Peso Korner

Peso Korner

Friday, September 12, 2014

5 Steps to Financial Independence


Already working, but still living with your parents?  Wow, you are one lucky fellow! Free board and lodging! A bunch of my well-off friends was even receiving allowances from their parents during the start of their career. While me? I’ve been financially independent from my parents since my first paycheck at the age of 20. And instead of my parents giving me a monthly allowance I am the one sending money home.

I was trained to be independent at a very young age, I always sell stuff on the side since grade school for my daily cash, and for that I am so thankful for it shaped me to who I am today. So thank you nanay and tatay!


Let me give you 5 important steps in achieving financial independence:

1) Take a deep breath and believe you can do it! Yes, you can do it. Self confidence is the first key,  if you are having doubts, always remember why you want to be financially independent in the first place.  Take a deep breath and smile! Believe me, you will survive. 


2) List down your Financial Goals - What is it that you want to achieve? Make it tangible, you want to buy the latest iPhone and macbook by December of this year? You want a car by the age of 25? Your own place by the age of 30? A business of your own by the age of 35? List them all down and be specific. 


3) Identify your Financial Limitations - In order to achieve #2 what are you planning to do with the limited resources that you have without asking financial assistance from anyone? Make a list of your monthly income, all your expenditures and evaluate yourself if you can achieve your goal with just the monthly income you are getting. If not then look for ways to get more income (as long as it's not  an illegal business!) or control your spending!


4) Adjust your lifestyle and target a debt free life. In other words, live within your means. Upon assessing your goals and knowing your financial limitations, it is time to implement your plans.  Will you hang out at Starbucks to spend more than a hundred pesos for 1 order of coffee? For now, just settle for 3 in 1! Tempted to buy a gadget on installment? Include it in your financial goal, save for it first!  Know the difference between needs and wants. Whenever you are tempted to buy something that is not on your list of financial goals, take a deep breath and ask yourself, do you really need it? If you can live without it, then it is just a “want”, so let it go.



5) Help your money grow.  Don’t just deposit your savings into a regular savings account. Let your money grow for you. Try time deposits for a start, if your goals are not within the year then try  mutual funds or UITFs (Unit Investment Trust Fund). Savings account only earns around 0.25% per annum while mutual funds /UITFs are averaging 10% to 30%. ( I will discuss this further on my next posts.) Aside from bank deposits or investment in equity or money market funds you can try investing in a small business too or any sidelines that will work for you. 



The hardest part in the process of gaining financial independence is the sacrifice you have to endure to achieve your goals. But believe me, the rewards are well worth it. So stay focused and surround yourself with positive people!  When you learn these things then and you are on your way to financial independence in no time! Goodluck!


17 comments:

  1. I think, this is good for youngsters nowadays and it should be taught at school while the students are growing up. In my case, the number 4 and number 5 are very hard for my kind of personality.

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  2. You can really be rich by changing your lifestyle and living simply. You'll have more savings and more flexibility.

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  3. this is a good tips for who doesn't know where to start , my husband has a lot of books about financial .. it is really good to have a list and guide. thanks for the tips!

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  4. i am still with my parents up until now not because we are well off, it's just we are having a hard time leaving our parents alone. our siblings are independent and we are working very hard always.

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    1. yours is a different case Sef, as long as you are not relying on your parents for your daily finances then that's understood. Your parents are so lucky to have you guys taking care of them instead of the other way around. ;)

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  5. I am so pump up after reading this. It is better to invest your time and money on work and spend it 10 years from now relaxing from all of the hardwork.

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  6. I think the number one is important. Without you having to believe in yourself nor having the confidence - it will all be hard to do.

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  7. Your tips are really great,every youngstar should follow it and became independent.

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  8. Thanks for the tips! I really need to start investing.

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  9. Pretty cool! I wish somebody taught me all this stuff back when I was still in school. I know nothing about investments. Maybe you could write something in detail about the different UITFs, treasury bonds, stock options, etc. that normal people with no financial background (like me!) can understand. That would be extremely helpful!:D

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  10. I like this philosophies as well.We also live on not depending on credit cards as well.

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    1. yes so true. Life is easier when we are debt free. ;)

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  11. I'm not really good in keeping my money. Even a fortune teller once told me that money come and go through my hand. I've been married for 8 years and from the very start, my husband who is British encourage me to keep some money in the bank, "money that I wouldn't miss." He was so 'makulit" that I agree to open a savings account putting £50 a month, while he opened an account for my then 2 year old daughter, putting £20 a month.. after a year I was able to withdraw the money, but the idea was just to transfer it to another account to accumulate more interest. I did not do that! Instead I took the money and spent it all! While he continued to save for my daughter. after 7 years my now 9 year old daughter has more money than me! I have 2 more children age, 6 and 2 and he's also doing the same thing for them. Adding pension fund and child trust fund but in a very small amount. It's not going to make them rich but he's hoping that it would help them pay their university fees or just something to start them up when they come of age... at their young age, they still don't get the idea of saving their money. They're like me, they would rather spent it on toys or sweets. So what my husband does, whenever they received extra money as presents, he will bring them to the bank so they can do the transactions. Their bank statements and financial reports are under their names and they get to read it. Just for them to feel grown up. We are just hoping that when the time comes they will spend it wisely :)

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    1. kudos to your hubby! Its a good thing that he thought of your kids future earlier, it will be easier for you guys too later on. Planning for the kids college education is really important specially overseas since college education there costs a fortune! Just teach your kids the value of money and eventually they will apply it too in their lives. So before you can teach them that, you should practice it first! So good luck Isa! You can do it.. little by little.. ;)

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  12. Thanks for sharing this! It is indeed an eye-opener. Late ko na na-realized na ayokong abutin ng 60 yrs old sa corporate world kaya ngayon I'm trying to my best to live simply, save and invest.

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    1. congrats! You have the proper mindset, yap let's target an early retirement. Then do what you want na like travelling! Goodluck! ;)

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  13. I have read T. Harv Eker's book and it really has made the difference. For me, financial independence have always been my goal

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