When you are in a financial rut, you may start many of your sentences saying, ‘If I only earned more I would…. However, it is worth noting that financial freedom has nothing to do with the amount that you earn, or your potential to earn more. Instead, you need to look at what it is that you have, and how you can build on that. In addition, you also need to have a clear definition of what financial freedom is, versus what you think it is.
You may believe that financial freedom and wealth are the same thing. This could be that you have more money than you actually need, and could buy whatever you want, whenever you want. Financial freedom is a journey, where you acquire skills to put money aside so that you have enough to maintain the lifestyle of your choice. This should be possible even when you do not have a monthly paycheck that you can depend on. When you are living paycheck to paycheck, earning more may be your solution to get financial freedom. If you have no control of your spending, you will soon discover that even with more earnings, the script of your finances will remain the same.
Going through the Journey
Look at your finances as they are now. It is likely that you spend your entire paycheck on paying bills, and then on maintaining a certain lifestyle. If you were to lose your paycheck, you would be in dire straits and within a few months if you have some savings, you may find that you are struggling to survive. The first step of your journey to financial freedom is to spend less than what you earn and put the rest of the money into savings. Then you need to put your savings to work, so that they create their own stream of income. How you do this is up to you, but you should do some research and discover what the options are.
The next leg of the journey is working towards your savings, and the income they generate, exceeding your monthly paycheck and covering all of your expenses. At this point, it becomes possible for you to start focusing on creating a better life for yourself, by spending your time and energy on something that is much more meaningful. The fact is, by now you have mastered your way to making your money grow and are at the tails of financial freedom.
The final part of the journey is when you have more income that your expenses, and that income is sustainable with minimal effort. This is the point everyone is looking to achieve, and it is a challenging point to get to. It is worth remembering that this is not an automatic point one can reach, instead, it requires a lot of hard work to get there. It is not about how much that you earn, it is more how much you put away. This will mean making sacrifices, and at the end, you will be glad that they all pay off.
Quick Starting Tips
With your current salary, you can attain financial freedom by trying the following: –
- Cutting down your monthly expenses by choosing cheaper options.
- Increase your savings, even if it is a few cents each week until you can put away larger amounts.
- Increase your income by starting a small business that can give you a little income. It will have all the potential to grow with time.
In response to the first question, No, earning more does not lead to financial freedom. Good money habits are the solution.