Financial Freedom(A Roadmap towards Independent and Thriving Life

Pattern)

And We made the day for seeking livelihood. (Al-Quran)

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Table of Contents1) Introduction – Definition & Nature2) Achieving Financial Freedom3) Significance of Financial Freedom–Individual & Interactive

Perspective4) Absolute Bases of Financial Freedom5) Basic Channels/Ways of Financial Freedom6) Effective Strategies/Tactics for Stable Financial Freedom7) Balanced Money Formula8) Major Path Hurdles during Financial Struggle

i. Financial Idealism ii. Indisciplineiii. Fear of failure iv. Get-Rich-Quick-Mentality v. Procrastination

9) Financial Freedom - Institutional Aspect 10) Concluding Remarks 2

INTRODUCTION (Definition & Nature)

Apparently, the plentiful availability of money units for buying required things gives financial freedom to an individual; on the contrary, the scarcity of money units for purchasing necessary items may lead someone towards financial dependence.

Realistically, it is livelihood that gives financial freedom to an individual.

Financial Dependence happens on account of two reasons – personal & interactive. At personal level, the very negation of independent life-pattern is cause of meager livelihood. At interactive level, the utter denial of interdependent life-pattern is reason behind insufficient livelihood.

Financial Freedom is the state of

having sufficient personal

wealth/income to buy independently needed items and

desired goods/services.

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How Does Financial

Dependence Happen?

A person without proper livelihood is generally poor.

In addition, a deprived person is worried permanently about his/her insatiable needs, so that, he/she may become a depressed person.

Now, a privileged person through financial support can oblige him/her. On account of financial support, especially at critical moments of life, the rich patron may confine his/her liberal choices, rightly or wrongly, on various life matters. Now, the life with minimal liberal choices is financial subjugation or dependence of a deprived person.

The inability to distinguish between

dependent, independent and interdependent

economic choices leads towards

financial dependence.

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Achieving Financial Freedom

There are five steps procedure for setting and achieving financial goals:

I. Specific Mindset towards Paraphernalia of Life,

II. Measuring Mindset towards execution efforts,

III. Proactive Behavior in order to Attain desired outcomes,

IV. Consistent Behavior towards Realistic targets, &

V. Time Efficiency during economic struggle.

Financial freedom is prerogative of every economic agent. A

successful economic agent designs

SMART (Specific, Measureable,

Achievable, Realistic and Time bound) financial goals.

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Significance of Financial Freedom

The inability to protect financial freedom means financial subjugation.

The financial subjugation is mother of all subjugations, both individual and collective.

At individual level, shrewd lusty people try to capture/confine productive capacity of naive or immature individuals in their favor.

At collective level, institutions/states try to capture means of production of opponents.

The autonomous productive capacity avoids multiple subjugations.

The three economic skills that provide permanent security to productive capacity of an individual or group are effective entrepreneurship, efficient workmanship and honest consultancy.

Human beings are interlinked and

interdependent creature of God. The mutually

dependence means existence of conflicting regions about

exact localization of possessions/authorities. In real life, many people ignore moral sense and/or

twist collective rules in their favor. Consequently, the

situation of exploitation of naive or feeble dependents is

aroused, now and then.

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Absolute Bases of Financial Freedom

The natural productive capacity can adopt three routes through proper nourishment, i.e., entrepreneurship, consultancy, and workmanship.

Workmanship is the ability of an individual to accomplish an economic work, efficiently.

Consultancy is the capacity to provide professional advice/workable idea to someone on economic work, honestly.

Entrepreneurship is the ability of an individual to innovate/realize business idea, effectively.

The innate productive capacity is wasted or damaged on account of wrong beliefs or heinous crimes, whatever may be the reason, conceptual or practical, the dormant or depleted productive capacity can be regained or replenished through concerted economic efforts and earning skills.

The prominent replenishing tools are learning of new earning techniques, application of acquired skills for earning and networking with relevant people or institutions.

The ingrained productive capacity of earning is natural gift

of God. Practically, it is

learning, earning and networking during economic struggle that gives financial

freedom.

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Ways of Financial Freedom

Job - In job, the onus of responsibility rests on employer, a wage-earner is efficient follower. A well-performing worker adopts professionalism in his/her tasks.

Business - In business, an employer is inevitably responsible and accountable for smooth sailing of enterprise. A thriving entrepreneur is effective in his/her decisions.

Investment - In investment activity, the investor provides money for quick, certain and definite share. A financier develops agility in efforts of entrepreneur/worker. An effective investor is supportive during multiple financial crises, pragmatic towards business opportunities and precise towards accounting works.

Consultancy - In consultancy work, a consultant shares burden of employer, investor and worker through coaching /training.

There are four rudimentary channels

of independent economic life - job,

business, investment and consultancy.

The income from job is wage, from business

is profit, from investment is share or

interest and from consultancy is fee or

commission.

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Effective Strategies/Tactics for Stable Financial

Freedom

The prominent strategies/tactics for stable financial freedom are:

1. Set Financial Goals, wisely, 2. Track Every Money Unit You Spend 3. Develop A Budget, 4. Review Your Bills,5. Spend Less Than You Earn, 6. Remain Out Of Debt, 7. Learn The Art Of Conscious

Spending,8. Earn Extra Money, & 9. Educate Yourself On Money

Management,

It is noteworthy that money is best servant but

poor master. Financial freedom does not mean subjugation of money or wealth. It gives

us tools for conscience and independent life.

