Financial Freedom seems to be the buzz word ever since Robert Kiyosaki made his book series "Rich Dad Poor Dad" famous. While financial freedom has been on the minds of numerous people, not many individuals understand how to achieve it. The constant routine of getting to a 9 to 5 job is all too common.



So, what is financial freedom? There are of course many definitions in various publications describing financial freedom. Financial freedom is not wealth beyond your imagination. It is not about living in a big mansion or driving around in a flashy sports car. It is certainly not being a multi-millionaire. Financial freedom is the really dependent on the individual. It is to be free of the constant stress of paying installments, mortgages, and bills. Financial freedom is achieved when you know you no longer need to be in the rat race ? the need to work for money. Of course, you may opt to continue working (well, you define work) but working for fun and your passion. Financial freedom can be achieved even though you are driving a beat-up junk or still living in a trailer home.

So how does one achieve financial freedom? Mentioned earlier, it really depends on the individual. Your lifestyle dictates your pace. If your lifestyle expenses are high, you have 2 options.

One way is to scale down on your lifestyle through the reduction of living expenses. This is difficult for most as it involves plenty of sacrifices. Moving to a smaller house or downgrading to a smaller car is drastic but extremely effective in reducing your expenses. There challenges of course in these because you or your family may not be able to adapt. Then there is the social pressure that you will face. Unfortunately, in this materialistic world, you will likely lose your status among your peers. Whatever it is, this is a difficult route to take.

The second approach is easier to "swallow" but will take a longer time before you can achieve financial freedom. You can maintain your current lifestyle but you need to continue working. At the same time, you need to save. If you are working just to pay off your monthly bills, you need to take a long hard look at your belongings and decide to cut off items that are not necessary in your life today. As a rule of thumb, you should not be spending more than 30% of your net worth on luxury items.

Once you have done that, you should have some savings every month. Let's say you manage to put aside $1000 a month as savings. It is not much but it is a good place to start. Your saving fund should be divided into several components. As an example, you can divide your savings for investment, for rainy days, and for an item of your desire. How you allocate your savings is up to you. The lesser it is for the last component the better. Delayed gratification is a must. Sacrifice today to enjoy these desires later when you are better financially prepared.

Assuming that you maintain your expenses and your current income with some savings, you should be on the right track. To achieve financial freedom, the key is in your saving funds ? the investment portion. Choosing the right investment will determine how long it takes for you to break free from the rat race. As long as you continue to save, with steady monthly increment year on year, you cannot stray too far from achieving your goals.

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