Monday, July 27, 2009

Financial Freedom is Fortitude

"Freedom is not merely the opportunity to do as one pleases; neither is it merely the opportunity to choose between set alternatives. Freedom is, first of all, the chance to formulate the available choices, to argue over them -- and then, the opportunity to choose." - C. Wright Mills

The 21st century has thrown several challenges to mankind. Apart from creating lot of uncertainty and complexity with the drastic changes in rapid growing technology, it also made people to think deeply about financial freedom. Man cannot survive without money. Money has become almost a necessary evil. In the name of acquiring money, many people struggle a lot and a few make mistakes to earn money for their survival and few make mistakes to amass wealth. People are made to think that money is success, although it is not.

Money will not buy happiness but it provides a sense of security. Money is only a means not an end. Unfortunately, for many people, money has become an end resulting into unethical practices. In this context, let us know what is all about financial freedom.

What is Financial Freedom?

“Lack of money is the root of all evil.” - George Bernard Shaw

What do you mean by financial freedom? Is it having sufficient money to live off forever without working? Is it having income more than expenses? Is it being debt free? Is it the freedom to do anything and everything with money? It is very difficult to define financial freedom as there is no yardstick to measure. It is, in fact, a complex one. Financial freedom differs from person to person.

Financial freedom is more about your attitude towards money rather than about the amount of money you have. It is also about having sufficient money to lead your life comfortably without any botheration. It is not being too much rich but being comfortable with sufficient financial reserves to back you up in case of any eventuality. It is like having money beyond your break even point i.e. the point where your income flow is higher than expenses.

There are two types of incomes such as active and passive income. In active income, the individual is actively involved in generating income. On the other hand, in passive income the money flows without active involvement of the individual. The rental income, returns on share market investments, income as a sleeping partner in business etc. fall in the category of passive income.

Tips for Financial Freedom:

“Money isn't everything--but it's a long way ahead of what comes next.” - Edmund Stockdale

• Sit in a quiet place and ponder ways towards financial freedom.
• Develop a positive attitude towards money.
• Minimize spending and maximize savings.
• Generate multiple sources of income.
• Don’t save until you clear your debts, if any.
• Go for cost cutting wherever it is possible.
• Buy in cash not on credit as the cost of the goods will go up on credit purchases thereby denting your reserves.
• Be good at accounting and budgeting. Many people fail miserably in these two areas resulting into financial chaos.
• Work hard and work smart as well. You need to make sure that your money should make money. Your money should rotate.
• Set SMART financial goals where S stands for specific, M for measurable, A for achievable, R for reachable and T for time-bound.
• Diversify the risk. Don’t keep all eggs in one basket. Invest little in savings, little in share market, in gold, in land and in other areas. In case of crisis in one area, the other areas can back you up.
• Work from home, if possible. Now –a-days, there are so many opportunities to generate incomes through home based businesses.
• Convert your passion into profession and make your passion as a business opportunity.


“Earn all you can, save all you can, give all you can.” - Charles Wesley

Only when you have financial freedom you will be able to concentrate on other creative pursuits. Have the mindset of a rich person. It is all there in your mind. If you have mindset and urge to make money you can definitely make money. Penny saved is penny earned. Cultivate savings attitude. Save for the rainy day as the life is full of uncertainty and complexity.

Financial freedom is all about your attitude towards money and your aptitude to make money. Old notion of ‘making money is a sin’ is to be wiped out. Parents need to cultivate right attitude about financial freedom among their children in the initial stage itself as they learn to save, manage and enjoy money. It helps them to know the value of money and how it plays a crucial role in having comforts and facilities and leading a successful and peaceful life. To conclude, financial freedom is, indeed, fortitude.

The End

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