Here’s today’s installment:
For the next 25 days, I’ll be posting one actionable item per day for myself and you, the readers of Frugal Pinoy.
It’s best to start off these daily actions with a definition. How do you define healthy finances? Wealth? Financial freedom? We need to know what we mean by these words if we want to achieve them.
Today’s Task: Define wealth and financial freedom.
If your definition is a specific number, why that number? Why 10 million pesos as opposed to 15 million? Is your definition based on income? Savings? Or is it a specific lifestyle? Properties such as real estate and businesses? Or is it just a state of mind?
It helps to write the definition somewhere – it could be your blog, journal, financial notebook, etc. Writing this down makes it more concrete. Also, you can easily refer to it in the future. Remember to be as specific as possible.
As for me, here’s the definition I’ve come up with: both wealth and financial freedom means that I won’t be worrying about my family’s finances, since I know that we’ll be okay. I can only do this if the following criteria are met:
- I have no debt whatsoever.
- I have an emergency fund worth 1 year of living expenses.
- I own a small house with a garden.
- My monthly passive income covers our monthly living expenses.
- I have a healthy “retirement” fund. (Since I’ve never been employed in the traditional sense, my definition of retirement is the time when I’m no longer physically and mentally able to work as a writer – I plan to keep working as long as I can.)
Right now, only criteria #1 is met in full. Although I live in a house, it is legally in my mother’s name. Still, I am already saving up for a house of my own. I’m halfway through #2. As for my retirement fund, it’s still small but I’m working on building it and keeping it in stronger investments (it’s still in a savings account).
How about you? How do you define these words?
This is great.
I hope I can stick to it.
Great website. I’ll be following along for the challenge. Right now my definition of financial freedom is: Income-Expenses=Enough to put something into saving as well as being debt free. I just started reading a book called “The Debt-Free Millionaire” by Anthony Manganiello. This book outlines a process that helps you successfully plan to meet your financial goals. It’s really eye opening!
Can I join? I’m a little late…
Of course you can join in
You can do the tasks at your own pace.
i wish to have Financial Freedom in the next 5 years or so. i was able to establish a small internet retail store last year. i am hoping to gain enough profit from this store.