If I asked you if you wanted to be wealthy,my guess is that you would say “yes”.  I think not many people would say “no”. I mean who would rather choose suffering over comfort, or lack over surplus?

 

In this blog, we’ll cover the three basic principles of financial freedom including reading.  budgeting, saving, and investing.

Let’s get to it then!

 

Financial Freedom begins with Financial education

 

Financial freedom is a goal that many people strive for, but it can be elusive without the right information and actions. While information alone may not bring the financial freedom you desire, ignorance would  be a hindrance to achieving it. By gaining accurate and reliable information about  how to be financially free and taking the necessary steps to apply that information, you can truly be free. Knowledge of finances by itself does not make you financially free, but applying that knowledge does, invariably you need to have financial  knowledge and then apply it, to be financially free.

Financial literacy is an important aspect of financial freedom  that everyone should strive to achieve. It involves understanding how money works, how to manage your finances, and how to make smart decisions about spending and investing. With financial literacy, you can be empowered to take control of your financial future and achieve your financial goals.

 

“Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.” – Warren Buffet.

You must KNOW and RECOGNISE that information is a key factor to transformation. When you are ready to transform your finances, go for INFORMATION! Without access to reliable and accurate information, it is difficult to make informed decisions and take effective action towards your goals. It’s fundamental, learning about financial freedom is crucial in achieving financial independence and security.

Acquiring new information can provide you with fresh perspectives and insights, leading to personal growth and transformation. For instance, when you  learn a new concept or skill, you may feel inspired to alter your behaviour and habits, which can result in a personal transformation. This is same with FINANCES.

Have you heard that taking risks is essential  to breaking  new grounds?  YES! Wealth creation will require being audacious. The caveat though is that it’s critical to take calculated risks.

Information can help bridge the gap for potentially harmful decisions made in the name of risk-taking. While informed risk-taking doesn’t guarantee a positive outcome, it can help individuals make better choices.

What we find with many wealthy people is that they are astute readers.Reading is one common habit shared by successful people. It is a major component of their daily lifestyle.

Many people have formal education but are not committed to self education which is much more critical to personal development. There are many examples of successful people throughout history who did not have a formal education but were devoted to reading and to self development..

Abraham Lincoln – the 16th President of the United States was largely self-educated. He had less than a year of formal schooling and taught himself through reading books.

Andrew Carnegie – the steel magnate who became one of the richest people in history had very little formal education. He left school at the age of 13 to work and educate himself through books and public speaking events.

Coco Chanel – the fashion designer who founded the Chanel brand had a difficult childhood and was sent to an orphanage at a young age. She did not have a formal education but learned sewing and designing skills from her time in the orphanage and later on in her work as a seamstress.

Thomas Edison – the inventor and businessman behind the electric light bulb and many other inventions had only a few months of formal schooling. He was largely self-taught and educated himself through reading books.

Richard Branson – the British entrepreneur behind the Virgin brand did not have a formal education. He struggled in school due to dyslexia and dropped out at the age of 16. He went on to found Virgin Records and later expand into other industries such as airlines, trains, and mobile phones

It’s worth repeating that many successful and wealthy people are known for their voracious reading habits.

Bill Gates : The co-founder of Microsoft is an avid reader, and he’s often sharing his favourite books on social media. He’s known to read about 50 books per year on a wide range of topics, including technology, history, and economics.

Strive Masiyiwa is known to be a voracious reader. He said he reads for at least two hours every day and sometimes up to five hours. He emphasizes  that reading widely and constantly seeking out new knowledge and perspectives is essential for success in any field.

Mark Cuban: The billionaire entrepreneur and Shark Tank star is also a big reader, often sharing his favourite books and insights on social media. He’s known for reading about three hours per day and says that he uses reading to stay informed and develop new ideas.

Mark Zuckerberg, the co-founder and CEO of Facebook, resolved to read a book every 2 weeks throughout 2015. He called it his “Year of Books” challenge and created a public page on Facebook where he shared his book recommendations and invited others to join him in the challenge. Some of the books he read and recommended during the challenge include “The Better Angels of Our Nature” by Steven Pinker, “Gang Leader for a Day” by Sudhir Venkatesh, and “The Structure of Scientific Revolutions” by Thomas S. Kuhn.

Oprah Winfrey: The media mogul and billionaire has credited books with helping her overcome many challenges and achieve success. She’s known to read several books per week and has a popular book club that has helped promote many best-selling authors.

