime and they can provide you answer straightly rather than giving a call or visiting the branch during office hours.

Some banks can provide video broadcasting for investment topics and market insight that you can be kept track of the latest investment market without losing the chance of capturing investment opportunity. Some banks can provide wealth planning tool so that you can set goals for different life cycles. It would facilitate you to come up with the clear planning of what’s the amount of saving and period required.

3. Earn more

To boost your monthly income, switching job is the easiest way to increase your salary. Depending on the professionalism of your post, the range of increase can be between 10% and 30%.

Employers usually do not prefer jumpy candidates whose employment period is less than one year for each post. Hence, switching job can only be considered every two years or more.

Another way to increase income is to get the industry’s qualification of your work. Depending on your job nature, the level of competence can be determined and recognized by taking some professional courses and examinations. Your efforts should be able to pay off by investing for your long-term future.

The third way to create the additional sources of your income is to take up a part-time job e.g., tutor, consultant and customer service representative. Nowadays, being a Slash is more accepted by youngsters rather than working as a permanent role at designated employer.

A Slasher can make multiple income streams simultaneously from different careers. He or she can be a freelancer of designing website, teaching drawing and being a secret shopper for a retail shop at the same time.

No matter of being a permanent staff or a Slasher, you can earn more by investing your leisure time after normal office hours. Based on the sharing of some Slashers, their monthly salary is even higher than that of their permanent job.

(III) Conclusion

Last but not the least, the preparation of achieving financial freedom may last for ten to twenty years. Hence, you’ve to be patient, disciplined and sticking to the plan of rule of saving, spending and investing.

Although you may encounter obstacles e.g., lack of planning, overspending, sudden family or medical issues, it’s still an achievable goal as soon as you remain mindful about the way you spend and save. As you’ve strong passion to build the life of your dream, you must be able to have hard work and dedication by setting yourself on the path to the ultimate goal.


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