How to Achieve Financial Freedom: Guide for every Filipinos

A great deal of articles and blog posts spread over the internet with the common theme of “How to achieve financial freedom, “Tips to financial freedom”, “How to be financially free” and various labels like “Steps to monetary freedom and independence”, “how to get out of debt”, credit card management and financial management, made me think for a second the severity of the need for financial literacy. With growing number of Filipinos desiring to be financially free, I spent the day thinking---What is Financial Freedom?

WHAT IS…

Kim Kiyosak gives a profound definition of the terms. According to her, “Financial freedom is much more than having money. It’s the freedom to be who you really are and do what you really want in life”. While her words seem relatively abstract for some and many find it hard to quantify, I believe her definition best sums up the end goal of every sound financial journey.

Louis Delos Angeles, CPA and blogger, defines financial freedom as the “state at which one is not worried even with unexpected obligations because one has more than enough and has expected new source of income to address such arising needs.” Mr. Angeles definition speaks of volume on the context of Filipino financial landscape since many Filipinos view financial freedom as being free from the anxiety of debt, job loss, and unforeseen events with monetary implications.

With some definitions in mind, I visualize basic vital words to have a solid picture of financial freedom--STABILITY and SECURITY (being able to meet financial needs both at existing and unforeseen conditions), SUSTAINABILITY (being able to meet monetary requirements at future dates), and INDEPENDENCE (using financial resources to live life to the fullest). These four words guide me in gauging my financial health.

HOW TO…

The road to financial success does not end in knowing and understanding. “what-is” is usually followed by “how-tos” and with the existence of technology these information are readily available over the net and almost everywhere (work, communities, compact groups and etc). Achieving financial freedom is a systematic but at the same time a creative process which entails magnitude of discipline and perseverance.

Most financial advocates list steps on how to attain such state. Renz Paguio, in his 6 tips to financial freedom, enumerates the ‘basics’ tricks which include acquiring healthcare, creating an emergency fund, managing debts, increasing cashflows, accumulating assets, and preserving estate. Ryan P. Zacharczyk, CFP®, MBA CRPC give a detailed steps in his 7 Steps to Financial Freedom which includes making a budget and cutting up your credit card.

I have attended a number of seminars, talks, financial orientations given by various financial groups, and famous people in the field of financial literacy. These people share the same concepts, steps or procedures and vary slightly on the terms, interpretation, and presentation. Most, if not all, believe that in order to achieve financial freedom one must pay his debt, establish an emergency fund, acquire health care and life insurance, build a solid savings and finally let his money work for him through passive income streams, investment, and an enterprise. I made a simple smudge to illustrate the idea presented which I am currently following as of date of writing.

It is frustrating when I hear my kababayans talk on how miserable their lives have been due to debts, credit cards, dysfunctional finances, loss of job, sickness, lack of resources for education and even the basic survival needs like food, shelter and clothing. It breaks my heart that they have to suffer simply because of lack of financial literacy and application. But despite all of these, my hopes are high that one day the dream of financial freedom for Filipinos will be achieved not only through financial management concepts written on books, checklist, steps and lists but a rock-hard sustainable commitment in lifting each other towards that dream.

References:

1. What is Financial Freedom?, http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/January-2012/What-is-Financial-Freedom.aspx
2. What Is Financial Freedom?, http://investinginphilippines.com/what-is-financial-freedom/
3. 6 tips to financial freedom, http://www.entrepreneur.com.ph/business-ideas/6-tips-to-financial-freedom
4. 7 Steps to Financial Freedom, http://www.dummies.com/how-to/content/7-steps-to-financial-freedom.html