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Managing Money a Path to Financial Freedom
Finance
2 years ago

No matter what people think about when it comes to financial independence, attaining it is not a matter of luck. Financial independence has to do with living a life free from financial worries. Each and every one has the possibility of living a life free from financial worries if they should just do what should be done and at the right time. In life so many people do measure their success with the amount of material wealth they possess. Another way they do measure their success is if they actually go to the places they dream of and do what they want. Whether dressing in very expensive clothes together with its accompanying accessories or possess houses together with expensive cars and the latest electronic gadgets. For them after possessing all these and even more, then by definition they have actually made it in life. After all they would just be the envy of all their friends and neighbours for crossing the goal line of this modern life. In short financial independence has very little to do with owning lots of material things but does have all to do with what you did keep aside after buying and owning all that. Accumulating material goods and lots of experiences is not the real financial goal line of life for the real financial goal line of life has to do with building enough wealth so as to enable financial independence. That is to say the measure of success does not have to do with how much money you spend but has to do with how much money you retain.

The truth is when someone retains enough money, the income they do get from all their financial investments does produce enough money which can meet their present and future needs. By so doing they free themselves from financial worries reaching a stage where they no longer need to work to support themselves but just sit back and allow their money work for them.  Not to forget is the fact that you don’t need to work for money but can actually decide to make money work for you while you sit back to enjoy its outputs. What a wonderful concept, whenever this does happens then you have attained what is referred to as financial independence. It should be noted that financial independence does enable you to live your life just the way you chose to and think best. Once you attain financial independence, you can work if you just desire to not actually because you need to. After attaining financial freedom, your life becomes enjoyable as you are free to make your decisions without any financial barrier stopping you from doing so. You can decide to pursue interest, education, growth and travel to enjoy the nature.

Financial independence is the only thing that can enable you to discover what actually lies beyond the blind acquisition of the material goods. If you allow yourself to be wrapped up in pursuing material things and the struggle to putting food at table all the time, you shall miss the wonderful rewards which life has reserved. Financial independence is within the reach of anyone via some few and simple steps together with simple rules to be adopted. Once you succeed in attaining financial independence which is something possible to do, you are free from the daily struggle of trying to stay out of bills, providing shelter together with food. In fact you shall be free from all the past financial worries you use to have. True financial independence refers to the situation where your investments do produce income through earnings that are actually greater than your current and future financial needs. It should be noted that financial freedom is not measured by a number of objects that you gather for yourself neither the so many life experiences which you take part. Most of all those who are financially independent live just moderate lives, there by driving cars and living in homes that would not obviously be rated as rich. So many people think when it comes to be rich is by how much money you can spend. To be noted is the fact that spending is a very poor measure of financial independence. So many people who pass their lives spending around through the possession of many houses,expensive cars and very expensive clothes are in debts up to their foreheads.

Some rules of financial independence

Spend wisely and save the rest

Spending less than you actually earn is the first rule to be learned and practised when it comes to money, wealth and financial independence. Generally disposable income is always produced whenever you spend less than you earn. This disposable income should be saved, for this is what anyone wishing to achieve financial independence should be doing. Trace out all the things you spend much on as this would assist you in being aware your expenditures and as a result help you take better measures to reduce spending.

Use debt wisely

Today so many people just feel better about themselves if they possess many credit cards with high limits. It just makes you feel in a pretty good way receiving a piece of plastic passing on the information you are worthy of 20 000 dollars credit limit. That’s just pretty good for someone actually giving you a blank for 20 000 dollars. They believe in one and more to that you can just buy what you want. Not very long another one follows up in the mail and before you realise you are buying and making lots of spending that marks you as somebody. That is purchasing the right music, right clothes and the right everything. At the end when you start getting the bills, it is notice that even as you do make the minimum payments, the amount you do owe seems to remain stagnant and not going down. This is because you had never really paid much attention in analysing the interest rate, for it is at this time that you start realising that 18% interest  is really too high, but it is already too late. Because the bills are just too high, you decide not to even open them up thereby allowing them to pile up or even start carrying out payment on one card by making use of the other. As a result you keep on moving into the hole further and further till a day you try buying something and the card is refused. The truth is once you dig such a deep hole and get in to it, it can take so many years to take self out of such a hole. Actually to use your credit smartly is one of the ways in achieving financial independence. Some of the ways of using credit smartly are as follows;

  • Sort out your credit card bills just every month.
  • Use the credit card to buy things that last very much longer than it takes to actually pay them off, for example a refrigerator. A bad example is using the credit card so often for restaurant meals.