“If you buy things you do not need soon you will have to sell things you need.” (Warren Buffet)

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Balanced Money

Formula

A prudent person may adopt the Balanced Money Formula.

The formula states spend 50% on needs, 20% on facilities/wants, 10% on aesthetics/recreations and at least 20% on savings.

Warren Buffet nicely suggested,

“Don’t save what is left after

spending but spend what is

left after saving”

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Major Path Hurdles during

Financial Struggle

A work for monetary benefits is called economic work; it gives monetary independence to individuals.

The financial Intelligence is essential to accomplish multiple economic works, successfully.

An effective economic work must demands three vital steps:

i. Acquisition of financial education, ii. Aspiration of financial goals, and iii. Application of financial techniques

for financial goals.

Financial intelligence is an ability to differentiate

between possible economic opportunities and economic threats.

The major financial threats during an

economic struggle are – Financial Idealism,

Indiscipline, Fear Of Failure, Get Rich Quick

Mentality & Procrastination.

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Financial Idealism

Idealism is the practice of forming or pursuing ideals, esp. unrealistically. It is a great self hurdle of financial life

Generally, a rational economic agent spends / saves something bearing in mind the lifetime income/wealth stream.

An idealist economic agent takes the lifetime income stream without considering forthcoming hurdles of economic struggle, while a pragmatic economic agent adopts the lifetime paradigm with changing ground realities of economic life.

The financial idealism means

to pursue financial

freedom through impractical

ideas.

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Indiscipline

We realize our dreams through following various rules & regulations during planning, executing and interacting.

A common variable during all activities is disciplined and systematic behavior.

Discipline has matchless power to propel any life effort into successful effort.

An undisciplined person can

never achieve her/his

financial goals.

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Fear of Failure

An economic agent faces two acute threats in his/her economic struggle - Fear & Regret.

Fear is linked with future results while regret is based on past results. The inner defeat and/or outer bending against fear and regret shapes fear of failure or criticism or rejection in one’s mind.

Successful individuals overcome their fear of failure through courage. Courage is developed by conviction towards specific goals and objectives.

Goals are ultimate targets of an effort; while objectives are steps necessary for specific goals. Goals make someone effective, while objectives make efficient.

Life shrinks or expands in

proportion to one’s courage.

(Quote)

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Get-Rich-Quick-Mentality

Life is effort-return phenomenon. In economic work, a range of inputs/efforts are used to realize outputs/benefits.

In real life struggle, the spiritual intentions shape mindset, stable mindset crafts behavior and consistent behavior creates results.

The Get-Rich-Quick-Mentality devastates the result producing chain among spiritual intentions, mind powers, and practical actions.

The Get-Rich-Quick-Mentality is very negation of

ingrained spiritual intentions of an

individual, so that, the hollow effort is failed ultimately.

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ProcrastinationProcrastination is the practice

of carrying out less urgent tasks in preference to more urgent ones, or doing more pleasurable things in place of less pleasurable ones, and thus putting off impending tasks to a later time.

Moreover, time efficiency is essential for every achievement; procrastination does not take into account significance of time.

Procrastination contradicts with

responsible behavior so that it

magnetizes financial

dependence.

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Financial Freedom - Institutional Aspect

An institution is combination of varied economic agents such as worker, manager, consultant, investor and entrepreneur, however, it is not a numeric summation of persons rather it is wise networking of people in order to attain synergy.

A synergistic combination of economic agents shapes financially independent and thriving institution.

The outcome of effective combination will give financial freedom to all individuals of an institution. The two issues are significant for effective team – responsibility and accountability.

The main difference between responsibility and accountability is that responsibility can be shared while accountability cannot.

The effective beginning of a financially independent business or project is based on Cost-Benefit Analysis (CBA). The Cost-Benefit Analysis (CBA) quantifies costs and benefits of a decision (over a certain period), and those of its alternatives (within the same period). The CBA’s results suggest best option for actions. The analysis may also include social costs and benefits that can be reasonably quantified.

Financial freedom of an institution is evaluated through

multiple financial ratios.Major financial ratios are, (1)

Efficiency, (2) Liquidity, (3) Profitability, and (4) Solvency

ratios. The efficiency ratio measures performance and productivity of inputs, liquidity ratio measures

the liquidly strength or cash condition of an enterprise, profitability ratio evaluates

growth behavior and financial gains of institution, and solvency

ratios are used to measure stability & sustainability of the

setup.

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Concluding Remarks

The road towards financial freedom is dominantly sustainable livelihood.

The decisive personality elements of financial sovereignty are moral sense, independent mindset and interactive behavior.

It is noteworthy that presence of vital personality traits means enthusiasm and courage during economic struggle.

Enthusiasm and courage are actualizing variables of life; they materialize ideas into reality, then and there.

Interactive life offers countless options to an

individual. All Individuals want to enjoy the available options

of interactive life. An individual having financial

freedom pursues the available life options, confidently and

pleasantly. The multiplicity of choices on account of interactive life and its fulfillment caused by

financial freedom makes human life contented and

confident.

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