Hi everyone, my name is Hj Mahmoud. I'm 33 years old now, born in 1982. I'm here to share with everyone, what I guess is what everyone is pursuing which is freedom and stress-free life, living not just surviving and I don't mean camping out in the wilderness, trying to look for food or water.
This subject has been a topic, close to my heart because I've been holding myself back for years and years from sharing this topic. To get into perspective, I've been working since I was 15 years of age and has been working ever since I retired at 28 and have been for the past 4-5 years.
Even though retired at 28, I was able to travel, purchase anything to my hearts desire and those I could not I strive for. I would like to talk about goals, and the idea behind goals. Bruce Lee once said, "A goal is not always meant to be reached, it often serves simply as something to aim at." My interpretation of this is that you should aim for the highest likely outcome and obtain somewhere close to it. Goals are something that you should strive for and what you get from the experience might be better than what you wanted to get in the first place. I'm talking about the experience, life lessons and value that comes with aiming for a goal, which from my personal experience can open more opportunities and better goals in the future.
This article is a culmination of my life experiences, advice that I can give to those who want to be like me, financially-free and retired from working. So, how to get there? These are the key fundamentals that you need in order to achieve this;
1, Money management
At the time when I decided to not work for anyone anymore, I was earning little to no money, having to pay for my school and bank loans. I understand though that not everyone will have this problem but what I'm trying to get at is that everyone has debts or responsibilities. Money management was the solution to my debt problems.
Me showing a scale to show that you need to tip the balance in order to have more or little of something
What do I mean by financial freedom? It is where you have more income than expenditure. Even at 1 cent more than your expenses, that means you are financially-free. A single person may spend a $100 a month just to get by a month. If that person makes $100.01, that to me makes you financially-free. In order to get more, you need to lessen your expenditure or vice versa.
What is expenditure? This are things that you absolutely must pay for e.g. bills, rent money and etc. This does include things like entertainment fees e.g. watching movies at cinemas, eating sushi/fine dining and etc. So in order to be financially-free, you need to manage your income and expenditure. Either you make more money OR you lessen your expenditure.
How do you then manage your income and expenditures? The simple answer is by discipline and sticking to these simple money 'quotas' or funds.
2. FUNDS
Necessities - 55%
Future business fund (FBF) - 5%
Rainy day fund (RDF) - 35%
Charity - 5%
Necessities are bills, rent money, food, loans and etc. I've set it at 55% as a standard but the whole idea is to reduce this number as low as possible, in order for you to be financially-free faster.
FBF are funds that you save until you have enough to use it for a business. I'd recommend saving up to $100 to use for opening a business such as selling nasi katok or cakes. 5% should suffice as $100 isn't that much to be honest but it might be harder for others to achieve this goal.
RDF are emergency funds for those surprises life throws at you. Maybe you've gotten injured or lose a job. Maybe you or a family member is hospitalized and you need to pay for the medical bill. This is what you could use for those times. It is not, however, meant for those pair of Jimmy Choo's you saw on sale at the mall. I'm talking to you, ladies.
Charity is more a spiritual rather than a financial thing. I find that when you are charitable, it does good for your soul and also a means to get back into the community/fellow man. I myself am aiming to be able to give 1 million dollars a month towards charities, so imagine how much my income must be if I had to give only 5% of my income a month to reach that goal. I also put aside some money from this fund to spend on others like coffee or lunching with friends and the like. This is just so you don't feel guilty when you do as well as not affect your other funds doing it.
The percentages that I've set for each funds are not set in stone. You may want to adjust them accordingly to fit your income and budget BUT do try to keep the Necessities to 55% or fewer. This is very important to get financially-free FASTER. Of course, you may think I'm crazy to just spend 55% or fewer for Necessities but let me share with you now, I currently spend only 5% or even less of my income on necessities. It is not impossible, if you can differentiate between what is a need and what is a want. However, I can also happily inform you that if you are at my current position, money will not be such a big issue on impulse buys and if it is, my mentality is not 'Oh no, I can't afford it' but 'What must I do in order to be able to purchase it?', which means I will have to 'manage' my money in order to obtain in one day.
I cannot stress how much being able to do what you want, any time you want, feels like. I can write you books, sing you songs, tell you stories of the places and vacation locales I've been to or even list all the nice things I've purchased over the years and you still wouldn't get me. You need to experience it for yourself. Once you're financially-free, you can go ahead and pursue your true passion or purpose in life. Be it playing video games and representing the country in international tournaments, broadcasting your cooking show, be a rock star or whatever you want, you can have time to do them without compromising your responsibilities.
In conclusion, in order to be financially-free you must:
- Manage your money. Income is MORE than your expenditure.
- Don't just let your money collect dust and not working for you. Make your money work for you by making businesses and let that develop into passive business income
- Work towards earning the same amount you're earning from your job into a passive income through businesses per month. This is working towards leaving the workforce and becoming your own boss.
- Have multiple businesses and not just focus on one business. Spread out.
- Do new things. Delve into other types of businesses, you never know until you try.
- Don't be afraid to fail. Even if one business fails, you have 10 others still running and making you money.
- Know yourself. Be open to new things but make intellectual decisions. Don't overstep your boundaries and spend more than you can afford or take projects you can't commit to.
Saving Tricks: Invest in precious metals such as gold to prevent yourself from spending money. Or you could exchange your local cash to foreign currency such as US dollars or British Pounds Sterling. It prevents you from spending your money but still use it during an emergency.
This system has helped me be financially-free within two months of practicing it. I've made my first $10k within another 2 months.
