CAREER, FINANCE

FINANCIAL FREEDOM: FOLLOW OUR EXPERTS GAME CHANGING TIPS

November 26, 2021

*Disclaimer: This blog post is not a financial advice, nor connected with a recommendation to buy or sell shares, but an educational article for those who are interested to know about investing in the stock market, written by DisiCouture.com contributor and finance advisor.

Most people think being rich is synonymous with flaunting your wealth on social media. Expensive watches, bags and even new cars are exposed everyday. Unfortunately, social media is an illusion, which means that everything that sparkles is not gold.

You may be one of those people looking at your favourite influencers profiles and thinking: I wish I was ‘rich’ or this ‘successful’! While you wish you were as ‘rich’ as them, nothing says they attained financial freedom. They might spend their last penny on a bag trying to meet ends at the end of the month and not save or invest anything.

Isn’t this more important? To attain financial freedom so you can live a comfortable life– make money work for you instead of working harder to gain more money.

Financial freedom is attainable for anyone and you don’t need sums of money for it. What you need to do is to make money for yourself. Being rich doesn’t mean you have millions in your bank account. It basically means that you are able to lead a comfortable life with the standard of living that fits you. And, attaining that freedom is a long road. It’s likely something you cannot achieve in 5 years because it takes time and comes down to dealing consciously with your money and investing for the long term.

#1 Understand your finances

Have you ever thought how to understand your personal finances? If not, you are not the only one. Many people don’t have an idea how much they earn per month and how much they spend. You’ll be surprised that many have no insight in their spending pattern at all. And you’ll be even more surprised how much unnecessary expenditure you make.

You might say “this is not me!” We all think we need that subscription we barely use, the avocado sandwiches we buy at the newly opened fancy Cafe, or the dinner dates we have three times a week. We get it, you love that life and these ‘small expenses’ won’t hamper your goal to attain financial freedom, but if you can structurally cut your expenses– this will have a big effect on your bank balance. We’re not saying you should not enjoy it at all, but try to strike a balance so that cutting expenses does not come at the expense of your happiness in life. You can do this by setting a fixed budget for each week or month.

#2 Increase your income

This sounds harder than it is, but there are plenty of ways to make more money than you are doing right now. Do you have a permanently appointed, and you have a full-time job? When was the last time you asked for a pay raise? Of course you don’t just do this, but it can’t hurt to know how much you are worth. Go and apply next to your permanent job, see what you can earn with other employers and use this information when negotiating with your current employer. Your employer pays you the minimum to keep you satisfied and the maximum to keep you employed, dare to see this and act on it. You are worth more than your employer is currently paying you.

For example, have you ever thought of carrying out the work that you now do as an employee as a freelancer? To many people, this sounds scary and unrealistic. Of course, it comes with risks and uncertainty, but it also has many benefits such as higher revenues. There are sites where you can easily rent out your knowledge and skills. What’s stopping you?

#3 Find a side hustle

A side hustle from home, that’s the game-changer that will make a difference in your bank account while giving you the freedom. We all have talents and how great is it that you can earn some money with your hobby or skills? Just try to find out where your passions lie and if people are willing to pay you for it. For example: are you good at web design, tutoring, teaching online yoga classes, interior design, writing or baking and cooking? Then it’s time to show your skills and earn some pocket money. By doing this, you will not only increase your income but also build your resume, gain experience and become better at your profession. In the short term it will be hard work to earn those extra bucks (you might even do the first projects for free to have a portfolio), but in the long run your skills will become more valuable and lead to bigger income.

#4 Put money to work for you

You should make your income and expenses transparent. Cut your unnecessary expenses and increase your income. Why? So you can save more. The more you save, the more money can work for you and the faster you can attain financial freedom. But how do you put money to work for you?

The best way is by investing your money. You can let others do this for you by paying a small fee, also called managed investing, or you can invest by your own. If you choose the latter, you can choose to do this actively or passively. Passive investing means that you invest your money in a fund or ETF for the long term so that you don’t have to worry about it. You can opt for a defensive strategy by investing in a diversified fund, so that the risk is minimized, but you still benefit from the productivity increase and growth of the economy. You can also choose to actively invest. This means that you actively buy and sell individual shares. This sounds very attractive, but it takes a lot of time and emotion. You have to teach yourself to analyse companies and read finances in order to select the best companies. One thing you also need to keep in mind that you need to control your emotions. What do you do when the shares you bought suddenly drop to 30%? Many people have FOMO and lose more money. This means that the vast majority does not outperform the index. Overestimation is a well-known phenomenon in investing and so the majority will perform better if they invest passively.

There are also plenty of other ways to put your money to work if you like to risk. Have you ever thought about investing in wine or whiskey? These are products that increase in value as they age. When you know how to buy the right whiskey or wine, you can sell it with a nice profit, provided you can resist opening the bottle.

Other examples of products that are increasing in value are watches, real estate, land, crypto (although many will disagree, it is quite a lucrative market), precious metals such as gold and silver, art and much more. Think for yourself which products you have an affinity with and what you like to spend time and money on. The more intriguing you find a product, the more fun you enjoy doing research on it, the better you can estimate its value and the more profit you can make. It is very important to choose products that increase in value. Not every watch you buy increases in value as it ages. There are also plenty of products that at first glance look like they are increasing in value, but do not.

This article discussed a few options to increase your income in order to invest it and generate more money. The first step of course is to have an insight in your income and spending pattern, the second to increase your income and the last step is to invest your income to generate more money. I truly hope, if you want to attain financial freedom you start thinking about ways to increase your income.

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