Elon Musk is an avid reader and when asked how he learned to build rockets, he said “I read books.” He said his passion for reading helped him gain the knowledge and expertise he needed to build his various companies, including SpaceX, which designs and manufactures rockets for space exploration. In a 2013 interview with The New Yorker, Musk said, “I was raised by books. Books, and then my parents.” He has also recommended various books to his employees and followers, including “The Hitchhiker’s Guide to the Galaxy” by Douglas Adams and “Structures: Or Why Things Don’t Fall Down” by J.E. Gordon.

Ben Carson is known for being an avid reader. In his autobiography “Gifted Hands,” he writes about his love for books and how reading helped him to develop his intelligence and his imagination. He has also spoken about the importance of reading and education in his speeches and public appearances.

Warren Buffett: The billionaire investor is famous for his love of reading and has said that he spends up to six hours per day reading. He credits much of his success to his reading habits, which have helped him stay informed about business, finance, and the world at large.In fact, when Warren Buffett was once asked about the key to success, he pointed to a stack of nearby books and said, “Read 500 pages like this every day. That’s how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.”

“In an interview with The New York Times in 2016, Bill Gates shared that he reads around 50 books per year. Reading is, he said, “the main way that I both learn new things and test my understanding”. “ 88% of financially successful people read at least 30 mins per day”

( Blinklist Magazine)

 

But successful people don’t just read anything. They are highly selective about what they read, opting to be educated over being entertained. They believe that books are a gateway to learning and knowledge.

 

Reading is a cogent part of personal growth and self-education, I cannot overstate this. It explains why successful people turn to books to guide and inspire them.

 

In his book “Rich Habits: The Daily Success Habits of Wealthy Individuals”, Tom Corley explains that rich people tend to read books that help them improve themselves and their business skills. On the other hand, poor people tend to read for entertainment purposes. This is because the rich see reading as a way to gain knowledge and expand their skill set, while the poor see reading as a way to pass the time.

Of course, this is a generalisation and not all wealthy people are avid readers, nor are all poor people uninterested in self-improvement. However, the data and research suggest that there is a correlation between reading habits and financial success.

 

Apart from its benefits in personal growth and success, reading is also associated with various health benefits, such as preventing stress, depression, and dementia, and enhancing overall life satisfaction, empathy, decision-making, and confidence.

 

Learning about financial concepts can stimulate us to modify our attitudes and behaviours, resulting in personal transformation. Nonetheless, it’s crucial to understand that transformation necessitates not only information but also action, introspection, and a willingness to change. Simply accumulating information without putting it into practice is unlikely to lead to meaningful transformation

 

So, do you want to be wealthy, huh?

 

Educate yourself about money, saving and investing. Learn about different types of investments and understand the risks and potential rewards. Be a lifelong learner of money and how it works.

When you invest in your education and continuously strive to improve your skills and knowledge, you can increase your earning potential and create wealth over time. By continuously learning and growing professionally, you can take advantage of opportunities for advancement and increase your income, thereby creating wealth.

 

“The only way to change your circumstances is to focus on improving yourself…wealth is not the result of random chance. It is the result of doing the right things, in the right way, every day.” – Tom Corley

 

Budget your way to financial freedom.

Wealth is usually created following certain principles.Smart financial planning and decision-making certainly plays a huge role in wealth creation. By creating a budget, saving and investing regularly, minimising debt, and taking calculated risks, you can maximise your wealth creation potential.

 

 It’s important to take the time to understand your finances and develop a plan that aligns with your financial goals. With a solid financial plan in place, you can make informed decisions about your money and work towards creating wealth over time.

 

By setting a budget, you can gain a clear understanding of your cash inflows and outflows and make informed decisions about how to allocate your money. Start by tracking your income and expenses for a few months to get a clear understanding of where your money is going. This will help you identify areas where you may be overspending and where you can cut back.

 

Set financial goals, both short-term and long-term, and align your budget with those goals. For example, if your goal is to save for a down payment on a home, you may need to adjust your budget to prioritise saving for that goal.

 

Group your expenses into categories, such as housing, transportation, food, and entertainment. This will help you identify areas where you may be overspending and where you can cut back.

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Review your budget regularly to track your progress towards your financial goals and make adjustments as needed.

 

Budgeting helps you take control of your finances and move towards financial freedom. It can help you live within your means, save for the future, and avoid debt.

 

Remember, financial freedom is not just about having a lot of money; it’s about having control over your finances and being able to make informed decisions about how you allocate your resources.

