Anyone who works an 8-5 job dreams about achieving financial freedom or at the least, financial stability. And while I’ve been lucky with a job that I enjoy (on most days) and pays enough to live comfortably, I am still actively thinking of how to maintain our lifestyle without the daily grind.
First, a big fat disclaimer: I am in no way a financial expert and have just started on this financial freedom journey. This is mostly for me as reminder and just in case anyone else is interested, a way to share what we’ve done and our goals.
1.Emergency Fund equivalent to 3 months of our monthly expenses
As of today, this is a tick for us.
Why is an emergency fund important? A lot of people go into debt because they don’t have anything saved for a rainy day causing them to touch their savings or investments or worse take a loan when they need cash.
How to compute for an emergency fund? List down all your expenses every month include all items that you believe you cannot live without even temporarily. Multiply that by 3 or more. My number is 3 because my worse case scenario is that lose our jobs and 3 months is a comfortable time to find a new one.
2. 20% of monthly salary into Investment or Savings
Since we’ve maintained a stable emergency fund, we decided to reduce savings to 5% and push 15% of our monthly salary to long-term investments. The very simple reason behind this is we want to ensure our money beats inflation.
Our long-term investment of choice is the Stock Market through colfinancial. I’ll probably talk about this in more detail on a future post but for now, here’s a Chinkee Tan video that gives good pointers on why stocks.
Our goal this year is to have a 67% increase in our investment portfolio.
*We also have Life Insurances (and I advocate having this) but I consider them as expenses and I treat it more as a safety net.
Thank you to a former boss for introducing me to the concept of tithing and to the Feast for deepening my appreciation. Now, this I need to be more diligent about because while I regularly give, I don’t know if I maximize the 10%.
I have a different and perhaps a “controversial” approach to tithing — my 10% goes to charity first before the rest goes to church. I rationalize that Jesus is our neighbor and any help we give directly to our neighbor is equivalent to giving to his church.
How does Tithing benefit you? I strongly believe that Tithing wires your brain towards abundance and as you keep on helping others, your mind and spirit works on how you can have more so you can give more.
4. 7 income streams
I heard from a talk that millionaires have an average of at least 7 income streams. Seven! Do you have at least more than 1?
This year, we decided to get our 3rd stream and already on planning stages for our 4th.
Our 3rd stream? We decided to try our hands at the food business by franchising a food cart 🍜🍡🥟🍔. As of today, we’ve managed to find a location and are plugging away at steps 2,3,4 til we hit opening day.
5. Enjoy life!
As long as steps 1-4 are delivered and we splurge within reason, we spend for YOLO!
Part of this, I believe, is to keep us motivated. We work hard and we need to feel good about how hard we work. This fuels us to move forward each day and stops us from wanting to quit even during the most trying of days because YOLO helps us understand exactly the lifestyle we are working for.
Important: We do not YOLO using credit cards and pay any purchases in full every month. We’re practical though and take advantage of all pay later or 0% installment plans — cause money in your bank account is interest in your bank account so pushing cash out has its benefits.