By Nathan Mvere
WHAT is financial freedom? As my manager and mentor Kamalesh Somaia likes to put it: “financial freedom means having the right amount of money, for the right purpose, at the right time.”
Now, financial freedom and being rich are not necessarily the same thing. You can be rich without financialfreedom but you can have financial freedom without being rich. Look again at the definition. How many people do you know that are rich but use their money for the wrong purpose? Or, how many people do you know that were very rich at some point but as time went on they lost it all? Have you noticed that someone may earn more than you but at the same time they can look to you for financial assistance? How does this happen? This is because they do not have Financial Freedom. The ideal situation is to be both. As Robert Kiyosaki (Author of Rich Dad, Poor Dad) says:“It’s not how much money you make, but how much you keep, how hard it works for you and how many generations you keep it for!”
So, in a nutshell, Financial Freedom does not come from how much money you make, but it comes from how you utilize the money that goes through your hands. How then does one attain Financial Freedom? This is where the concept of Financial Planning comes in.
Financial Planning is something anyone can do. It does not need a Degree or a Masters in Economics to do it. A lot of us avoid this but it is a necessary process if you have a plan for your life, which you should. As it is said:
“People do not plan to fail, but many fail to plan”
Another popular saying is: “If you don’t know where you are going, any road can take you there!”
Now, we all get a great big smile on our faces when we think about our future, we see us driving in our dream car (mine is a BMW X5 by the way), living in that amazing house sprawling over acres of lush green landscape (Double storey if you will, I’m more of a single storey kind of guy) with a range of cars to choose from depending on which day of the week it is or simply depending on how you’re feeling, having a stream of income flowing into your account while you do something you are passionate about like travelling around the world. A lot of you are smiling as you read this and probably asking yourself if it’s possible. It is. What is the difference between you and the person already living this dream? As a whole, nothing. But the difference is in the fine print, our habits.
“Don’t tell me what you value, show me how you spend your money and I will show you what you value” – Joe Biden. To get there though, you have to renew your mind. You have to see into the horizon and keep your gaze fixed on the end goal rather than focus on today.
We will start by harnessing control of your money. A famous quote says:
“You must gain control over your money or the lack of it will forever control you!”
Now I will leave you with this exercise that I posted earlier this week on my Facebook page and we will pick it up from there next week. Do this exercise and be honest with yourself. As a motivational speaker and preacher, Vukani Dladla, wrote in his book “Re- Engineering the Mind”, this exercise will put you into your “Boardroom” and as the CEO of your life you will be asking yourself very tough and hard-hitting questions. Where do you see yourself in 10 years’ time? Are you on course to getting there? What actionable markers indicate that you will achieve this? Are you winning or losing? Do you want to be rich? Do you want to have Financial Freedom?
Here is a simple exercise that will predict the future, to show you whether you will be richer in 10 years’ time than you are today!
Be honest with yourself because you are going to mark your own answer.
Take a paper, pen and calculator.
Now, starting 5 years ago (January 2011 or as far back as you started earning an income):
1. Calculate your ANNUAL income (total income for the year) for each year (i.e 2011, 2012, 2013, 2014, 2015)
2. Now add up the totals to get your TOTAL income for the five years.
3. Now calculate 20 percent of that total you came up with in Step 3.
Now, the answer you are looking at is how much you should have in Savings (Do not include assets, they depreciate in value)
1. 20 percent+: You are well on your way to becoming wealthy and you have already achieved Financial Freedom.
2. 10 percent+: You are on the right path and still have a chance to live comfortably if you increase efforts in saving.
3. 0-10 percent: Take a minute to think of all the dreams you wanted to achieve. If you wanted to own a property, wake up. This isn’t Monopoly, it’s real life!!! If you wanted to own an airline, that dream is flying away from you in First Class!!!
The successful people you see today didn’t become successful overnight! They started by practising successful habits!
“If you cannot save, you cannot behave”
Nathan Mvere is an Authorised Consultant at Nexus Insurance Brokers L.L.C (U.A.E). He can be contacted on firstname.lastname@example.org or on his Twitter handle @natemvere.