Are you on the right path to financial freedom?

By Randell Tiongson on May 24th, 2016


What is financial freedom? It sounds like a heavy word. In reality, financial freedom is being able to afford and do what you want, when you want it. This could be having the ability to buy material things without thinking about the cost. This could be retiring early, way before you hit sixty. This could be having the power to quit your job and pursue passion projects, be it starting a business or giving back to the community. Financial freedom sounds like a dream, but if you look around, you may know of some people living the dream, living financial freedom. Do you want to reach financial freedom as well?

Here are 5 points to determine if you are on the right path to financial freedom:

1) You don’t worry about last-minute emergencies

Car broke down? Are you feeling aches and need a trip to the doctor? Other people may hold off having car repairs and medical trips because of the expenses they will incur; however, if you have an emergency fund and even health and car insurance policies, you won’t even think twice of taking your car to the shop or having a doctor’s appointment. If you find yourself panicking during emergencies because of finances, then that’s a sign that you have money problems. If you’re on the right path to financial freedom, you find yourself having the monetary means to pay for last-minute emergencies.

2) You have a positive money mindset

There are people who balk at the idea of having credit cards or loans. “Credit is evil and should be avoided at all cost” is an exaggeration but a very true statement you may hear. It’s time to change that mentality. Credit can be good for you if you use it to your advantage. This means paying your credit card balance in full or taking out loans to set up your future, such as taking out a house loan to buy an investment property. By having a positive money mindset, you’ll learn to make money work for you.

If you want to build a positive money mindset, you can start with reading online blogs, such as mine, and educate yourself on personal finance. At present, self-education is easier than ever what with the multitude of resources available. Even when it comes to applying for a credit card or a house loan, the information and resource you need can be found through comparison websites, such as The availability of finance-related resources makes talking about money more accessible. The more you read about personal finance, the more you realize that money isn’t as scary or evil as you may have originally thought.

3) You have a healthy savings account

Do you know someone who earns so much and yet always complains about being broke? At the same time, do you have a friend who may not earn so much and yet never complains of not having enough? Between the high and the low-earner, the latter is the one closer to financial freedom. Having a large salary becomes futile if you save 0%. What happens during retirement when you’re not earning a salary anymore? To be closer to financial freedom, start with having a healthy savings account. This means saving a portion of your salary every month. It’s even better if you have a large income; this means you’ll be able to save more. Remember, you cannot invest what you do not save.

4) You know how to say ‘no’

Whether it’s saying ‘no’ to that new pair of shoes or saying ‘no’ when your friends chide you to treat them to another round, having the ability to say ‘no’ can do wonders for your finances. If you track your expenses, you will notice that the little things add up. A cup of Php 100 coffee may not seem much, but drinking one every day of the working day adds up to Php 2,200 a month, or Php 26,400 a year. By learning to say ‘no’, you’ll be able to do your finances some good. Learning how to control your impulses and building the habit will have positive effects not only when it comes to your finances but yourself as a person.

5) You’re making money while you sleep

You may find yourself raising an eyebrow. ‘Making money while I sleep? Is that even possible?’ Yes, it is, and it can be done through investing. I mentioned earlier that employees lose their primary source of income when they reach retirement. This means they won’t be earning a salary anymore, and yet, they’ll continue to spend. If you reach retirement and you have insufficient savings, how will you cover your expenses? You can start investing.

However, don’t start investing when it’s already too late, start as soon as possible. To stay on the right path to financial freedom, make you money work for you while you sleep, and this can be done through investing. You can put your money in a time deposit or a bond wherein you’ll earn interest. You can also invest in stocks, real estate, or a business wherein the value of your investment grows; however, it’s best to note that investments are not guaranteed, and you can lose money as well. This is the importance of starting as soon as possible. The earlier you start investing, the more time you have to spread your risk through the years. The longer your investment, the less riskier they become.

The road to financial freedom

The road to financial freedom is not easy but nothing worth it ever comes without hardships and difficulties. What is important is you take the first step, be it opening a bank account or saving a small percent of your monthly salary. Once you take the first step, you’ll start building the discipline and the habit to continue making smart money choices, and before you know it, you’re already financially free.

As you experience financial freedom, always remember that money is only a tool, not the end goal. Be generous and always be a blessing to others. Wealth and the ability to create wealth comes from the Lord, and it is not for our own purpose, it is for His.

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Are you on the right path to financial freedom?