It is vital to understand the true meaning of financial freedom.
Many a times I come across people who aim to have six figure salaries or to become millionaires and the reason for their desire for such wealth is for "financial freedom". But I can't help but think how flawed that mentality is, because being financially free doesn't start with a six figure salary, it starts with attitude and wisdom.
What do I mean? Well, unless you learn to live within your means you will never be financially free. Let me just emphasize this again.
UNLESS YOU LEARN TO LIVE WITHIN YOUR MEANS YOU WILL NEVER BE FINANCIALLY FREE.
I need this to sink in because many of us have been deceived by the concept of having a high income will automatically result into financial freedom. Well if this is true, how can a whole country default on its debt? How comes multimillionaire celebrities go bankrupt? How can a profitable business go under administration? Now obviously the financial operations of a corporation and a country are different to individuals such as you and I but the point is, high income doesn't always result into wealth. However, low expenditure accompanied by high income can add to your wealth.
We all know that profit= income-expense so common sense tells us that if our income is £120,000 a year and our expenditure is £50,000 a month, we clearly have no control over our expenses, we also have an accumulating amount of debt and therefore cannot be "financially free". You may say "Oh but Peace I had to buy my new car to match my new salary which has a higher maintenance than my old car, and we also remortgaged the house, I also reinvested some of my funds in a new product advised by wealth manager" etc.
Now to be candid, it's absolutely irrelevant why you overspend each month I just want you to see the damage it's doing to your capital. Therefore rethink your expenditure and make necessary cuts in order to bring you closer to your desire of being financially free.
For some of us, circumstances have caused this such as emergencies and various issues but even if that's your story it's never too late to start saving, even if it's a pound a week or a grand a month, develop the discipline to set aside money and to only spend when necessary.
Now just as a business makes more profit when income is high and expenses are low so it is for us! So there's living within your means and then there's living as though your rock bottom- on purpose. Now not many people can do this as they believe they need the things that they have, but common sense tells us that the less we spend each month the more we have left over. So if you want to increase your capital, quit spending so unnecessarily!
We could take it a step further and start investing the money into a diversified portfolio of assets ranging from stock to property to commodities etc. However, such investments require more personal research so you can identify if your risk adverse or of you desire long term investments or short term investments etc.
But today's main point is live within your means and then learn to reduce your expenditure so that your capital is increasing and not just levelling out to no debt but then no capital either.
So when you start earning your six figure salary, remember you don't have to live a six or seven figure lifestyle. When you do become a millionaire don't feel insecure if your home is only worth half a million.
Learn to save, learn to accumulate wealth.
Money isn't everything but having true freedom over every area of your life is worth aiming for.
Lastly, let The Giver be your source.
Never put your trust in what you think you possess, let it not be your god.