Overview ON Financial freedom
"This seems so excellent and so perfect that it's certainly not true.
Many people associate the concept of financial freedom with images of millionaires resting on their yachts while others make money for them in return and effortlessly.
But do you have to have a million in your bank account to get financial freedom?
Or can this be achieved at a medium level of gain as well? And if possible ... So how?
[COLOR="black"]What is financial freedom?
Financial freedom is often linked to wealth. However, they are not synonymous with them in the literal sense.
The fact of the matter is that financial freedom here means that you are not financially dependent on anyone, so don't rely on the owner of an address, the country, your partner, your mother and your father.
So here's what you have to do first and there are several ways to do it, including:
And that's what most people think – simply getting enough money into the account, more than you can spend, but of course only a few have been able to do it.
It is a long-term, real-life method that enables you to save enough to build up enough reserves to meet any financial drought, and be a financial cushion enough for you to retire early from work.
Financial freedom is not necessarily higher than average capital.
Financial freedom arises when you have sufficient reserves to compensate for your short-term income loss.
(For example: you have enough to make you make more freely relevant decisions) if, for example, she wants to reorient yourself professionally, it will be easy and safe for you.
Achieving financial freedom requires managing a certain type of risk, to avoid them in the future.
Unfortunately, many people do not realize or ignore these risks, as they spend everything they earn each month or more.
Even as income grows, expenditures increase, and reserves cannot be built in this way to achieve financial freedom.
This is usually possible by reducing expenses and saving a portion of your income, and there is a way to do it, which is what is called the 20/30/50 rule.
This rule is simple and not only helps you get your money organized in general, it also allows you to build capital.
With this rule you can also avoid financial pitfalls and you can easily adjust your expenses and maintain your budget.
How does the 20/30/50 rule work?
This rule is derived from the Barreto principle: the aim is to achieve a great deal of savings even with low incomes and little effort.
That rule provides you with quick success, which leads you to discipline.
According to that rule, you have to divide your income in three proportions:
50% or half of your income for your fixed expenses such as your rental and bills. And so on.
30% of your income is reserved to meet your personal needs and desires
20% is the amount you provide each month to save it.
In this way, your capital will increase relatively easily after a short period of time and you will also have a better view of your expenses and costs and more conscious than before.
Either if you have debtors or loans, repayment will of course have a priority over savings targets.
You can't save and you have debts, in which case you have to put everything you can to pay off all your debts.
And you have to remember when you pay your debts not to get used to living beyond your means permanently, which plunges you into debt.
Practical tips for applying rule 20/30/50:
It is recommended to review your fixed costs at regular intervals (e.g. every year) so you may be able to save on some items that you may find insignificant or useless compared to their cost.
Is there a cheaper provider of basic services (e.g. electricity, telecommunications) ?
Do you have insurance policies, are they really necessary?
Can you get cheaper alternatives to your accommodation or food?
It may be useful to keep the 50% fixed costs in a separate family account.
The allocated percentage is immediately set monthly independently of the rest of the income. This enhances the clarity of expenses.
It is very important to accurately differentiate between your real basic needs and anything else that would enrich your standard of living or be a luxury that you may be dispensing with.
That is simply a difference between what is necessary for the continuity of life and what life can go on without.
Your personal expenses:
Did you know that you will face significant expenses in this area in the near future (e.g., buying new living room equipment)
Maybe you can enter for a few months to get that room.
You don't have to pay for it at once, so you can save 30 percent to meet this item, outside of the 100% savings for investment purposes.
In this context it will be very useful to keep a family book in which we explain current and future personal expenses, and this record is checked monthly to enter variables and organize spending
In addition to the fixed amount of savings in order to increase your capital, you must always have flexible access to a portion of this funds.
Where unexpected things can always happen that call you for that amount.
Damage is important, vital and essential to life (as an electrical metaphor must be repaired immediately), a family member's illness or any sudden and unexpected event.
Without a financial reserve for such emergencies, you have a problem that may take you to the debt trap so it is recommended to keep a separate savings account that is easy to access for your money, and is fed monthly and fixed.
If you implement these tips, you will be able to build capital continuously or pay off your loans and debts quickly.
This is an easy and quick key, not an exception, but this should be your basic system.
Rewards and celebrations such as birthday celebrations, or the success of one of your children in full should also be included in the 50-30-20 rule.
You can get support and organization through smartphone apps.
