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3 Paths to Financial Freedom

All of us dream of attaining financial freedom, but only a few of us will ever get there. What’s financial freedom, you ask? It’s a bit different for everyone. To me, financial freedom means I can enjoy a comfortable life without having to work or worry much about money.

Financial Freedom Formula

How do you attain financial freedom? It’s easy; you need to generate passive income. For most of us, this means investing. It’s easy in theory, but you would need to invest a lot of money to generate enough passive income to cover your cost of living. The personal saving rate of Nigerians is around 5%. This statistic is pretty dismal and it is exactly why so few of us will reach financial freedom. You need to increase your saving rate so you can invest more.

Saving = Income – Expense

1 – Grow your income

Here is the first path to financial freedom – grow your income. This is pretty obvious. If you make more money, then you’ll have a better chance of saving more. The tough part is that it’s difficult to grow your income. Here are a few ideas.

Accomplish more at work and get promotions and raises
Actively seek better job opportunities that offer more pay
Get advance degrees or certifications to increase your pay
Change career if you’re in a low paying field
Start a business
Work on the side
Rent out a spare room
Learn about investing

2 – Live a frugal lifestyle

Of course, not everyone is as good as making money . I think you should keep trying to increase your income, but if you can’t then you need to focus on the expense side of the equation. While not everyone can make a lot of income, everyone can learn how to live more frugally. Living frugally doesn’t mean you have to eat ramen noodles every night, you just need to spend significantly less than you make so you’d be able to save and invest more. A 5% saving rate isn’t going to cut it. You’d need to save at least 30% of your income to reach financial freedom in a reasonable . Here are some ways that we save money.

Cook at home
Share one car
Take public transportation
Live in a modest home
Delay purchases until you are sure about them
Try to fix things yourself
Ignore impulse spending and stick to a budget
Seek out less expensive entertainment

3 – Create Something Valuable

Lastly, there is the unconventional way. You’ll have to figure this one out for yourself. One example is Ernie Zelinsky. He didn’t actually start saving for retirement until he was 40 years old. He used his creativity and wrote many books including The Joy of Not Working and How to Retire Happy, Wild, and Free. Now, he is making more from book sales than most people from their day jobs. Ernie was able to leverage his creativity and achieve financial freedom on his own terms. I’m sure if it’s important enough for you, you can come up with something too.

Many people achieved financial freedom through rental properties. This is a great way to go if you can handle being a landlord. I think everyone should try this one out to see if they can make it work.
Financial Freedom isn’t that difficult

When it comes to financial freedom, you have to go with your strength. If you are good at making money, then work on increasing your income. If you’re good at living frugally, then focus on minimizing lifestyle inflation. Of course, most of us will fall somewhere in the middle. The key is to grow your saving so you can invest more every year. The more you can invest, the faster you will achieve financial freedom.

The third path is definitely interesting. If you think outside the box and have the courage to follow your creativity, then good things might happen.

How will you achieve financial freedom?
Credit: retireby40.org

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