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You might already have come across several articles on how to become financially independent. Some will tell you to invest on things which will mostly and unfortunately lead you to financial downfall.

Why? It is because most of us, if not all will just jump into ventures we are really not so knowledgeable about just because of the very promising return on investment. Worst of all, scam investments are very rampant online. Promising you a triple-double return which are oftentimes too good to be true.

Before we dig into this, let us define first financial independence: Financial Independence simply means being able to pay your expenses and live comfortably without relying on being employed or support from others.

So how can we be financially independent considering that not all of us has any background or in-depth knowledge on business and economy? There is only one answer to that question.

Never spend more than what you can earn. We are so used to “Earning – Expenses= Savings” which is totally wrong. In order for you to be able to save, the equation you should strictly follow is “Earning- 20% Savings = Expenses”.

Through this equation, we can make sure that we will only be living within our means. This will prevent you from having multiple debts which in the long run, you will not be able to settle plus you will have the money for emergency purposes. Many would say that it is too hard to squeeze your budget but what we didn’t realize is that we are buying things which we don’t necessarily need.

Smartphones for example, unnecessary trips, and shopping during mall sales. We don’t need to frequently replace our phones if it is still working properly just for the sake of following the trend.

Always remember, that a “SALE” only entails buying what you don’t need for a price you can’t resist. We can always control how much we spend. What we can’t control most of the time is how much we would earn especially if we are only dependent on our salary.

From that savings, you can apportion 10% of it for investment. You can start by investing in VULs (Variable Insurance Life), Bonds, Mutual Funds or Universal Investment Trust Funds (UITFs) wherein the financial institution or insurance company will be the one who is going to trade your money in stock market. Aside from a bigger return that this could offer than merely saving at the bank, some of this investments comes with life insurance that your family or beneficiary can get in case of your sudden demise. For some who are conservative when it comes to investing their hard earned money, there are still other investments with lower risk.

One is investing in yourself. Get a higher degree so you can have that promotion you have been eyeing for or simply open a small business such as franchising which will only require you to spend a small capital to start up your business.

Financial Independence is actually not that hard to attain if we have self-discipline and if we are really committed to it. Lastly, never live a life you can’t afford.

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