If you do a simple search on your phone's app store, you'll find many useful apps that will help you adjust yourself financially, and you'll also find apps for the 50-30-20 rule.
Applying the 20/30/50 rule continuously without exceptions and without interruption guarantees your success:
Even if the amounts of money specified after that percentage are not.
You have to stick to 20 percent strictly to save and you may be able to adjust the other percentages, save your expenses or reconsider your lifestyle.
However, you have to commit to providing 20% very strictly in order to be able to provide the necessary capital even if it is difficult.
If you try and you can't, for example, raise your rent or something, you don't have to give up and try again and again to adjust your expenses.
Even if you have to look for a low-rent residence at a lower level, perhaps a little less to reach the future you want, you must now save your expenses.
Ask yourself and try with her constantly:
Can i move to a smaller apartment or at a lower and acceptable level?
Can we cancel a half-year trip and just one trip on the end-of-year vacation?
Can we look for a cheaper trip and enjoyment?
Is what I'm buying really necessary?
This may cost you a reduction in your overall standard of living, but it will bring you closer to your savings target and give you disciplined steps towards achieving financial freedom (in the future).
For example, it allows you to buy your future dream apartment faster, where you can live rent-free, and in this way you will be able to save 20% in the future better.
You should not completely neglect entertainment, otherwise your motives will weaken and your nerves may eventually collapse and dissipate everything you have saved under the stress of psychological stress.
But you just have to find cheaper and maybe more fun ways.
In Egypt, for example, the free skirt was expensive and sometimes cost 5 pounds, the best in the rating on international entertainment sites.
Maybe a home-cooked meal in an open garden and a bit of jogging and fun.
Better than an expensive meal in a fast food restaurant, walking around a mall and spending a lot of money on useless things.
Perhaps a tour of one of the archaeological areas that inherits awareness and culture and will not cost you more than 10 or 20 pounds and then walk a little in the open air and eat some popular sweets much better than go to see a dancing fountain and pay a lot of money to think you will see something impressive and then discover that it is just mechanical movements of lights and water not creativity.
In any case, the principle of 20/30/50 only works where discipline and follow the guidelines and rules in a disciplined manner and you always and in any case under the weight of any temptation to adhere to this principle.
7 levels of financial freedom:
Level 1: Complete Reliability
Level 2: Independence (preliminary stage)
Level 3: Financial independence
Level 4: Financial Security
Level 5: The first step to the formation of wealth
Level 6: Short-term financial freedom
Level 7: Absolute Financial Freedom
Now the main question of our subject which naturally presents itself for many:
How do I get financial freedom?
This is a good question in fact as we explained above, and according to experts this path usually occurs in seven classic stages (or levels) about how people move from dependency to financial freedom:
1. Full reliability to achieve financial freedom:
And be in childhood and adolescence, at those stages everyone depends on their parents in normal circumstances (in some individual cases depend on the state or aid associations)
2. Independence (preliminary stage):
First salary often leads to a sense of initial independence, as you have your own income and you can spend it freely.
However, this income is still low and covers your fixed costs only, and of course you still rely heavily on your employer and may still be partly dependent on your parents.
3. Financial independence for financial freedom:
At this level you can actually earn your living and cover your expenses.
Not only your basic needs can be fully funded (your vacations, purchases, leisure activities) through your own business.
This is a fun phase for a lot of people, so it seems to them that it is necessary to change something, it is now important to protect yourself.
4. Financial security for financial freedom:
Reserves at this point, the goal now is to build sufficient reserves at least to be able to fill half a year without income.
The best way to do this without having to restrict yourself and significantly reduce your lifestyle is to rule 50-30-20 above.
It is important to be prepared for unforeseen events and to be able to meet and respond accordingly.
5. The first step to the formation of wealth:
In the fifth stage, you have to intensively tame the way you handle your money.
It is now necessary to deal with the issues of wealth creation investment, and at this stage it continues to finance livelihoods through work, yet your wealth is growing steadily in the background.
6. Short-term financial freedom:
You already have enough reserves to make up for any loss of income.
At this stage, if necessary, you can live for a year 6 months or even a full year on your accumulated assets.
This immediately makes you independent of your current employer (but of course not yet for all employers)
But this gives you a feeling of financial freedom (short-term).
It is now important to pay more attention to the capital created to create profitable forms of investment, equity (dividends) or real estate.
7. Absolute financial freedom:
In the meantime, you can even generate income from your assets.
