Setting Yourself Free: A Guide to Financial Freedom

As Filipinos abroad, our dream is always to give our family comfortable life.

 

We aim to earn a huge income enough to send our children to school, send money to relatives, save for our family’s future and achieve financial freedom.

 

Freedom. Wouldn’t it be nice to finally be free financially?

 

You might think that this is hard to achieve unless you are in a really good occupation or maybe a CEO but do not fret, financial experts spilled the beans on how to have reach your dreams.

 

9 Steps to Freedom:

 

Family Discussion

 

Every big decision in the family should be discussed between you and your spouse especially if you expect your spouse to take part in the whole plan.

 

Talk about how you view money, what your goals are financially and what you plan to do to achieve them. Listen to your spouse’s view as well. It may be that your partner’s views are opposite yours. If this happen, you need to meet somewhere where you are both comfortable – without discussion and compromise, it would be very hard to set a financial goal.

 

Financial Worth

 

To your spouse you may be worth more than any riches in the world but we all know that is just being romantic.

 

Have an honest look at how much you and your partner earn, your assets and your liabilities. Remember that houses and cars that are not fully paid yet should not be considered as an asset.

 

Once you are aware of your financial worth, it would give you a sense of how much farther or closer you are from your vision.

 

The Good Old Budgeting

 

We hear the word budget a lot of times even when we are still younger so by now we should know how to do that right?

 

Still for some creating a budget is one thing and keeping to it is another. Here are some things that may help you:

 
  • Keep a written monthly budget.

  • Categorise your expenses as needs, wants and likes. Needs are things that are absolutely necessary like food, water, house rent/mortgage, school tuition etc. On the other hand, wants are things that you may not need but they may be nice to have.

     

    Likes are things that you do not really need but may be these are things you aspire to have.

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  • Prioritise your expenses and cut those that you do not need as much.

  • Assign each money you earn for a certain expense – to the last centavo as much as possible. Do this at the beginning of each month.

  • Synergise. Include everyone in your household to commit to the budget. Besides, even your children can benefit to learn about money.

  • Adjust. Be kind to yourself and give room for some adjustments. It will not be that easy to control where your money goes especially if you slashed some things that you are used to having.

  • Save for a safety net, just in case something happens to you or your main source of income, you have something to fall back on. Save at least 3 month’s worth of your salary and put it in a separate account so you would not be tempted to touch it for other occasions other than this kind of emergency.

 

Money Detective

 

Track where your money goes. Keep a small notebook that will serve as your expense journal – list even the smallest amount because an accumulated amount of these small things may actually be a big chunk off your budget.

 

There are also websites and apps available to help you keep your expenses and your budget on track. Just make sure it is a safe web portal or a trusted brand; better be safe from those bank account thieves than sorry.

 

Minimalist Queen

 

While planning the budget and tracking expenses you may have stumbled upon some things that really swallow a huge chunk of your income.

 

Rethink about these items; do you really need to pay for them? Is there a better option?

 

In addition, are there things in your house that you do not have use for anymore? Maybe it is time to sell them and earn a little more from them.

 

Set Your Goal

 

Now, you are really ready to begin setting goals to achieve your vision. One of those is to be debt free or to save enough money for retirement.

 

American Financial Author, Dave Ramsey suggest following the 7 Baby Steps: Take Control of Your Money One Step at a Time

 

The 7 steps that you should follow (progressing in order as quickly as possible) are:

 
  1. $1,000 to Start an Emergency Fund

  2. Pay Off All Debt but the House

  3. 3- 6 Months of Expenses in Savings

  4. Invest 15% of Household Income Into Retirement

  5. College Funding for Children

  6. Pay Off Home Early

  7. Build Wealth and Give

To achieve this you have to set a date for each step and devise a plan so you can progress faster.

 

Insurance and Taxes

 

Research for and buy a comprehensive plan if you can. Protect yourself and your family more for unexpected events.

 

Look for coverage that will most benefit your entire family especially if you have children under 10 years old.

 

Additionally, know how your tax work and find out if things are computed properly and adjusted against your current income and status (single or married). Contact a certified accountant to help you out.

 

Invest Wisely

 

Financial experts often advise to look for sound investments and to study your options before investing.

 

Research online about different ways to invest your money or read:

 

Your Different Investment Options in the Philippines.

 

In addition, be wary of scams that plague Filipinos who want to invest. Experts advise that if the investment company promises a huge interest in a short period of time, it is probably not a legitimate investment.

 

You may also want to read: Why Filipino Families Continue to Fall Victims to Investment Scams.

 

Think of this as a way to pay yourself in the future for all the sacrifices you are making now.

 

Good Samaritan

 

Lastly, accumulating wealth is not all about saving for yourself and your family.   Sometimes, giving to others make all the difference. It does not only attract good karma, it also gives us perspective of other people’s conditions. The more we give, the more we become grateful for the things we have.

 

Aim for financial freedom now and make that first step today.

 

Cheers to a happier future ahead!

  Special thanks to Silliman University Community Cooperative for the main image.
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