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The library of essays of Proakatemia

Financial Freedom



Kirjoittanut: Aman Kumar - tiimistä SYNTRE.

Esseen tyyppi: Yksilöessee / 2 esseepistettä.
Esseen arvioitu lukuaika on 4 minuuttia.

 

Financial Freedom

 

Introduction – The meaning of independence or freedom is very wide.  Talking about financial freedom, it means that you have time to enjoy life, and time to spend with your family.  You should understand the concept of FIRE.

The meaning of independence or freedom is very wide.  As much as there was a yearning for the country’s independence while being under the Soviet Union rule, the same yearning is felt for financial freedom today.  If someone does not have financial freedom, then he may not be a slave of the Soviet Union, but he must have felt slavery even in doing a job. There is no single definition of financial freedom.  According to American financial advisor and author Susan Orman, “Financial freedom is when your mind and heart are free from the worry of – what if?”

 

In the words of Robert T. Kiyosaki, businessman and author of Rich Dad Poor Dad, “Freedom from fear is financial freedom.”  Freedom, according to celebrity life coach Tony Robbins, is “working because you want to work, not because you have to” Robert T. Kiyosaki 1997.  If we talk about financial freedom in a simple sentence, it means that you have time to enjoy life, and time to spend with your family.

Why is financial freedom important?

There are many things like increasing work stress, decreasing working life, trend of nuclear families, fast changing world, which are making life difficult.  These are some of the main reasons, due to which financial freedom becomes more important.  You should understand the concept of FIRE.  FIRE stands for Financial Independence, Retire Early.  Today this concept is becoming quite popular in the new generation.

 

This concept is becoming popular, but under this you need to keep 70% of your income in savings.  On the basis of this savings, you can retire early and withdraw money for your daily expenses.

What level of financial freedom do you want?

Before achieving financial freedom, you have to decide which level of financial freedom you want to achieve.  This freedom can be divided into 8 levels.  Out of these levels, we try to achieve any one goal or level.

 

  1. Savings and Investments – Those who spend as much as they earn, they will most likely need some funds for emergency. You must have the necessary funds with you for any emergency.  For this you can save something every month.  If you are young then starting from here can be a good strategy.
  2. Debt Relief – I have come across many people who have taken huge loans to achieve their short-term goals. Debt-free should be the priority for them and it will be the biggest financial freedom for them.
  3. Saving with ease – Rather than being more frugal (spending less), saving up to 30% for investments based on our long-term goals may be a priority for many of us. When I started my business, this was my first target for financial freedom.
  4. Work-Life Balance – For some people, maintaining a work-life balance is the key to financial freedom. You love it when you take out time for regular holidays and follow your passion or hobby.
  5. Long Vacation – Some people want to start a startup to fulfill their dream or their dream project. Or they want to go on a world tour.  Such people need a long break from their jobs and this is also financial freedom for them.  This is possible only when you have good investment and emergency fund.
  6. Small expenses after retirement – ​​Financial freedom can also be having a good amount in hand to live in a smaller city or town after retirement instead of where you are currently living.
  7. Maintaining the Speed ​​– The way life is going now, continue with the same speed even after retirement, this can also be financial freedom. You will need a good amount of funds to meet the daily expenses.  You should have a good fund to deal with any kind of bad situation.
  8. Keep On Moving – Retire with Security. Having enough money to maintain the current lifestyle. Having all goals covered, having enough money to travel somewhere, and still leaving something for the next generation is a level of financial freedom.

 

What after setting the level?

When you have set a level for yourself then the next step has to be taken. The next step is to achieve the financial plan. Have clear, achievable goals, and work to achieve them.  Don’t be intimidated by ‘financial planning’, or other heavy jargon.  Financial planning is not an intellectual aspect, rather it is practical.

 

great example of ronald reid

Morgan Housel’s book ‘The Psychology of Money’ gives excellent lessons on financial planning.  An example is good to understand this.  Ronald Reed made headlines around the world at the time of his death in 2014.  He was among 4,000 of the nearly 3 million Americans who died that year, whose net worth was more than $8 million. Reed worked at a gas station fixing cars for 25 years and mopping floors for 17 years.  The man, who once worked as a janitor, left $2 million to his stepchildren and more than $6 million to a local hospital and library.  The discipline followed by Reed to maximize savings is excellent.  He did it in good blue-chip stocks and kept patience while investing.

 

Conclustion

Here I want to emphasize on discipline regarding financial planning.  You should be disciplined about your spending and investments.  It is this discipline that assures you that you can achieve your set goals and that too within the same time frame.  That’s why it is said that financial planning is a practical aspect, which leads you to financial freedom.  Ronald got the 7th level. As we celebrate Finland’s 104th year of independence, let’s set a target level for financial freedom, and work towards it.  Let’s begin the journey of being the Ronald Reed of your life

 

References    O.Susan ,The 9 Steps to Financial Freedom,08/15/2006.

https://www.barnesandnoble.com/w/9-steps-to-financial-freedom-suze-orman/1101023202?ean=9780307345844&itm=1&usri=suze+orman+9+steps

Robert T. Kiyosaki Rich dad Vs Poor dad 1997.

https://www.nextory.fi/kirja/a-summary-of-rich-dad-poor-dad-10070095/?gclid=CjwKCAiAuaKfBhBtEiwAht6H787BbwJIOFfbHTEOZoIO_c9NAbcjD_PnjQa3T_jtVYtyWNQubQNwcRoCUy0QAvD_BwE

H.Morgan, Psychology of Money 9/8/2020.

https://www.amazon.com/Psychology-Money-Timeless-lessons-happiness/dp/0857197681

 

 

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