Your credit rating is your most valuable financial asset

Generally credit rating helps to track your use and misuse of money. Possessing a bad credit rating does guarantees that money in all its forms will obviously costs you just more than people possessing good credit ratings. By this, it means you would have to pay higher interest rates for car loans, credit cards together with home mortgages. It is just so often difficult for someone having a bad credit rating to rent or own a shelter. The following steps can be used to get out of a bad credit rating;

  • Just start by spending less than you earn.
  • Asked to be given a copy of your credit report from all the agencies and make sure through thorough verification that all the information found on it is correct.
  • Write a letter of confirmation to all the agencies on the amount you owe them.
  • Just cut up all cards but one, if possible the one you have stayed for a longer time with.

Financial freedom whereby financial refers to the science of managing money and freedom referring to a state of being free characterised by the following;

  • The absence of constraint in choice, coercion and the absence of necessity
  • Independence or free from another’s power
  • Actually released from something onerous.

Financial freedom means you are actually having the ability of managing your money in a way that you have sufficient and enough funds to live your chosen and desired lifestyle without assistance from others. In other words financial freedom means you have possess enough money to meet all your present and future needs whether you do physical works or not. To be noted and taken serious is the fact that the above definition does not mention any specific amount of money nor does it mention the symbols of having money that so many people do attach to financial freedom. To so many people financial freedom might just mean possessing expensive cars together with lots of mansions. To other people financial freedom might just mean never having to worry about bills again knowing well fully that they shall have a comfortable home, enough free time together with resources to enjoy their interests alongside their hobbies. For some other people simply having enough income so that their spouse can remain home and take care of their children is financial freedom. Some steps to consider so as to be financial free;

Taking stock

It is always important to determine a starting point before embarking on any new adventure. So just make a thorough picture of your current financial situation for knowing and understanding your present financial situation is a major step in moving to financial freedom.

Goal setting

Goal setting is very important when it comes to moving in to financial freedom. So goal setting should just come before creating any spending and saving plan as this reinforces your determination in moving to financial freedom. Goal setting does reflect your personal values thereby providing direction for planning. Goal setting would actually help you in balancing your needs and wants. Goal setting will help you overcome the obstacles on the way to achieving financial freedom without which you might be possibly discouraged on the way. Understanding the difference between a dream and a goal is of great importance. Saying you want to live a very good and comfortable retirement is a dream but if you should fixe a certain amount to obtain before retirement in a fixed amount of years and that the amount shall last for a certain amount of years you fix then you have set a goal to achieve. A good goal should have the following characteristics;

  • A good goal should be specific, that is let the goal possess a given time of realisation together with an associated quantity to be achieved during this fixed time.
  • A good goal should be measurable, that is you should be able to monitor your progress in a way that makes sense to you.
  • A good goal should be reasonable and realistic.

Saving to achieve

In other to move to financial freedom, make saving part of your budget. Just see on spending much little than you earn so as to save significant amounts. In moving to financial freedom it is advisable to start an emergency saving account.

Invest in your future

After having your emergency account founded, you begin to diversify your savings through different types of investments you judge good and secure. At this point in time, you can just decide to invest directly on stocks and bonds. You could also possibly invest in mutual funds as well as you could just prefer keeping your money in cash.

Most of today’s different jobs do provide free time which workers could exploit in earning extra income if they desire to. One of the ways in earning extra income is through E-Commerce through the following ways;

  • Anyone can make extra income through affiliate marketing
  • With a little bit of coding experience, anyone can earn extra income through Mobile apps
  • Anyone can purchase goods and resell them to other buyers through EBay Reselling during their free times
  • Anyone can gain extra income by designing Word Press themes during their free times to sell to other webmasters.
  • With a little experience in accounting you can just start your own financial planning consultancy online so as to earn extra income.