I always understood the power of financial freedom, that I never have to give up a desire for an exotic vacation, exciting adventure or simply a piece of fashion or relaxing spa treatment, desire for a sports car, fancy games.., and all this on an average income. Sure there are limits (although more physical than mental) but I’m talking about that spiritual freedom that you have by knowing where and when you’ll have something you want.
Financial Freedom – But How?
How did so many people including myself achieve financial freedom? How could I possibly do it, you ask? Well, it’s not that hard, really. What you need is a little bit of discipline, a clear financial plan and follow thru.
Routinely save money
Automatically put money aside, or deposit 20% your paycheck to your saving account, or even save as little as $1 a day. The key here is that you do save money on a consistent basis. We all spend little amounts here and and there every day, be it for a cup of coffee or some sweets, so it should be easy to put a little away without breaking our pocket. Before you know it, you will have saved a sizable chunk of money in no time.
Manage your money
Manage the money that you already have by open an online trading account for stock equities, options and/or bonds. But before you invest make sure you understand the risks and rewards that are inherent with stock investments. Buying government bonds or treasuries might be a safer bet to start off. How to make money in stocks is one of the best books to learn how to properly by stocks and it costs less than 10 bucks. Do yourself the favor and read it before investing.
Save for retirement
Contribute part of your paycheck to a company matched 401k or Roth IRA. If your company matches 25% or more, go for the max. If it does not offer a 401k investment plan, you may set money aside by investing with an IRA or Roth IRA. The main difference between the two are tax deferred investing. With the regular IRA, you’ll pay taxes at retirement age as opposed to Roth IRA, where you invest your pre-taxed money and no taxes are paid during retirement.
Diversify your investments
Nothing is more detrimental than observing your investment loose value, because one invested all their assets in one stock. Bad earnings, negative news or just a rumor can send a stock spiraling out of control. By putting extra money into a foreign CD account or buying some Gold or Silver, you stand a better chance of not getting hurt during the next market correction or outright recession. Often one type of investment does well when another suffers. For example, Bonds do well when stocks are in flux, gold shines during inflation elevated times.
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