We all want financial freedom, but how many have got it? Financial Freedom has little to do with how much you earn as salary. It is in your ability to spend wisely, invest and stay off debts.
Sadly, because the cost of living is so high, it is next to impossible to save or invest a substantial portion of your earnings. Over the years, most Nigerians have become financially dependent or stuck with so much debt. Interestingly, some of these people earn good pays, but still do not have enough left at the end of each month.
If you are currently struggling with being financially free, the following tips would help:
1. Set financial goals
Clearly define and prioritize your financial goals both in the near term and long-term. Setting such goals will help in establishing the structures needed for achieving them. Remember, your investment horizons should match the timing of your goals.
Set a monthly budget –track your daily transaction, monitor your goal progress and also your spending habits.
2. Save. Save. Save
Save as much and often as you can. Avoid impulsive buying –don’t buy anything you actually don’t need. For instance, instead of expensive branded things, you can still manage with cheaper brands. Remember, no one gets killed for not owning an iPhone.
See what you need to cut off. Plan your expenditures, and include everything, food, rent, clothes, party, trips, vacations, and medical bills.
Everyone keeps saying it’s not safe to put all your eggs in one basket, but what’s more risky is putting your eggs in the wrong basket. It is essential to know your risk-taking capacity and risk tolerance. Knowing this will help you invest in financial opportunities that aptly suit your profile.
Invest with successful investors, advisors, money managers, business owners, and even buying something on sale for your own use at a later time. You can also buy shares of successful investment funds.
4. Form an emergency fund
Life can be unpredictable. So, putting aside some money as emergency fund will help tackle the rainy days. Your emergency funds should be liquid. An adequate emergency fund depends largely on a person’s financial worth. However, many advisors recommend emergency funds to be at least worth your 6 months salary.
The first thing to do, is make a decision on how much fund to create and then make a plan to save for it.
5. Get a life insurance
Only a small percentage of the insurable population in Nigeria is insured. People generally do not see the importance of life insurance. What more, Nigerians are generally superstitious — they easily assume that they are too young or healthy to die.
Ideally, a person should have a life insurance which is worth 20 times their present salary. This would help ensure that their family is taken care of , should they become financially unstable.
Are you currently struggling financially? We bet this article helped. Share your thoughts in the comments section!