Financial Advice Blog

How to be financially free

Everyone wants financial freedom, and it’s possibly easier than you think. Brenton Tong speaks to Money and Finance Magazine on how you can supercharge your efforts.

Financial Spectrum’s Brenton Tong authored this article for Money and Finance Magazine.  You can view the original article here.

Most of the time when we talk about being financially free, the focus is trying to make as money as possible, as quickly as you can, so you can get on with the things you enjoy rather than work. However here’s the thing – what does it mean to be free? We have created incredibly complicated and expensive lives and for some people, there is no light at the end of the tunnel. Is freedom working your backside off for 40 years to pay off a mortgage and then have enough for a bit of travel?

Everyone wants it, and it’s possibly cheaper than you think – sometimes

The quest for financial freedom is as old as modern society – and more accessible and achievable for most today than ever. The fastest way to be financially free is to create a life that’s less expensive. Avoid the big cities, don’t worry about nice new shiny things, and focus on what you need to be happy. You might be surprised that it’s less than you think.

Once you understand that, work out how much it will all cost – the house, the life, the adventure and travel. Can you save for it? If you can, great – get cracking. However, you’ll find that often, saving for it is a slow process. While you’re saving, it’s getting more expensive, so sometimes you’re just keeping up rather than getting ahead.

Here are some ways to supercharge your efforts.

Save as much as you can

But, still spend and be happy. Saving just for the sake of it isn’t much fun – but if you have a clear goal in mind and you genuinely feel that your efforts are creating the future you want, then the sacrifice can often feel worth it. Cut out anything that doesn’t bring you value. Marie Condo for spending maybe? If it doesn’t bring you joy – then why would you buy it?

Develop additional income streams

There are so many ways to create income streams these days, it’s really not that hard to generate even just a few thousand per year. A side hustle is the easiest, but you’re trading time for money which has it’s limit. Think e-commerce, think leverage and scalability. You can save the extra money, use it to invest or enjoy it. If you do a good job here, you’ll be able to continue earning your extra money forever and it will supplement your early retirement.

Invest

Einstein once said compounding is the eight wonder of the world. He was onto something here. Invest when you can – keep it sensible, and focus on a mix of good long term investments with maybe a few fun investments. But keep most of it solid so it’s reliable and there for you when you need it. This too will provide a passive income stream for your future.

Understand risk

You can’t invest without risk. You can’t develop a business without risk. Understand your risks and do what you can to mitigate them. If you’re investing aggressively, don’t invest the money you need in the near term, make sure you have a long time frame to work with. That way, you’re not going to forced to sell at the worst possible time.

Being financially free isn’t rocket science, but we often get terribly distracted in life and find ourselves in a very different place than we hoped for.  What types of things have you done, or seen others do, that you feel are taking them off track? Stay focused, work out what you need and if you can’t find a way to make the numbers add up, get some professional help from a specialist financial adviser.

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