 

When creating a budget, it’s important to start by listing all of your income sources, including your salary, any investments, and any other sources of income. Then, list all of your expenses, including housing, food, transportation, entertainment, and any other bills or debts you have.If you find that your expenses are higher than your income, you may need to make some adjustments to your budget. This could mean cutting back on discretionary spending, such as dining out or entertainment, or finding ways to increase your income, such as taking on a side job or selling items you no longer need. Once you have a handle on your budget, it’s important to stick to it and avoid overspending.

 

Save and Invest

 

 

“Do not save what is left after spending, but spend what is left after saving.”

-Warren Buffet

 

Saving and investing are two key principles of achieving financial freedom. Saving involves spending less than you earn and putting the difference into savings or investments. Investing is using those savings to generate income and grow your wealth over time.  Make saving a habit by setting aside a portion of your income each month.

 

The earlier you start saving and investing, the more time your money has to grow.

Saving involves setting aside a portion of your income on a regular basis. This can be done by setting a budget, cutting unnecessary expenses, and finding ways to increase your income. Automate your savings. Automatically transfer a portion of your income into savings each month to make saving easier 

 

The money saved can be used to build an emergency fund, pay off debt, or invest in assets that appreciate in value. Investment should be the goal.

 

Prioritise spending and focus on essential expenses, such as housing and food, before non-essential expenses, like entertainment. By consistently saving and investing, you can build  a financial safety net and accumulate wealth that can provide you with the freedom to pursue your goals and live the life you want.

 

When I started paying attention to my finances in order to build wealth, the first challenge I had was the difficulties in saving. It was plain near impossible! I seem to have a good reason to always spend  all that I earn and even borrow more, many times.

 One of the mistakes I made was not planning my spending. I also learn from experience and from books that it is best to save first and spend the rest.

 

It took lots of resilience and determination, reinforced by continuous reading to begin to save. I started by planning my savings and my spendings. What I found that works best is to save first and spend after.

 

 It’s also important that you keep track of your spendings and categorise your expenses to see where your money is going and identify areas where you can cut back.

 

Like me, you  always have wants, smart things to do is to differentiate between needs and wants.It is helpful to minimise your spendings  by cutting back on unnecessary expenses. Save aggressively.

 

Save as much as you can each month. Aim to save a certain percentage of your income, and gradually increase this amount over time.The primary aim is not just to save but to increase your finances. So, save and Invest in assets. Instead of buying liabilities, such as expensive cars and luxury items, invest in assets that appreciate in value over time, such as stocks, real estate, and your own education. 

 

Avoid taking on new debt unless it’s for an appreciating asset, such as a mortgage.Avoid unnecessary fees Look for low-fee investment options and avoid paying unnecessary fees that can erode your wealth.

 Watch out for your subscriptions. Bill payments are legitimate ways to become broke .

 

To achieve financial freedom, it’s important to strike a balance between saving and investing. Saving helps to build a financial safety net, while investing can generate passive income and increase your net worth over time.

 

Savings in commercial banks have very limited appreciative value. The interest rates offered by commercial banks on savings accounts are generally very low, which means that the money saved in these accounts will not appreciate significantly over time. This is because the interest rates are typically lower than the rate of inflation, which means that the purchasing power of the saved money will decrease over time.

 

Invest in real estate. Real estate has the potential to generate income and appreciate in value over time. Real estate has the potential to generate income through rental income and appreciation in property value over time. When you invest in real estate, you can take advantage of opportunities to purchase property at a low price and hold it for the long term, potentially generating significant wealth over time.

 

In the book “Your Money or Your Life,” Vicki Robin and Joe Dominguez suggest that instead of relying on commercial banks, individuals should consider alternative investment options that offer higher rates of return. They suggest that people should educate themselves on different investment vehicles, such as stocks, bonds, and real estate, and find investment options that align with their financial goals and risk tolerance.They also emphasise the importance of creating a budget and tracking expenses in order to identify areas where money can be saved and redirected towards investments.

 

By reducing unnecessary expenses, you can save more money to invest and increase your chances of achieving financial independence.Avoid lifestyle inflation: Don’t let your spending increase as your income grows.Shop for the best deals. Compare prices and look for sales and discounts to save money on everyday expenses.

 

The ultimate caveat for saving is “make saving a priority and then live within your means”.

Save regularly. Make saving a habit by setting aside a portion of your income each month.

 

Avoid get-rich-quick schemes: Be wary of any investment that promises high returns with low risk.

 

You deserve to be financially free. Cheers to compound growth in your finances.

 

Thank you for reading.