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What is Financial Freedom and 7 Tips To Help You Achieve It

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by CashOctopus • October 16, 2019

What is Financial Freedom?

Financial freedom means different things to different people. For many Singaporeans, financial freedom means having all their financial needs met and having the freedom to pursue other things that they enjoy. Attaining financial freedom is a process, and you need to be committed to making major lifestyle changes over a period of time before you finally reach your final goal of being financially free. There are many good reasons why you should make it a priority to pursue financial freedom. Some of these are given below.

Freedom to pursue your passion

Once you become financially stable, you are free to pursue any other interests that are not necessarily income generating. This will give you the opportunity to get involved in what you are actually passionate about. Many Singaporeans are stuck in jobs and careers that they actually hate. They have no choice but to remain in these jobs simply because they desperately need the income, since are not financially free.

Freedom to plan for long-term goals

It is very difficult for you to pursue any long-term goals when you are sinking in financial troubles. Being financially free allows you to focus on pursuing long-term goals because the worries of short-term financial liabilities are no longer an issue. This will help you to continue to build your investments and expand your financial base over the long term. Long-term planning is essential for your retirement years when you may not have a reliable income.

Freedom to give more to charity

There are many charitable organizations in Singapore which need as much support as they can get. As you attain financial freedom, you will have a very good opportunity to contribute towards these noble causes. Giving to charity is one very effective way of building yourself as well as the society around you. This will eventually make Singapore a much better place because the charities serve the needs of the underprivileged. You will also have a sense of pride as you get involved in this positive endeavour.

Peace of mind and better relationships

Being financially stable will give you a new level of peace of mind. One major source of stress is financial problems. Mental stress usually results in other problems such as a strain in relationships with family members and even friends. Indeed, many Singaporeans have ended up with broken homes because of financial woes. Financial freedom will result in emotional stability, which will translate into more peaceful relationships and stronger families.

Freedom to stick to your values

There are times when your employer could require you to do something that is in conflict with your personal values. However, it may be difficult for you to refuse to follow your boss’s instructions simply for fear of losing your job and getting into a financial crisis. Once you attain financial freedom, you will most likely be in a position where you can resign from your job and pursue other activities that are in line with your personal values.

As you endeavour to pursue the goal of being financially free, there are several tips that will help you to achieve this goal. Some of these are given below.

1. Limit your level of debt.

In Singapore, there are several lending institutions that offer numerous types of loans. It is therefore very easy to get into overwhelming debt within a short period of time. As you endeavour to walk towards financial freedom, it will be unhealthy for you to take on several loans at the same time because the chances of default will be high. Limiting the amount of debt will help you to organise your finances in a better way so that you can manage to pay off all your debts and move towards total financial liberty.

2. Choose to live in a HDB flat rather than a condominium.

In Singapore, living in an HDB flat is much cheaper than living a condominium. The costs of buying an HDB flat as well as the maintenance expenses are generally much lower than the costs that come with living a condo. In an HDB flat, services such as the cleaning of corridors and collection of garbage are done at a very small fee. You will therefore incur much lower household expenses if you decide to live in an HDB flat. This will enable you to save a reasonable amount of cash which you can channel towards savings.

3. Operate without a car.

Having a car in Singapore will cause you to incur expenses in both tax and maintenance. If you decide to avoid the whole cost of having a car and use public transport instead, the amount of cash saved can be invested into a profitable venture. Alternatively, these savings can be used to pay off some debts so that you are able to achieve your goal of being financially free sooner rather than later.

4. Invest in high-yielding stocks.

In Singapore, there are many high-yielding stocks that can give you a good return. This is a good way of earning a passive income. You can choose to invest in a basket of assorted stocks from places like Singpost, business trusts and banks. This can give you an average interest of 5% in dividends. Over a period of one year, this figure can be a very good income and it can be used to build your financial portfolio as you move towards financial freedom.

5. Differentiate between your needs and your wants.

There is a big difference between needs and wants. Once you take note of your needs and remove your wants from your list of expenses, then you will be surprised at the amount of money that you can save. Many Singaporeans do not differentiate between their needs and their wants.

This is why they end up overspending on a regular basis. Once you remove all your wants from your budget and only spend money on your needs, you will be able to build up your savings substantially. One example of an extra expense that is unnecessary in Singapore is the cost of having a pet. Such expenses should be avoided if you plan to become financially stable.

6. Manage your credit card carefully.

Many credit card lenders in Singapore charge very high interest rates on the cards that they issue. It is advisable for you to pay the full amount owed on your credit card every month so as to avoid the interest charged. You should also avoid taking cash advances from the ATM because you will be charged very high interest rates as well as transaction fees.

In addition to this, it is important that you avoid applying for several credit cards at the same time so that you do not get into a situation where you are stuck in a viscous cycle of credit card debt. As you handle your credit card carefully, you will be able to reduce your debt liability substantially and eventually became more financially stable.

7. Make wise purchases.

There are many stores in Singapore where there are discounts offered on purchases. Choose to make wise purchases by doing research on where you can get the best discounts so as to reduce your monthly expenses and build a good financial base.

In conclusion, financial freedom is an important goal that should be pursued by all Singaporeans.