Financial freedom refers to a situation where one is not limited financially and can meet needs with ease as they arise.
However, it is expedient to know that attaining this level of freedom does not happen by mere wishes or magic. Rather, it is a gradual process which requires discipline and diligence.
Did you know that even a steady and constant stream of income is not a guarantee for financial freedom? Many people desire financial freedom but lack financial discipline. Discipline means ‘to train or develop by instruction and exercise especially in self-control. Many people yearn to become healthy, wealthy, physically fit with no effort, but it will hardly happen. It is fraudulent to be expecting financial freedom without financial discipline.
Let’s discuss a few financial mistakes made by millennials:
Poor Savings habit: Savings simply refers to income not spent or deferred consumption. Saving is an action word, it involves putting aside a part of your inflows consistently towards meeting your future financial obligations. Savings is the first step in the journey of financial freedom. Recall there’s a quote that ‘the journey of a thousand miles begins with a step’. You can’t achieve financial freedom without taking the first step. Did you know that saving small amounts soon builds up to a large amount?
Saving today will save you tomorrow, George Clanson puts it this way’ A part of all you earn is yours to keep’, and this portion should not be less than 10%. He goes on to advise that ‘You must pay yourself first’, this means in the same manner you pay the grocer when you go purchase groceries, pay the butcher when you purchase meat, and pay the hairstylist when you get a new hair style, it’s expedient you equally set aside something decent for yourself, this is represented by the funds you put aside for the future, remember self for others starts with a healthy self-love. Saving remains a proof of self-worth.
Just as every country of the world holds a reserve to deal in its financial transactions, in the same manner every individual should hold a reserve of financial resources. The major excuse for lack of savings is insufficient resources. Warren Buffet proposed a solution ‘Do not save what is left after spending but spend what is left after saving. Savings is essential for wealth creation.
Uncontrolled Spending: Beware of little expenses; a small leak will sink a great ship. ’Benjamin Franklin’. According to economist’s human wants are insatiable, this implies that human wants are unlimited and cannot all be satisfied at a time. As such, you must be able to distinguish between your needs and your wants. A need is what you need to survive, something you can’t live without such as food, clothing and shelter. These are things that will put you under pressure if you don’t have them. While wants are simply things an individual desire but would be able to live without. They are your wanna-haves. There is a saying ‘Cut your coat according to your size’, this means you must let your expenses be determined by your resources. Some people are poor, not because of how much they earn, but because of their spending habit, they splurge without limit nor due consideration for their inflows. It’s important to live within your limits. Be content with what you can afford in the moment, delay gratification and plan expenses. Whatever you do, do not live above your present means. Moderate your lifestyle to accommodate your current financial resources.
The quest for quick easy money: This microwave generation that aims to ensure speed in delivery of every form of service in a bid to improve their quality of life needs to slow things down where investing is concerned. The desire for quick and easy money is one of the biggest lies of all times. The reason for saving and investing your hard- earned financial resources is to multiply and not lose your money. However, many people fall victim of many pyramid and get-rich quick schemes all in a bid to get wealth. Everyone wants to be an instant millionaire overnight. For starters, be sure that the investment firm you are dealing with is registered by the appropriate authority for example, in Nigeria we have Securities and Exchange Commission as the apex regulatory body for capital market operators. Also, be sure to get at least basic knowledge in the asset class you intend to put your funds. Finally, if it sounds too good to be true, pause and make more enquiries before committing your funds to fraudsters.
So, dear millennials in a bid to becoming financially free, your financial goal should be to earn money, keep money and make your money earn more money by Investing.
For investment options, be sure to reach out to us at Investment One Financial Services.
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