Understanding Financial Freedom
Is having money financial freedom? No! Having lots of money in your bank account or other investment is not financial freedom, it means much more. To simply put, financial freedom is having more passive income than expenses. Please take note, I didn’t say having more money than expenses but having ‘more passive income than expenses’. This, of course, will result to having more money but having more money may not result to having more passive income. You may have to read that again.
I want to help you understand the concept behind financial freedom. Having enough passive income over expenses is different from having more money over expenses. With one, you don’t have to work for it, but with the other, you will have to work for it.
A lot of people think being financially free means being rich. Whenever a speaker say ‘be financially free‘, they hear ‘be rich’. Some people say these three words but don’t understand what it means but thank God you’re reading this. You see, You achieve financial freedom when your passive income is more than your expenses.
Now you ask ‘what do you mean when your passive income is more than expenses’? Although I think I’ve answered that question but let me help you understand it further.
What is passive income?
Passive income is an income (such as investment income) that does not come from active participation in a business; e.g. rental income and income from securities such as dividends.
From the above, it means it is possible to earn money without actively/physically working. I know this from experience, I can say, Yes it is possible. One of the important skills you can learn is how to make a living in today’s world; a more important skill is to learn how to earn and live on passive income. I’m not insinuating that you should be lazy, that’s far away from what I’m saying. What I’m saying here is: free up your money and let it work for you. If you can learn to do this and the income you earn doing it is more than your daily, monthly or yearly expenditures – you are financially free. Because that’s when you can stop active work and still live, I mean really live.
I hope you now understand the concept. Let me state it again – here’s what I mean when I say ‘…your passive income is more than expenses’: if you should stop active work today, the money you earn without working (not the money you’ve saved) can pay your bills.
It is important I also let you know that it is a journey, and the starting point is where you are right now; it is NOT when you start earning a million. You may be schooling, working or unemployed, but as long as you are getting a kobo or a naira, you can be financially free. I learnt from the Bible that It is only a fool that spends everything he makes. Right from when I was in primary school, my father taught me how to save, I opened a savings account and started saving small amount from my ‘pocket money’. You can do the same, help your child or someone (not related to you) do the same.
Proverbs 21:20 (GNT) says “Wise people live in wealth and luxury, but stupid people spend their money as fast as they get it”.
Be a wise person, change your mind-set, start saving part of what you earn, and choose to have more passive income over expenses. Passive income can help supplement your current income. It can also help you get ahead, and can take away the threat of losing your job.
In conclusion, your objective to be financially free means to have more passive income than expenses. If you focus on only to be rich, you may have to actively work to sustain it. Be wise, be smart, and be free.
To your success.
What does financial freedom mean to you?
Everything you’ve read is my opinion and it is not to be taken as investment advice because I am not your investment adviser nor have I considered your personal situation as your fiduciary. This post is for your entertainment and education only and I really do hope you have enjoyed it.
Now, go and be wise.
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