There are many reasons why you decided to work overseas – to send your kids to a good school, have a house you can call your own, sufficient savings that will last you for years, and a small business that will sustain your everyday needs among many others. Whatever you hope to achieve, it will fall under one big umbrella and that is financial freedom.
Here’s the thing: the term “financial freedom” may be easy to spell, but it can be challenging to make it happen. Still, this doesn’t mean you cannot achieve it. It may not guarantee 100 percent success, but these six steps could help.
First, get out of debt.
At one point in your life, you can’t help but borrow money from lenders. That’s okay, especially if you used the proceeds for important purchases. Nonetheless, if you really want to say that you achieved financial freedom, then you need to get out of debt so you could focus more on savings and investments.
To guide you better, check out this post to help you get out of debt.
Second, set aside a budget for your Emergency Fund.
Emergency fund is important. You’ll never know what could happen, so it’s better to be prepared. This is essential because you can use the emergency fund in times of, well, emergency.
Ideally, the fund must help you sustain at least two to three months worth of your income. This is enough to help you get through in case of loss of job, sudden expense, and illness among others. Remember, the purpose of the fund is for emergency expenses only. Buying a new phone or tablet is not part of the emergency list.
Here are tips to help you set up your Emergency Fund.
Third, prioritize long-term savings.
Don’t just settle with having an Emergency Fund. Another fund you need to have is long-term savings account.
It’s not the savings + remittance account you set up before you left for your work overseas. Long-term savings is a separate account that could serve as your Retirement Fund. You may opt for the typical savings account, but you might want to consider long-term time deposit for higher interest rate. You can deposit anytime plus the interest earned is cumulative, thereby allowing you to earn more.
Tip: In case you prefer the typical savings, make sure that this long-term savings account should be in passbook only. Having an ATM can be tempting and makes it easier for you or your family to withdraw, thereby defeating the purpose.
Fourth, make long-term investments.
They say that to be able to achieve financial freedom, you need to have more than one source of income. That’s true. Opening your own business, no matter how small it is, might be your go-to option, but keep in mind that this could be risky. You are your own boss and managing a business is not as easy as it sounds.
To minimize risk, you might want to look into investments. There are many options – mutual fund, UITF, stocks, and bonds. Each of them comes with its own risk and benefits, so it is best to explore your options and understand them before putting your money into it.
Fifth, it’s time to make those large purchases.
Ideally, you should be doing the first four steps before you even think about buying your own home or car. This is because the first four steps give you enough time and leverage to invest into something bigger while reducing the risk of losing everything you worked hard for.
Once you achieved the first four steps, go ahead and make that large purchase. Still, take it one purchase at a time. Give yourself a few more years to save up before buying again.
You can do it!