Susan had done everything right – or so she thought. She had an honors degree, a good job, a reasonable enough husband with a decent job. They were renting an apartment and their kids were attending good schools. This was what she had always wanted, but something wasn’t right. She found herself constantly worrying, “What if one of us loses our job? What if one of us gets sick or worse? How will our family be able to cope?”.
Every time Susan and her husband would get a pay raise, they would upgrade their lifestyle and that was OK with them. Except years had now gone by and they now realized if they both lost their jobs, their savings wouldn’t last them more than a few months.
Well, I have good news for Susan – this is not a hopeless situation.
The first giant to tackle is their lifestyle choices.
Rule no 1: If you are unable to save at least 10% of your earnings every month, you are living above your means.
This is called paying yourself off first. You pay the government, you pay your landlord, you pay the businesses that sell you goods and services – but who pays you? Invest in yourself and your family.
Rule no 2: If you are concerned that your family or those close to you will have a hard time if you get critically ill or worse, take out life insurance.
Life insurance is one of those things that you really don’t need to have until you need it. What does this mean? If you could predict the future you would know whether to take out life insurance or not – but most of us can’t. There are many different types of life polices available in the market, it is best to speak to an experienced advisor who will be able to guide you in this regard.
Rule no. 3: Don’t depend on your job as the sole source of income.
A lot of us spend our time in unfulfilling roles because without them we won’t be able to get by. To make matters worse, we want a change but we feel stuck in the rut. We’re afraid to take on new opportunities because there’s too much at stake, we can’t afford to take the risk. Once we learn how to save money regularly we need to learn how to invest it wisely. There are many options when it comes to investments. It is best to have a balance of short and long term investments that are catered to your risk appetite. Your risk appetite is how much risk you’re willing to take on and this is a factor of age and/or personal preferences.
Learn how to save, then how to invest. These are the first steps to achieving financial freedom.