Daily Short Blog #7
Financial freedom is a term that we often come across nowadays especially during these difficult situation when we are able to find out whether we can sustain our needs financially. Different people has their own definitions. In my opinion, financial freedom is buying what you want anytime, being debt-free and being able to support yourself independently.
It is not really about being rich and having tons of money. Hence, it is having enough residual income to cover all your living expenses so that you can spend your precious time doing what you like rather than doing things just to earn money – like having a full-time job.
This can be easily achieved with preparation and financial planning.
”There is no lower, middle, or upper class. There is the investor class and the people who have to work for a living.”
Here are some ways to conquer the financial freedom mountain:
1. Become debt-free.
Pay off your debts such as non-tax deductible high-interest credit cards and car loans. Though not all loans are not bad loans, such as home and educational loans that provide certain tax benefits, being debt-free is better than having any loan.
If you have a loan, whenever you get a good amount of money in lumpsum, for example a bonus or a commission, pay it towards the loan as much as you can. Through this way, you will be able to pay off your debts sooner.
2. Build a contingency-fund.
Be ready for life’s uncertainties. Therefore, building a contingency fund will be great to meet urgent and unforeseen expenses. Let’s say, you already set a budget for a month and kept a certain amount as savings, keep at least 3 to 6 months’ expenses as a contingency fund to ensure you don’t need to dip into your investments in case of an emergency.
3. Get a medical insurance.
With the rising healthcare costs these days, having no health insurance can break your pockets. So to ensure your investments and savings are safe from medical expenses, get one and set your goal to become financially free in the upcoming years.
4. Start investing with passive income.
Start investing as early as possible even in small amounts. You will, after few years, realize the power of compounding dividends. It generally includes cash, fixed interest, shares and properties with varying growth and income potential. This can save you from unnecessary financial tension and save you tons of money.
As for me, I have started investing to a Philippine savings program called the Pag-IBIG MP2 Savings Program which is a savings facility ideal for conservative investors who want to have a safe place to invest and without capital loss with over 7% annual dividend rates. I discussed all of its important benefits on my other blog, please feel free to check it out. [mfn] The Benefits of Investing in Pag-IBIG MP2 Savings Program – OFW Guide [/mfn]
The Benefits of Investing in Pag-IBIG MP2 Savings Program – OFW Guide
In the UAE, since I stay here for employment, I have chosen the UAE National Bonds to invest some part of my monthly income. With the help of this program, I will be able to save for my future and also helped me build my emergency fund. And because I and my husband are now going to be a soon-to-be small family, we can also use these funds for our baby’s future needs as well as her education. I elaborated the reasons why I started saving on this program on my other blog, please also feel free to check it out. [mfn] Why I Have Decided to Save with The UAE National Bonds [/mfn]
Why I Have Decided to Save with The UAE National Bonds
I know and I believe that saving and investing with the Philippines’ Pag-IBIG MP2 and the UAE’s National Bonds will be a good way for me to reach financial freedom.
Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.”
5. Handle your wealth reasonably.
Manage you income and all your wealth virtuously without overspending and being too extravagant. Assess and always monitor your investment portfolio whenever necessary to ensure that your financial strategy remains up to date as your expenditures vary over time.
6. Think positively.
Debt can definitely be discouraging but you have to look at your money positively. Money is actually a good thing even if it seems you carry a lot of burden right now. Look at it as a tool to help you achieve your dreams, fuel your energy and live a stress-free life that you can enjoy. Because if you view it negatively, you’ll unknowingly wreak havoc your chances of making and keeping the right amount of money you need.
7. List down your goals.
Start working on your goals by enumerating them, this way, you’ll start working towards those goals without even realizing it. You might not accomplish everything in a month but a year is enough to start and make a progress.
8. Always monitor your expenses.
Tracking your expenditures is an integral step towards financial freedom. Monitoring your expenses can be done by keeping a journal or an excel sheet will all the details of your cost of living. It will be very helpful for you to stay up to date on whether you are able to meet your monthly budget or failed your allocations and exceeded it.
9. Pay yourself first.
Through this, you will guarantee you’re always putting money aside to invest in yourself. Because by doing the opposite, you will only get what was left over that will not suffice to help you obtain your financial freedom. When you pay yourself first, you are prioritizing your long-term financial well-being rather than focusing only on immediate needs such as bills and other daily expenses.
10. Cut down your expenses.
When you spend less, you’ll have more savings and you’ll learn that you need a lot less to survive – yes, as simple as that.
There are two ways to get rich – make more or desire less.”
11. Look and create for additional sources of income.
There are several ways to do this. There are few side jobs you can do such as blogging, working as a virtual assistant, or even a part-time driver. As for me, aside from being a blogger, I also sell my handmade crochet products. I earn a little amount of money, but it’s better than nothing, right?
But if you don’t have a lot of time to devote to earning income, then you may focus on increasing your income streams passively through investing in stocks, starting your own online business, let’s say a clothing shop, or buy a property and rent it out.
Author’s View
Financial freedom can be achieved by incorporating these good money habits into your daily life. Once achieved it, you will have more time to choose a second career, spend more time with your family, or just be happy with whatever you have – you will obtain simple happiness in life that money can’t buy, but comes at a cost if we are not financially prepared for it.
Here’s my small business page:
Anne’s Yarn Creations
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Being debt free is a good start. Remember to pay yourself first on paydays!
First way is already true, to be debt free. Also agree with finding another source of income!
Cutting expenses is important. It’s not always easy though. We have additional sources of income that help.
Great ideas, at the moment I’m not in debt and I can invest in other things to help increase income.
I agree, debt free is so important. I also agree with passive income, really trying to work on that one.
Such great tips! We are working toward financial freedom. I hope that we can be debt free very soon.
“There is the investor class and the people who have to work for a living.” I love this!
Thank you for sharing these tips! I found useful info here. I didn’t hear this saying previously: “There is no lower, middle, or upper class. There is the investor class and the people who have to work for a living”. I like it! 👍
Those are some great points to and will keep them in mind. My number one is debt free as well, I try not to be in any sort of debt.
Financial freedom is everyone’s dream. It can be reality with smart money handling such as following these tips