Tired of relying on a payslip? Here's how you can achieve financial freedom

The road to financial independence is a journey.

You know you have arrived when you find the stage in your life where you work, live and do the things you really want to because you are not reliant on being on a payroll.

Imagine the freedom to do what you want to because you have sufficient income to maintain your lifestyle - and the income is from the savings and investments you have acquired over time.

Very few of us achieve this in our life times and yet it can be attained with the right approach.

Work on earning interest instead of paying it

If you are borrowing to maintain your lifestyle your standard of living is too high relative to your income.

You should be able to service your debt comfortably after having firstly set aside the appropriate amount for savings. The cost of your total debt should not exceed 30% of your monthly income.

If it is higher, then you probably should be living in a smaller house or driving a cheaper car.

The higher your debt the more you are paying the bank instead of yourself. The opportunity is lost for diverting interest repayments to compounding investment returns.

Don’t rely on luck

Many of us dream that one day in the future we will strike it rich in some business or win the lottery.

We don’t then see the need to save along the way, which ends up in playing savings catch up and often ends up being too little too late.

The only realistic way to have a chance of building enough capital is to take full advantage of compounding.

The sooner you start saving the less it will cost you as the power of compounding increases exponentially the longer you save. Its the only magical way to reach financial independence, but it does need time to make it happen.

Keep it real

Ignoring the value of money now and into the future will stand in the way of being financially independent. Many of us are more ready to spend now rather than save for the future.

Be realistic with your lifestyle needs and keep close to how your investments are keeping pace with inflation.

Your financial independence will be greatly affected by the ravages of this enemy as you move into the future. Investments over time will need to perform at a higher rate of return than the inflation rate.

Your financial independence relies on setting aside enough money over time compounding at a higher rate of inflation.

Listen to the audio below for more information

Read more from Paul Roelofse at www.investforlife.co.za


Recommended

by THE NEWSROOM

702 welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the 702 community a safe and welcoming space for all.

702 reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

702 is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
Tips on how to get savvy with your salary

Tips on how to get savvy with your salary

Here is what you need to do to pay for your basic needs and still maintain your lifestyle without ending in financial crisis.

3 steps to a debt-free life

3 steps to a debt-free life

Financial fitness coach, Paul Roelofse, shares tips on how to pay off your debt quickly, with less interest.

Five things you need to know before choosing a medical aid plan

Five things you need to know before choosing a medical aid plan

How to choose a medical plan that provides benefits relative to your health and affordability.

What to do if you have experienced flood damage in your home

What to do if you have experienced flood damage in your home

Risk of losing everything is very possible with the current heavy rains, and here's what you can do to replace your belongings.

Ideas on where to invest on your own

Ideas on where to invest on your own

Personal finance expert Paul Roelofse shares some investments into which you can consider investing directly.

Is retiring at the coast really an option?

Is retiring at the coast really an option?

Personal finance expert, Paul Roelofse, provides tips to help you make sure you have a comfortable life when you retire.

A great investment on your doorstep…

A great investment on your doorstep…

Personal finance expert, Paul Roelofse, says a great place to save in the short term is your home access bond.

Choosing the right pension plan

Choosing the right pension plan

Personal finance expert, Paul Roelofse, explains the best options available when choosing a pension plan.

How to save before the festive season

How to save before the festive season

If you haven’t been saving for this costly event then you have four pay cheques to go to create a nest egg to help your through.

What the ConCourt garnishee judgment means if you're in debt

What the ConCourt garnishee judgment means if you're in debt

Financial fitness coach, Paul Roelofse looks at a recent ruling that changes the way garnishees are administered.

Popular articles
"Duduzane Zuma is the Gupta family's greatest asset"

"Duduzane Zuma is the Gupta family's greatest asset"

Sunday Times journo Thanduxolo Jika who broke the front page story about the Gupta family emails vouches for their authenticity.

So what exactly is radical economic transformation?

So what exactly is radical economic transformation?

Wits associate professor of economics Christopher Malikane speaks to Azania Mosaka about the term that is being bandied about.

Who is Advocate Tembeka Ngcukaitobi?

Who is Advocate Tembeka Ngcukaitobi?

The EFF lawyer stole the show during the state capture report court battle.

How to make your first million

How to make your first million

Warren Ingram discusses his new book in which he shares practical ways for ordinary people to achieve financial freedom.

'Collect experiences, NOT possessions!' - Paul Theron (Vestact MD)

'Collect experiences, NOT possessions!' - Paul Theron (Vestact MD)

Bruce Whitfield interviews the razor-sharp tongued Vestact MD Paul Theron about his money hopes, fears, successes, failures, etc.

3 easy questions could bag you R2000!

3 easy questions could bag you R2000!

WIN R2000! But only if you can prove you're a whiz of the MTN Biz Quiz by answering the following three questions...