Roadmap to Financial Independence

Ever since I attended a financial wellness seminar years ago, my interest about financial freedom has grown exponentially.  I went on to read books about the topic and engaged in different money-related activities.  I came up with a high-level model that I’m trying to use now in my quest to achieve financial independence.

There are 3 key points to emphasize here:

1. Increase your income.  This is a no-brainer.  The fastest way to fill-up your financial bucket is to boost your earnings.  If you only have one source of income, you can do this by aiming for higher salary (a promotion perhaps).  But a better way is to have other sources, and this depends on your skill set and interests.  Some tips include professional services such as tutorial, article writing and programming.  You can also buy and sell some goods and properties.  There are a lot of possible sources of income out there.  You just have to stop being lazy, and have a positive mentality towards financial independence.
2. Lessen the ‘holes’ in your bucket.  Of course, all your income doesn’t mean anything if most of them is spent on worthless items.  There’s no use of having more income if your expenses increase at the same degree.  We had this situation before when our income grew for about 40% because of salary increase and some sideline works.  However, we felt oftentimes that there’s not enough money left at the end of each month.  We started to keep track of our expenses found the culprit – dining on restaurants REGULARLY and shopping REGULARLY.  We had to change some habits for us to save more money.  I suggest you keep a listing of your daily expenses and summarize it at the end of each month.  For sure, you’ll find areas where you can save.  Remember, even big companies have cost-cutting or cost-saving initiatives to make the company in a better financial position.  We, as individuals, should do the same.
3. Put your money in investments that will provide more income.  I define an investment as anything that requires a capital and provides returns over a period of time.  These include mutual funds, time deposits, real estate and stocks.  I consider a business under this category since generally speaking, you have to shell out some capital in order to have gains in the future.  To be financially independent, this is where you should focus your energy on.  The goal is to have our income from your investments be able to sustain your living, such that you don’t have to be dependent on your salary.

What I learned from all the books and articles that I’ve read is that there is no perfect way to achieve financial independence.  Most authors will relay high level ideas and suggestions, but won’t provide exact details.  You will notice that people suggests different ways to manage your money.  This is because the financial situation of a person is unique, and each person’s attitudes and way of thinking are not the same.  You should find a way that best works for you, and you can do this through some research and actual experience.  Once you have that process that you believe will work, then execute your actions.  Remember, don’t just work hard.  Work smart.