Have you ever felt that you live to work? Do you think there is no solution? In this first week of October we have celebrated the financial education week and we can’t miss the opportunity to let you know about an alternative that will surely be interesting for you: financial freedom.
During this week, you will have heard and seen many inspiring stories about how a $100 loan changed a person’s life or how Warren Buffet proved to be a true financial genius before he was 20 years old. Today we will take a different approach: we won’t look outside for references, but we want to inspire you to be your own hero or heroine.
Financial freedom is not just a set of nice-sounding words, but a whole deep and transformative philosophy to change our perception and learn to live in a much more harmonious and fulfilling way. But what exactly does it mean, is it easy to achieve, and what steps do I need to take? As we will see below, financial freedom can only be achieved through financial education and knowledge of our environment to understand what is the truth of the world around us, because the truth will set us free (John 8:32).
What is financial freedom?
Financial freedom refers to the ability to maintain a desired lifestyle without dependence on a specific job or an active source of income. It is, in essence, having full control of your finances, allowing you to enjoy life with peace of mind and security.
This concept originates from a time of revision of Western philosophy in which a linear productive system of extraction, production and waste became an unstoppable juggernaut incapable of meeting real human needs.
In this moment of catharsis, certain people began to recognize that true wealth is not measured by the amount of money one has, but by the time and freedom to enjoy the things that matter most. In other words, it’s about living without the shackles of debt and financial commitments that limit our choices and life potential.
How can I achieve it?
Achieving financial freedom requires several key ingredients. First, it is essential to have passive or semi-passive sources of income that are not directly dependent on the amount of time or effort you invest in a job. This could include investments, self-owned businesses, or any other means that generates money on a regular and consistent basis.
In addition, it is crucial to maintain a low level of debt and financial commitments. This does not mean that you should live frugally, but rather manage your finances intelligently and consciously, avoiding unnecessary debt and managing your expenses so that you can build and maintain a solid financial cushion.
Finally, and undoubtedly most important, is financial education. Without a thorough understanding of how finances work, how to maximize income, minimize expenses and effectively manage assets and liabilities, it is nearly impossible to achieve and maintain financial freedom.
Education as our compass to freedom
Financial freedom can seem like a distant and ill-defined horizon without a proper map and compass. On this journey, financial education acts as both, guiding us through personal finance toward a destination of financial independence and peace of mind.
Understanding the importance of financial literacy is critical. When you possess sound financial knowledge, you can make informed and conscious decisions about your finances.
This mastery allows you to open up a range of opportunities and strategies for investing, saving and generating income that you may not have known existed. And, most importantly, it allows us to have our own criteria to make decisions based solely on our own interests and avoid the influence of third parties who may advise us erroneously.
Financial education gives you the tools to:
Plan your future: With knowledge about investments, savings and financial planning, you can chart a clear path toward your financial goals.
Manage debt: By understanding how credit and interest work, you can avoid unsustainable debt and use borrowing to your advantage.
Maximize income: With informed investment strategies, you can make your money work for you, generating passive income that brings you closer to financial freedom.
As we can see, financial education is not a luxury, but a necessity for anyone aspiring to financial freedom. It provides the skills and knowledge necessary to navigate the complex world of finance, allowing you to not only avoid pitfalls and risks, but also to identify and capitalize on opportunities. By investing in your financial education today, you are taking a giant step toward a life of independence, control and financial freedom.
The Challenges Along the Way
Achieving financial freedom is not an easy journey and faces several common obstacles, but with smart strategies, it is possible to successfully navigate them.
Obstacle 1: Lack of Financial Literacy
Many people do not receive formal financial education during their educational journey, even for those with higher education, leading to poor or uninformed financial decisions.
Strategy: Although there has been social awareness of the importance of financial education since 2008, self-education is vital. There is an abundance of resources available, including books, seminars, online courses and professional financial advice. Make time regularly to learn about personal finance and investing and make it your hobby.
Obstacle 2: Accumulated Debt
Debt, especially high-interest debt such as credit card or commercial financing, can be a significant barrier to your financial independence because it forces you to maintain a high level of income.
Strategy: Prioritize repayment of higher interest rate debts. Consider debt consolidation and seek debt management advice if necessary.
Obstacle 3: Lack of Financial Discipline
Without discipline, it’s easy to stray from financial goals and succumb to impulsive spending, irresistible offers or ill-informed decisions.
Strategy: Set a clear budget and follow a disciplined savings and investment plan. Financial management apps can help monitor and control spending, as well as gamify the experience to make saving an attractive goal.
Obstacle 4: Fear of Investing
Fear of risk can prevent people from taking advantage of valuable investment opportunities.
Strategy: Financial education helps to understand and mitigate risk. Start with small, diversified investments and consider working with a financial advisor.
Obstacle 5: Lack of Clear Financial Goals
Without defined goals, it is difficult to chart a path to financial freedom, as we lose the purpose of our efforts.
Strategy: Define clear and achievable short-, medium- and long-term financial goals. Review and adjust these goals regularly to see how well they are being met and whether they are realistic.
Every obstacle to financial freedom can be overcome with education, planning and conscious action. These challenges are common, and with the right strategies, you can navigate through them to a life of financial security and freedom.
One small learning, one big transformation
Reaching financial freedom may seem like an imposing and distant mountain, but every great journey begins with one simple step. In this case, that initial and essential step is financial education.
Financial education is more than learning how to save or invest; it is acquiring a set of skills and knowledge that allows you to make informed and empowered decisions about your finances.
This learning doesn’t have to be complicated or overwhelming. A small daily effort in understanding how money works, how debt can be reduced, and how savings and investments can be maximized can have a significant long-term impact.
As you deepen your financial education, each informed decision you make acts as a piece in a positive ripple effect. A well-planned budget leads to more significant savings, which in turn allows for greater investment opportunities. Each successful investment brings you one step closer to financial freedom.