Today, I will tackle about the two ways to achieve financial freedom. Achieving financial freedom is one of the goals that a lot of people want. Who else does not want to enjoy their lives to the fullest without having to worry where to get their day to day meals? Who else does not want to spend their time with their loved ones without the stress that work brings?
In my journey towards financial freedom, I learned two ways on how to achieve it. I am not saying that I already achieved financial freedom but here are the two lessons I learned on how to move out from the rat race to the fast track that Robert Kiyosaki discussed in his famous book Rich Dad Poor Dad.
Generate passive income. Probably the most important but the hardest way to achieve financial freedom is to build assets that will generate passive income. In one of my articles before, I discussed several sources of passive income. It can be from a real estate investment; the royalty fees from a franchise, a music album, and other intellectual properties; stock dividends, interests income from simple investments, etc.
For you to move out from the rat race, you must build assets that will work for you to put money inside your pocket. As Kiyosaki said, assets are anything of value that puts money into our pocket. In contrast, liabilities are anything that drains money from our pocket. Some of us buy liabilities we thought are assets. You must be careful though in determining which are assets and which are liabilities among the things you buy.
However, this is not to say that you should deprive yourself with some of your wants. The very idea of building assets is to generate passive income enough to buy both your wants and needs. As soon as you built enough income generating assets, then you can enjoy the rest of your life with vacations, leisure, and some other forms of luxury and enjoyment. Be careful though not to spend too much to the point of disposing those passive income generating assets to fund your wants. In order to successfully do this, you must learn about financial intelligence.
Earn more and desire less. You may have probably heard this phrase since I already tackled it before. “Earn more and desire less” is the ultimate heart of frugality. In Filipino, “Ubus ubos biyaya, bukas ay nakatunganga.” No matter how much you’re earning, if you’re not spending it wisely to buy assets that will generate passive income, then your expenses are not worthwhile. Unless you’re one of the richest persons on Earth like Bill Gates and Warren Buffett, there is a possiblity that your source of income will dry out and you’re not prepared when that happens.
In addition, I’ve learned from personal finance educator Francisco Colayco that your future is the most important expense. Therefore, you must then prepare and save for that particular expense.