Financial Freedom = Peace of Mind
REALIZATION
Five years ago, I was devastated with our financial situation. We neglected saving up when we still didn’t have a kid and just spent our hard earned money buying material things that we actually don’t need at all. When I decided to resign from work I realized that we have a lot of debts to pay for.
Yes I am not ashamed to tell it because that mistake was my realization and that is when I promise myself to strive hard to clean my name and do something for our retirement and for my son’s future too. Ayokong dumating sa point na maiwan namin bigla si Ren ng madaming utang. Kawawa naman anak ko di’ba?
I told myself that we need to do something as early as now that our future self will thank us for (huli man daw at magaling makakahabol din).
FINANCIAL LITERACY
I spend most of my days reading books, magazines and following financial gurus tips to success. I will never forget what Chinkee Tan told the crowd in one of the events I went to. He said that we need to be financial literate first. What does it mean? Kapag si Juan nanalo ng 1 milyon, madali yang mawawala kasi hindi sya marunong humawak ng pera. Gagastusin nya lang yan kung saan saan, and in no time from 1 million magiging 10o pesos na lang. Pero kapag ang isang katulad ni Henry Sy or Gokongwei tinanggalan mo lahat ng kayamanan nila, in no time maibabalik din nila ulit kasi marunong sila, alam nila ano gagawin para kumita ulit ng pera.
You get the message? A person needs to be financial literate to be able to know the ins and out of the market. That’s the main reason why the rich gets richer and the poor gets poorer because the rich know how to make their money work for them while the poor work hard to get money.
STEPS TO FINANCIAL FREEDOM
There are a lot of books that I’ve read that will tell you to do these steps to reach your goal. Evaluate your current situation (assets vs. liabilities) to give you an idea what is your current value. If your assets is bigger than your liabilities then that’s good, but if the situation is the other way around then you need to do something about it immediately.
PAY YOUR DEBT – list all of them to give you an idea on how big or small they are. If you have watched the movie “Shopaholic”, the main character was broke and didn’t know where to find the money to pay for her debt. What she did is that she sold all her stuff to earn money to be able to pay her debts little by little. Remember you don’t need to pay everything in one go. You can ask the bank to give you an amnesty program for your credit cards debt so that you can pay it in the amount that you can monthly.
My advice, pay first the small ones then ask for a staggered payment for the big ones.
GET A LIFE INSURANCE – If you are the bread winner of your family or you have kids and spouse that depends on you, then you should invest on yourself for them. You don’t want to leave them in this world with nothing to start their life without you, right?
Getting a life insurance will make you at peace that your love ones will get something when an unforeseen event happen to you. Also now, there are life insurance that you can use for retirement because there is an investment attached to your plan. Some, also offers “riders” that you can add to your policy. Riders includes accidental death benefits, critical illness benefits and hospital income benefits.
Getting a Life insurance is not a priority for us Filipinos especially if our parents don’t have one (we were not exposed or required to get one also). Most of us think that SSS is enough for our love ones who will be left behind. Maybe it depends on your capacity and your goal for your family.
My husband and I are both freelancers and we have no employers who will pay our SSS. So getting life insurance is a necessity for us. We had a discussion on the benefits of investing in life insurance in this blog article.
Also, do not think that life insurance are expensive. Talk to a financial advisor and they can offer you the amount you think you can pay off annually, quarterly or even monthly. You can get as low as 1,000+ per month, insured ka na.
But of course, the premium depends on your age and lifestyle. If you are a smoker or have a risky job you will get a higher premium. It is really advisable to START EARLY. The earlier you start, the lower your premium will be.
Keep this in mind: The only person who will take care of the older person you will be, is the younger person you are now.
INVEST – Now, make your money work for you. You can start investing in stock market or get a mutual fund for as low as 5,000. Study the power of compounding interest.
BUILD UP YOUR EMERGENCY FUND – compute your monthly expenses. Your emergency fund should be at least times 3 of your monthly expenses (better if it’s 6 months). Emergency fund will help you cover your monthly bills and needs while you are getting back on your feet.
