What does financial freedom mean? Here’s five tips to achieving it

Having control over your finances is financial freedom in itself. Picture: Pexels

Having control over your finances is financial freedom in itself. Picture: Pexels

Published Apr 21, 2024


April is Freedom Month in South Africa, and what better way to celebrate than to focus on obtaining financial independence?

Financial independence does not imply wealth; rather, it means having control over your finances and being able to make life decisions without being excessively concerned about the financial consequences.

“Financial freedom is about being prepared for whatever life throws your way,” says financial expert and head of retail investments at Nedbank, Babalwa Nonkenge.

She provides five specific measures that everyone can take to obtain the financial freedom they seek:

Master the art of budgeting

Budgeting is the foundation of financial freedom. Contrary to popular belief, it does not have to be complicated or boring. It simply means giving each rand a mission and then tracking how well it achieves that purpose.

Fortunately, there are several online tools to assist you with this. These free digital budgeting and money management application allows you to track your income and expenses, create budgets, and make the most of your funds each month.

Eliminate debt

Debt is a big impediment on anyone’s path to financial freedom. Your income is your most effective wealth-building weapon.

And you won’t be able to achieve your financial freedom goals if a significant amount of your salary is spent on debt repayment.

She advises the snowball strategy. This entails categorising your obligations from smallest to largest and then focusing on paying off the smallest debt as soon as feasible while making the minimum payments on the rest.

Once the lowest debt is paid off, the payments previously made to the smaller debts can be applied to the next largest bill, resulting in a snowball effect until all of your debts are addressed. It is a good idea to start paying off unsecured obligations, such as clothing bills.

Set financial goals

Setting financial objectives and deadlines is critical for reaching financial freedom. Begin by outlining your short-, medium-, and long-term financial goals.

Short-term objectives could involve making a budget or paying off a modest debt, whereas mid-term goals could be saving for a down payment on a house or starting a business.

Long-term goals can include saving for retirement or your children’s schooling. When making objectives, make sure they are reasonable and attainable. For example, instead of saying, ‘save more money,’ set a concrete goal like ‘save R5,000 in the next six months.’

Writing down your goals and revisiting them on a regular basis will help you keep motivated and on track.

Build an emergency fund

An emergency fund is an important safety net that allows you to handle unexpected financial issues without going into debt.

Most financial gurus recommend setting aside three to six months’ worth of living costs as an emergency fund. This may appear difficult, but it is possible with discipline and patience.

This emergency money should be kept in a different savings account from your other long-term savings so that you can access it immediately if necessary.

Plan and save for bigger purchases

Whether you’re saving for a dream vacation, a new car, or a home remodel, planning can help you avoid debt and meet your objectives faster.

Begin by establishing a precise savings goal and calculating how much you need to save each month to meet it. Then, designate a savings category in your budget and select the most appropriate savings product.

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