When considering a career move or intending to buy a property, people will highlight money as a main determinant factor in the final decision. The usual answer is “Money Not Enough” for wanting to switch to a higher paying job or for the latter, the high purchasing cost and financial mortgage burden may deter most people from making the purchase.
Have money means peace of mind for most working class people, especially those with family to support. They could afford for basic necessities and a few luxuries like eating out in a restaurant once in a while.
If money is really tight, you might be worried about how many months you could pay the bills if you lost your job.
Later in life, the money thoughts that keep you up at night might center around paying for your kids to go to college or having enough money to retire.
Money gives you freedom and choices. You can decide where and how you want to live when you have a good income or financial resources. On the other hand, when you do not have much money, choice may be something that you cannot afford.
When discussing about building financial wealth, three financial phrases usually pop up, namely, 1) financial security, 2) financial independence and 3) financial freedom. Though these financial terms sounded the same, they have different connotation meanings.
- Financial security refers to the peace of mind you feel when your regular income is enough to cover your expenses, month to month. It also means that you have enough money saved to cover emergencies and your future financial goals.
2. Financial independence means you have enough wealth to live on without working. Financially independent people have assets that generate income (cash flow) that is at least equal to their expenses.
3. Financial freedom is the ability to pay for your lifestyle throughout the rest of your life without relying on a regular salary or wage. The money usually come from your “retirement savings and annuities” and investment portfolio income streams. The financial freedom is also characterized by a lack of debt.
There are really three steps to build wealth. Most people only think in terms of one or two steps. Here are the 3 steps you need to do.
1. Create your wealth
2. Grow your wealth
3. Preserve your wealth
For employees, the road to financial freedom will take tens of years with regular savings and long term investments. If you start working at age 25 and retire at age 55, you will work for 30 years. But you also have another good 30 years of life after retirement. Unfortunately, this may not be a reliable strategy in view that you may change six or more jobs in your entire mature working life and there is no guarantee that you have enough money/investment fund to finance your retirement years by then.
The fact is, the rich people in the world have figured out that you cannot build your wealth by savings and the money has to grow experientially. That is why 20% of the rich in the world still own 80% of the wealth.
It is essential for you to start on the right path towards financial freedom.
- You should consider start your financial freedom life today.
- You have to design a non-linear wealth building process. If you have no clue of building this wealth generating portfolio, start to educate yourself in financial literacy and learn the neccessary skill to create one that meets your needs.
- You have to create, grow and preserve your wealth.
The secret of having a financial freedom life you want is to convert your wealth from item 2) to Income Generating Assets (IGAs). High dividend stocks, investment property or REITs are good examples of IGAs.
Bon Voyage, Financial Freedom!