What is Financial Freedom?
In short, financial freedom is achieved when your assets produce more passive after tax income (i.e. not working for the money) than the expenses of your chosen lifestyle.
The basic premise is to accumulate assets, which could be in the form of shares, investment properties, low involvement businesses, etc. that produce an income stream in form of cash flows. These inflows need to cover your outflows (expenses).
How do we get there?
Achieving financial freedom is not an once off event but rather a journey. No single event or action will get you there! A large inheritance or lotto win will highly likely only exacerbate the financials woes down the line if you do not understand the flow of money.
A journey has a starting point and an end point. This is an important point to stress. If you do not know where you are now and have not defined your destination or goal you will never get there. The basic steps that you need to follow is outlined below:
1. Understand your income and expenses.
2. Understand your assets and liabilities.
3. Plan your future cash flow (budget).
4. Invest your surplus funds.
5. Invest in yourself through education.
