How to gain financial freedom

Going back to more than 11 years ago, when I was a student in your position, made me think, “What would I have liked to hear when it comes to finance?” A lot, to be quite honest, but I will focus on just a few. Given that we are wrapping up freedom month, cliché, as it may be, not talking about financial freedom, would be amiss. 

Financial freedom is what we are all striving towards in many ways than one. It is the ability to pursue your dreams and passions without worrying about making ends meet. A recent article in one of the asset management websites defines it as follows; Financial freedom generally means that you have enough money saved to maintain your lifestyle for the rest of your life, without being dependent on a monthly salary. You may choose to keep working, but you have the freedom not to if that suits you better. Being financially free means you do not have accumulated debt or bills you struggle to pay off. You can cover unexpected expenses when they arise and generally have the resources to meet your financial obligations.” 

While I wholeheartedly agree with this definition and many others, I could not help wondering if this is possible? Many people in our country study to create this financial freedom for themselves and their families through obtaining jobs. I believe our backgrounds have a significant role in how we view money, and ultimately our relationship with it. All the dreams of our families fall on our shoulders as soon as we start working, which creates implicit and explicit financial expectations. Ultimately, how you deal with your background and family can have the biggest impact on your financial freedom. 

I had learnt and made the following decisions when I started working, some not so popular: 

Manage expectations:

When you start working, to the rest of your family, it feels like all the problems have been solved and prayers answered. As motivating as that is, the pride the family has can quickly turn to pressure and expectations. Nip it in the bud and set clear boundaries. I am a fan of predictability and delegation. If you can support your family from the get-go, commit to a certain amount and let them manage it. Do not commit to something that fluctuates like buying groceries; their taste buds might change suddenly, yours too. 

Avoid getting into debt:

We can feel pressured to get into debt immediately after getting our first jobs. Why, no one expects you to drive a particular car unless they do, which is what you need to manage. Also, while your family may be pumping you to the neighbours because of your new job, you do not need to go take out a loan to renovate your mother’s house immediately. Instead, save for it and do it over time. 

The contentious one:

Move out of home as soon as you can – financial freedom is also mental. It is the wisdom to know we cannot fix all our families problems and that, to continue to support them, we need to invest in ourselves and grow. Usually, that comes with moving out of the home. And yes, you could be saving on rent, high cost of living in the suburban areas, if you currently live ekasi, but even if you stay at home, sometimes you cannot even point to the money you are supposedly saving on rent? When we start working, we fall trap to all the needs in our households, and we want to help solve them, derailing us from our goals, financial freedom.

Save and buy cash: 

Get into the habit of buying things cash, yes, including your car. Saving for things you need, especially the big stuff such as a car (more manageable if it’s second hand) and even renovating that house, is a good discipline. Putting money aside for the things you want should be at the top of your budget list. It is easy to get into debt, but once you are entangled in debt, sometimes saving makes no sense until you have cleared some of these debts. Lack of financial freedom can keep us trapped in positions or careers we are no longer passionate about; we find ourselves worried and unable to make the next leap because of debts and financial commitments. However, while perhaps some of the aspects of the above definitions may sound far fetched, they are all possible. It is possible to not depend on your salary. Still, you have to work towards these and create specific disciplines along the way and avoiding getting into debt by saving for what you need is probably the most important one. 

Thobela Mfeti
TSIBA 2011 Graduate
Manager Research Analyst
PPS Investments