This could be, for example, from the returns of stock packages or the rental income of your property
Either way, if you have a relatively high income from those returns enough to fund your lifestyle, you have achieved absolute financial freedom.
That means you can keep working anyway.
But you don't have to.
In other words, you are completely free from any source of income by relying on work. However, you must calculate your tax before deciding.[/COLOR
What are the ways to get financial freedom?
Financial freedom cannot be determined by a specified fixed amount of money.
It's different from person to person, some don't need a lot of money to feel that freedom.
Others are only happy when they can ride his bike and ride around, while others will only be satisfied when they drive their expensive car.
Also the place where you live plays a big role in determining how much financial freedom you will be guaranteed if you want to settle in Thailand your living costs will be much lower than if you wanted to settle in Munich, Germany.
However, the concept behind this issue is in any case identical:
It's about taking advantage of your sources of income that are independent of any third party (work anguish).
So you must first be fully aware of what your goal is in this life, financial freedom is not an end in itself, but it is just a means to achieve an end, the actual goal is based on it.
Actual example: Do you want to ...
Living a happy life on your own property?
Turning your hobbies into a job?
Can you live somewhere in the world or get freedom of movement?
Traveling around the world?
To give your children better chances in life?
So you have to set specific goals and a strategic plan to achieve this, you have to get yourself out of the hamster wheel with which you are connected financially so that you can achieve your goals.
The goal of financial freedom should not be to charm the treasure of money, but you must consciously seek financial security, provide comfort and improve the quality of life.
How do you get financial freedom?
To gain financial freedom, there are three things you should consider in order of the following:
Improving income for financial freedom:
Most people first try to increase their income, whether by increasing their salaries, getting a check or even changing jobs.
Or even to get a side job or provide services, and possibly also by obtaining a negative income (e.g. interest on investment certificates)
But all of this makes you still dependent on third parties, but in any case you can get to the independence stage faster.
Saving for financial freedom:
Usually the principle of financial freedom does not work without savings, where all freedom begins with restraint first as well as financial freedom.
Where most financial experts recommend saving at least 20 percent of your income, you may find it difficult, especially if your income is low.
But on the other hand, if you want to get out of the accreditation phase completely, you have to reduce your costs in every way in order to save more money.
The less you get and you start to give up and it will happen sometimes, in the end you have to remember that if you surrender you are on your way to an unbearable future .
Investing to reach financial freedom:
Investing is the best reasonable way to raise capital.
Of course, each investment means a certain risk, it is very important to deal with their business models and their investment models in advance.
Startups, for example, the more experience you experience, the more wise you will be, and the greater the risk, the greater the opportunities.
Where it's a low risk, a little gain, a big risk, a big gain.
Profit and invest this demand is the only reasonable long-term model of access to financial freedom.
What you need to keep in mind on your way to financial freedom:
Of course, there are some obstacles to your path to financial freedom.
What to pay attention to in order to obtain financial freedom:
Participate in making decisions at an early stage:
One cannot deal intensively and fully with the possibilities of investing its capital.
Do you want to invest your money without paying the consultants or without having to share with someone with experience and knowledge.
It is essential that you be able to make free and informed decisions about your own money.
So first be aware that you are solely responsible for your profits and losses even with partners or even with external financial advisors who will not take your risks.
So you have to make your own decisions without help from time to time, and you have to understand the advice of your advisors always and you have to go into things yourself in order to gain the necessary experience and knowledge.
Don't raise your standards too much:
If you want to reach something special, start now, but you should know that at all stages of your financial maturity and all levels of financial freedom, financial discipline is necessary, whether to obtain or maintain that freedom.
Especially if you can increase your income.
You should be aware of your financial expenses so keep them at the same level or increase those normal expenses only to a minimum.
However, it would be better to reduce your expenses, this way a safe financial cushion is achieved over the long term even if your income is small.
Learn constantly do not stop your path always and invest your time in yourself and increase your knowledge (specialized).
No one can take it away, not even the stock market collapse, no loss of your money, no wars or anything.
Your knowledge and knowledge in your head always stays in your head and produces on it.
The more knowledge and mastery you know, the more services and products you can offer, the more market value your business will be.
This increases the money you can earn in the future or opens up new sources of income.
Think about money positively:
It's okay to have money, that's why you're so far away is being a capitalist and rich.
You should not be ashamed of your desire to own money and enhance your financial wealth, as long as in any case you will earn it with your hands and your race and will not steal anyone or disturb the honesty towards anyone.