Steps to Financial Freedom

February 26, 2014

It is undeniable that majority of us struggle in handling finances.  What we are not aware of is that we  lack discipline, and lack of know-how on managing money. We spent our money extravagantly like a one-day-millionaire. And at the end of the day, we kept wondering where our money had gone to. Well, I'm not exempted to this situation. During my 20s, when I started earning,  I'd been a slightly compulsive buyer.  I couldn't help but buy the things I wanted - it could be clothes,  sandals, or other useless stuff. My friends thought I was stingy, but  I was not.  I realized I had a tiny amount in my bank account after I resigned from work. I should have then a 6-figure savings.

I remembered, when a close friend of mine shared this equation:  Salary - Savings = Expenses. Simple equation yet has great impact on my life. What does this equation mean?  It means that the moment you receive your salary, you set aside right away your savings. The amount left will go to whatever your expenses. This has started to "shift  my paradigm" on financial management. Before, what had been instilled in my mind was that I was not capable of saving money because my salary was small; my resources was limited. But now, I have changed. I am now becoming more financial literate.

What I am talking right now is all about financial freedom.  What is financial freedom?  For me, financial freedom means debt-free, worry-free related to money concerns, and I can do whatever I want without being limited by money resources.

My husband and I are now working very hard to attain financial freedom. Here are our true-to-life story tips:

1.      We set Financial Goals. We create specific goals to attain.

Ex.  At the end of 5-10 years, we will be able to:

*Fully pay our house
*Establish enough emergency funds
*Acquire more insurance plans – health, death, memorial, etc.
*Save more money in the bank
*Renovate our house
*Invest in the stock market

2.      We keep our outdated phones

We can’t deny the fact that  phone nowadays is a very essential gadget as means of communication to our loved ones, friends, business partners, among others. But keeping upgrading your gadget  from iPhone 2 to iPhone 3, or availing monthly postpaid plans for no reason,  is not financial wise.  Don’t try to impress others.

3.    No to “Credit Cards”

For us, it’s a very wrong idea to avail “Credit Cards”.  Bringing  credit cards along with you when you go grocery-shopping could tempt you to pick up anything and right away swipe credit card for unplanned purchase. 

4.      We live below our means.

We see to it that we don't spend beyond our income. For instance, if we earn 300 pesos per day, we don't spend more than that. 

5.     Budget! Budget! Budget!

When going to grocery, I've always brought a shopping list along with me to avoid picking up anything. We used to buy groceries in bulk for it is much cheaper than buying piece by piece.  If we have to run errands, we will do everything at once - pay the bills, grocery, stroll with the family, etc. This way we can save gas and money. 

6.      We earn extra money.

If there are opportunities like side jobs, then we grab them right away. 

 7. We invest, invest, and invest.

We plan our retirement. We invest money in the stock market aside from what we used to have like SSS, Pag-Ibig, Insurance, etc.  We should keep in mind that we are not strong and healthy for a lifetime. Our body depreciates too like cellphone and car. So it is just right to invest for our future. 

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