What you need to know to be financially independent
Are you financially independent? Do you have enough money to cover your basic needs and have some to save for the old age?
You need money to buy your needs and wants. You cannot be happy and achieve peak performance unless you afford to buy your basic needs.
How do you ensure you are financially stable to have peace of mind?
- Have a clear financial strategy
- Be a master of your own life. Write down what it is you want to achieve in in line with your guiding values or personal credo. Set your own agenda and work consistently towards your target in line with your values.
If you lack clarity about your definition of success, how will you know when you make it?
Above all, save.
Why would you live in a $1,000 monthly rent apartment, when you earn just $2,000?
Write this down:
Your total fixed monthly costs should never exceed 40% of your guaranteed monthly revenue. Always set aside at least 5% of your salary for emergencies and 25% of your salary (in stocks, land or in a small business). If you don’t have health insurance, set aside another 5% for your medical bills.
You can then try to live on the remaining 25%.
“Success is your ability to be well-off tomorrow than you are today.”
If you don’t save and invest wisely, you are unlikely to make your tomorrow better. The graphs’ below illustrate the point of retirement and poverty point.
Copyright Mustapha Barnabas Mugisa, MBA 2014. All rights reserved