Okay before you think that I am already living my life and shouting I am financially free, uunahan ko na kayo… I am still in the process and it still a long way to reach my goal.
Financial Freedom is a long term goal but if you are focused and determined to reach your goal you can have it in no time.
I love this article. I am a single mom and my son have autism. Honestly, I am a paranoid mom when it comes to my son. I have a life insurance na hndi lang para sakin but most esp. Para sa anak ko. I paid 1,355 per month. #spreadtheLEV
Omg, the name of your kid resembles my youngest daughter’s nickname, Ren-Ren (her name is Regina Lauren). I also had the same realization 2 years ago when my life was in turmoil, and I was still pregnant with my bunso back then.
Just like you, I educated myself through reading about financial education, got a life insurance and even joined a multi-awarded MLM company. I also had the opportunity to attend one of Chinkee Tan’s talks about money and financial freedom.
Now that I’m back to work (coz my kids are already big enough to be taken care of by a yaya), I’m building my emergency fund. It’s really nice to see fellow financial literacy advocates who are also moms. After all, we want to protect our children when the “time” comes. =)
This is something we seriously need to tackle in the family too. Peace of mind is also something I hope to have.
I can relate to this. I paid off a HUGE chunk of debt December last year (accummulated due to sickness and death in the family) and I admit it was one of the best feelings in the world. Better than eating a tub of ice cream. LOL!
I agree! Cheers to debt free life π
Hubby and I been discussing about getting a life insurance for our son few months back, nung may work pako. But i left my last December so this plan will hold back temporarily until we have extra budget for this.
Your hubby can get one for himself first, then if may extra na, insure yourself na din π
Thanks for sharing! I agree talaga na it all comes with financial literacy in terms of handling our finances! Thanks for sharing! π
yes Joy, mawawala agad ang pera pag di mo alam kung pano gagamitin.
Sarap Talaga if we don’t have to worry debts. Good thing when I was still working, I got insurance for the boys and for myself. Also able to get mutual funds. Now that I don’t have work (resigned last year) na to look after the boys, husband is working super doubly hard for the family. Somehow mahirap but we are surviving. Not able to pay for the insurance na lately and I hope We still can. Sayang naman.
Mutual Fund is next on my list.
This article is a very timely and useful article.I love that it was direct to the point.Thank you!
Levy, seriously I want to get that SunLife Flexilink Life Insurance. I’ll send you a PM.
I will refer you to our financial advisor
This is a great article. I will let my husband read. We don’t have a lot of savings too, mostly because the childbirth had cost more than we expected. It practically sweeped almost everything but, of course, it was a worthy expense. When we got back, we invested on a business. We wanted to sustain ourselves in old age and give something to our son when we’re gone, that’s why we’re preparing all these for him.
yes we need to do be financial stable for our kid/s.
That’s also my fear. I don’t want to leave my kids with problems and I also want to be able to leave them something when the time comes. Thankfully we will be finished with our debts soon! Now we have to start saving!
sigaw na ng I’m debt free!
Great article! I’m slowly building up my emergency fund… this will take a lot of time and sacrifices including lifestyle change. But i know i’ll thank myself afterwards for making a wise decision when it comes to money matters π Thanks for sharing this!
if you reached your 3-6 months emergency fund, you can put it on the bank (or invest it in mutual fund) to earn additional interest
Good job! Admission is the first step in liberating yourself from your debts. Learning is taking it a step further. You’rr an inspiration to starting families like mine. Thanks for sharing!
yes learn from my mistakes and do better π
Life insurance is really cheaper when you’re younger talaga..
Tama ka nga, emergency funds should be at least 3 months worth..
try to make it 6 months (kaya mo naman)
Your article title is so true.. can very much relate.. FINANCIAL FREEDOM = PEACE OF MIND
I’m planning to get a life insurance too when I’ve learned about estate taxes, though di naman malaki ang aming pera. hehehe! I know that we need it, still searching where to get it.
yes you need to have funds to cover the estate taxes for you dependents.