BusinessDay... the voice of business: Six steps to financial freedom

Six steps to financial freedom
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Kirk Leigh on 04 May, 2008 02:00:00
 
If you are one of those who do not read BusinessDay regularly, then you
certainly must be missing out on the hottest menu on financial freedom. We offer
nuggets to help you and your family achieve that freedom. This requires that you
are motivated and disciplined. Here are five tips you can take with you towards
financial freedom
Knowledge
You need to know the facts. What facts? You may ask. These are facts that
relate to your financial situation. For instance, how large is your family? How
many of your kids are ready for school? Are you ready to take out a mortgage?
That is, are you taking a loan to build your house or do you want to do it from
personal savings as we are wont to in this part of the world? Do you want to
have alternative investments? Are you desirous of playing the money and the
stock markets?
After getting to know your needs through such self examination then get
aggressive about seeking financial knowledge. Financial knowledge is not
difficult to acquire. It is available everywhere: in newspapers (especially
BusinessDay), on TV, radio and the internet, and through your financial
institution’s promotional publications.
For most people, financial ignorance has nothing to do with lack of access and
everything to do with attitude. We often say, “This is for other people.”
But to think this way is to do yourself a disservice. Financial matters affect
us all in direct ways. It therefore makes sense to become better informed and to
understand the processes that can enrich or impoverish us.
Try out the investor pages of BusinessDay where there are up to the moment
advice on stock picks that could enhance your financial position. You can also
pick up the Personal Finance pages of the paper or check out the internet for
about.com, cnnmoney and forbesonline and countless other web resources.
Goals
We all need to set our goals. Without something to strive for, life becomes a
grind. This is as true financially as it is in other areas of life. Most of our
goals require money, reaching them means we must have a financial plan to get
there.
There are three types of goals: Long term such as the one you make towards
living comfortably towards retirement; medium term, to pay for a child’s
university education, or to extend a home, or start a business; and short term
for example, to budget effectively to control your spending to establish a
healthy savings pattern. Take a close look at your own goals and work out the
financial implications. With realistic goals to strive for, financial discipline
and self-control become much easier. There are some web resources to help you
plan. They are called web calculators.
Save
After determining your goals whether they be short, medium or long term, start
saving. Your plan should be able to help you determine what you should put aside
on a regular basis. We are not encouraging you to save for the interest rate
your bank would pay. Those rates are miserable and can hardly make a difference
in your life but nevertheless save. Save so you can invest.
How much should one put aside?  This depends on you even if the Richest Man in
Babylon of George Clason advises ten percent.
Invest
There are myriad investment outlets for your money once you have saved enough.
Once again look into BusinessDay for these channels. There are stocks you can
invest in individually or a combination of stocks you can construct into a
portfolio.  You might need some expert guidance. For this, contact a fund
manager.Honesty
Knowledge and honesty go hand-in-hand. Knowledge without honesty is unreliable
and will do nothing towards helping you to realise your goals. Honesty means
assessing yourself, your needs and your areas of weakness. It means facing
facts. Are you in debt over your head? Admit it to yourself. Are you free from
debt, but unable to achieve your goals due to lack of commitment? You can change
your habits and achieve your goals, but it requires an honest look at yourself.
Only if you are honest about your shortcomings will you be able to overcome
them!
Discipline
This is the least popular requirement for financial freedom.  Financial freedom
does not mean having unlimited money. It means managing what you have in such a
way that you are free from worry, guilt or fear. Applying discipline where it is
required reaps great rewards. Learn to say “no” to yourself.
If you keep your goals in sight, it is easier to be disciplined. The people who
find self-discipline hardest of all are those with no clear goals and no plan
for how to achieve them - or goals that are so distant and unrealistic that they
are removed from daily life. Revisit your goals regularly, apply discipline and
self-control, and you stand a good chance of realising your dreams.