Being financially free can be defined as, the financial state in which your passive income (i.e. income from your investments which come without any effort on your side) exceeds your expenses.
For example, you have share of a good company who pays double the amount of money you require yearly as divident, so that you spend what you need and reinvest the rest thereby increasing your next years divident.
This is a simple example to illustrate, in practice there are many kind of such sources like rental property or a business etc.
So suppose you are retired (financially free), what will you do?
You can do a hell lot of things, first, if you don't like your current job then you can quit. If you like to start a business you can start. You can give more time to your family. You can watch your children grow. You can teach them how to be financially free. You can go on a holiday of your dreams. You can relocate to wherever you want. Or if you are the lucky one who loves your job then you can continue doing it. But this time your value to the organization you are working for will be far more than ever because as you are financially independent and love your job, you will not be afraid of doing any changes for the good in your organization and that will grow your organization and you will become highly sought after and respected employee of your organization.
Wheeww.... Enough now.... I am just feeling tired to type all those advantages you get when you become financially free, because numerous are coming to my mind. But hey, you can have your own great reasons..
The biggest advantage of financially free is a piecefull life. Life without tension (well one will definitely have positive tension to achieve their dreams). You don't have to worry about your job security, pay hike, lay offs or get up early for work or burn midnight oil and complete projects and presentations unless you enjoy doing it.
So I assume that it is foolish to ask you whether you want to be financially free. If you were not then why would have you been still reading?
Well I am so enthusiastic about it because I was financially free once.
My real life story-
First I came to know about the concept of financial freedom through Robert Kiyosaki's book- The Rich Dad Poor Dad. The book is awesome, a must read. A friend gave it to me when I was 20, quickly I got enfluenced by the concept. I was so much motivated because of the young age that I achieved the freedom before coming out of the college by following extreme frugality.
I also rejected the highest paying job of my college batch, every friend and professor were like "Are you crazy?? You have got the highest paying job in the college, what others just dream of and you are rejecting it?" The company was astonished, asking 'what's wrong with our offer? Do you have any better offer?'
Life was going very smooth for 2 yrs and then I started drifting from my course, it was too late until I realised it, many huge expences came by, some expected some unexpected to which I was not prepared. And I lost my freedom.
When I thought about it, it became appearant that I was doing all the preparation myself for loosing my financial freedom. I was blowing out money more and more, my reinvestment started declining, they even got in to negative territory, but it was slow. Habit of over spending was slowly infecting me and I was too busy to give any attention. I was distracted by society, slowly accepting the show off kind of mentality. Because of earning pressure I did some investments mistakes. It all resulted in, you guessed it right!! loss of financial freedom.
The good thing is that it took about a month to figure this out. I quickly assessed my situation and came to the conclusion that I need to do a job to increase my income and investments. So after 3 years from completng the college a friend of mine used his enfluence to atleast give me a chance for interview(not a single employer was even ready to shortlist me for recrutment round because of 3yrs of gap after the college). I cracked the interview and the interviewers were impressed and I landed in my first job. I got salary more than what my friend expected, who helped me to get to the interview (the salary was still less than half of my least earning college batchmate, to be true, I felt really bad but atleast I had a job :-) ).
I was able to crack the interview because I always cultivated curiosity and always liked to learn new thing.
One more thing I learned from this experience that knowledge and common sense never go waste.
At the same time I also got married in a traditional wedding ceremony which reduced my assets to ZERO.
I never lost hope and continued to save and invest as much as possible. Invented more ways to save money. Its been 2 years since I have been married, I have a 1 year old son. Despite the outrageous expenses of child birth, his vaccination, purchase of a motorbike, my minimum expenses are 8 to 10 times more than when I was single. I am saving at a decent rate and will able to achieve my goal which I stated in previous post.
This time I am being carefull with my calculation. Added a lot of margine of safety.
We will discuss about my plan for freedom and how you can also prepare a plan for your financial freedom in another post.
Till then read my signature... ;-)
Sumit
The POWER is when,
you use ODDS
to get EVEN..
