Being a Malaysian, I feel myself extremely lucky as I leave in a resourceful, multi-cultures, multi-languages and freedom country. I can achieve my financial independence I wished to by proper planning and follow a correct path. With the rising of new Economy Giant in China, it has provided many Malaysian especially Malaysian Chinese, an addition alternative way to achieve financial freedom.
I have been riding on this opportunity in my earlier stage of career path and building the basic foundation for my destiny to financial freedom.
Financial freedom is not a rocket science but something all of us can achieve if we have a will to achieve it, follow the proper path and make some sacrify in the early stage. Before go into the definition of financial freedom, ways to achieve it, It is good to have an overview of broad principals of financial freedom below:
DARE TO BE DIFFERENCE
If you want to become financially free, do not border about what the people around you think.
You can’t afford to give a damn what they think about the house you stay, the clothes you wear, the car you drive, where you buy your food, or comment on you that you are not comfortable to enjoy yourself with luxury stuff.
What you can afford to do, is to take pride in the fact that you are different. You can be proud and excited about your plans.
By daring to be different, you can know you’re on your way to be free from debt, free from the everyday struggles of money and, most importantly, on your way to live your dreams.
Learn the art of delayed gratification. What this basically means is that you still allow yourself to have the things you want, like a nice car or house or nice watch, but you don’t allow yourself to have them instantly. You commit to save up first for anything you want to buy.
Plan for your future. A time is coming where you won’t be able to work anymore, but you will still need money to live. You need to have a financial plan. You need to understand your plan, buy into it and work hard to make it a reality. I have a good friend who always say she is living in today world, enjoying now as never know what will happen tomorrow, however, she worries about the future failure of marriage, worries about unhappiness of future family life and that’s why she chooses to be single, this seem to be contradict isn’t it? The morale of this story is, we are living in today world and should appreciate every day we live however, we still need to plan for our future and have clear direction on our financial destiny, otherwise, we will always worry about our future, failure with financial burden, failure marriage and get nothing done.
SPEND LESS THAN YOU EARN
It is unbelievable that many of us fail to comply with this principal though it sounds fairly like common sense. I partly blame our culture of instant gratification, as a society, we are nearly incapable of sacrificing in the present for a benefit in the future. I have a friend in her late thirty who have more than one watches and has one nice watch with value of RM 3500 but yet fancy for a new model and spend another RM 11000 for another watch despite the RM 3500 one never “tell her wrong timing”.
Owning one watch cost RM 3500 is good to have "stuff" though already a luxury stuff for many people but buying additional on top of current watch with RM 11000 is tremendously more than an ordinary people will do. Yap, she is trying to be difference but don’t get me wrong on the concept of what I meant by Dare to be difference.
So the point of this tale is not to judge my friend. I just don’t understand how this purchase has improved hers quality of life, in fact, it seems to be actively detracting from it. I am not suggesting that my friends don’t deserve this watch; I simply question whether or not she needed it right now while so many other financial and personal goals are put on hold because of a purchase that could have waited several years without the least bit of pain.
And the really ironic part is that the impetus to make these kinds of purchases usually comes from an outside influence, rather than our own personal values. In other words, our spending decisions are not always our own. But this trap can easily be avoided if we choose to live within our current means rather than counting on future earnings to pay off our debts.
SET YOUR SPENDING PRIORITIES
Let’s review how we spend money. Look honestly at the things you own, the bills you pay, the debt you incur. Are your spending habits in alignment with your values? Here’s an example of what I mean. Let’s say you claim that spending time with your children is a priority. But over the years you have chosen to purchase an expensive car, big house, and a houseful of “stuff.” You eat out regularly at high-end restaurants, you take expensive vacations, and you are carrying a tremendous amount of debt. And you feel that you have to work 70 or 80 hours a week—evenings and weekends—to “pay the bills” and you rarely see your kids.
At first, it may have seemed that you were providing them with a good life, but wouldn’t they benefit more from your time and attention? In hindsight, were those really the wisest spending decisions?
So achieving financial independence is all about making value-based spending decisions proactively, before you regret having gone the wrong way. It requires avoiding impulsive spending and making CONSCIOUS DECISIONS about how to invest your precious resources. It also means moving beyond the insane need to keep up with your peers—to own the newest, sexiest, and most expensive “toys” out there. And you really have to view money as more than cash, you need to see it in terms of the time and energy it takes to earn it.
STOP YOUR SPENDING LEAKS
Let’s review all the “stuff” you buy everyday without really paying attention such as snacks at work, a magazine, that cup of coffee on your way in every morning. And the expenses you are racking up because of financial disorganization such as interest charges on your credit card debt, overdraft charges because you didn’t balance your checkbook.
All of these falls into the category of unconscious spending. You just do it because it’s a habit. And although you think that a dollar here or fifty cents there is insignificant, it can really add up.
PAY OFF YOUR DEBTS
Your first priority on the road to financial independence should be to become debt free. While you might earn as much as 10-15% on your investments, many loans and credit cards carry much higher interest fees. So no matter how much you scrimp and save, you still end up at a loss if you have outstanding debt. Suspend your investments, top putting away money in savings, just temporarily, and focus all of your financial energies on your debts. Plan to knock out the highest interest debt first, and then move to the next highest and the next, until you have cleared them all out. No excuses, no rationalizations, just do it!
However, do not miss understand with good debt, a good debt refers to debt you incurred in order to have investment and the investment will generate cash flow more than the expenses to serve the debt every month. One of the common good debt is mortgage loan for your investment property, the investment property generate constant cash flow via its rent and the rent amount is more than the monthly instalment for the mortgage.
