I am sure you have heard this phrase and know what it means in the sense of the word.
However what does it mean in terms of your life.
Suppose you need $100 per day to cover the cost of food and living in your city. This means that you would like to find a job that pays you at least $100 a day.
You give the office, business or shop you work for your time. With this time you add value for the business you work with.
In exchange for the value you create the organization pays you that $100 you need to live.
You do this over and over every day for the rest of your working life.
Now what if you want to time with a friend or want to spend the day with family. If you get paid on a per day basis then you go not get paid by the business or organization you work for.
Instead you have to dip into your savings. On such a day your savings are the source of sustenance for that day.
source: tenor.com
Till the time you work the cost of living is covered by the money you earn in your job or business.
However when you become too old to work you need some source of income to support yourself and meet the day to day expenses.
Some people think that when they start working and earning a wage to cover their expenses they become financially free.
However is this financial freedom for real?
True financial freedom would be when you have a source of income that is passive and can be set up by way of a business without you having to give it all your time.
It could also be a financial investment that gives you regular returns.
This way you can live free from the dependence of your work.
financial freedom can also be interpreted as your desire to quit your job once you have set up multiple streams of income that can support you once you decide to hang your work boots.
How I set up my savings and manage my expenses?
Suppose I earn $100 a month
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Out of this $60 or 60% should go towards covering the monthly expenses
Out of this 20% goes towards fulfilling my desires it could be that fancy dress that I have been eyeing in the show window or splurging on a get together with friends.
All this needs to be covered in this 20%
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The remaining 20% is the most important part and is goes towards the savings for the future.
I split this 20% across different asset classes. 50% of this goes towards my pension fund so that when I retire I have enough to support myself.
Out of the remaining 50% half of it goes towards short term financial goals .
If crypto is part of your portfolio then you can set up a DCA or dollar cost averaging strategy to make small crypto investments on a periodic basic.
This is no financial advice but I do a DCA as part of my crypto investment strategy.
When you start a job you do not think of old age and retirement.
However the earlier you start the easier it gets for you to have a financially secure future.
If you do not plan for the future then you may end up having to downgrade your style of living or having to make compromises.
If you look around for financial loan you can get a loan to buy a car, a personal loan to go on a vacation or for a child's education but there are no loans for retirement.
You have to plan and build a fund for it.
What kind of life you want to live when you retire is in your hands as long as you work for it and divert funds from your income towards it.
Planning early and executing your plan of action would ensure you have a good and secure financial future.
Your time should be yours and you should have control over how you spend it.
Similarly you should have control over your money, investments and lifestyle.
As a member of the leofinance.io community I am posting this content on leofinance.io
