Fi­nally achieve fi­nan­cial free­dom

Sunday Times - - Careers - Mar­garet Har­ris

Fi­nan­cial free­dom is when you do not need to work to cover your monthly ex­penses. Most of us ex­pect to achieve this sta­tus by the time we reach re­tire­ment age, but it does take plan­ning.

Un­for­tu­nately, many peo­ple make no plans and find them­selves in dire straits when they are too old to work.

Lizl Budhram, the head of ad­vice at Old Mu­tual Per­sonal Fi­nance, has these tips:

You can­not know how much money you need each month un­til you have drawn up a bud­get list­ing all your ex­penses — from your bond or rent to hair­cuts;

Abol­ish your debt, start­ing with the most ex­pen­sive (the debt with the high­est in­ter­est rate, usu­ally store cards);

Start sav­ing. The sooner you start, the more you can take ad­van­tage of com­pound in­ter­est;

Try to put to­gether some money for emer­gen­cies, so you will not have to go into debt to cover them;

Get in­sur­ance to pro­tect against loss of in­come due to death or dis­abil­ity;

When you have those bases cov­ered, start sav­ing for short-term goals, like trav­el­ling or a new car; and

Draw up a valid will to make sure all your hard work does not go to waste.

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