As-salamu alaykum
Today I have written another new post for you.
Let me briefly define two things from here and then I will go to the main post;
1.What is the meaning of financial freedom?
Some of us are familiar with this term, some may not know. But we all know how to be rich. Is Being Rich and Being Financially Independent the Same Thing? The answer might not be the same. We can say like this, generally all rich people are financially independent, but not all financially independent people are rich. Even if you're financially independent, you can't be rich. What does it mean to be financially independent? Being financially independent means that you are able to bear all the expenses of your life and you can do whatever you want whenever you want without worrying about any kind of money and if there is an accident with you or any of your loved ones, you are also able to bear all the expenses related to that accident. But it's something we all do. We all pay our own expenses. What's going on with financial freedom? The main thing here is that financially independent people can meet all the expenses of life without doing any work, that is, through passive income. You don't have to do any work to meet your daily expenses. And since everyone's daily needs are not the same, you can understand that if someone is happy in a small way, and if he can meet that small need without working alone, then he is also financially independent, but you may not call him rich. This is the difference between rich and free people.
2.What is money management.
This is how and where you will spend your earned money, where and how you will increase your chances of becoming financially independent in the future. No matter how little or how much money you earn, you must use it in the right place. And I'm not just talking about investing, I'm talking about investing. Investment is an area of money management. There are many other topics that we will discuss in this post. But it all comes down to investment.
So let's begin. Some of the most important aspects of money management are:
- Convert Active Income to Passive
First of all, we will talk about active income and passive income. One of the most important areas of money management is to convert your active income into passive income. Active income is what you have to work for every day and passive income is what you earn sitting down. Everyone has to work to survive. And there's no other way to do it. Income does not only mean the profit of the bank. There are many other types of passive income. We all try to master some skill in life, basically for a job and there is no problem about it. Now many people see various topics on social media such that it is wise to work for yourself as an entrepreneur instead of working for others. Yes, of course, if you have ancestral wealth, it is not bad to be an entrepreneur from the beginning of life. But if you don't own a lot of property, you must find a job and accumulate the capital needed to become an entrepreneur. But it is seen that once a job is found, most people do not want to make any investment using the income of this job. If you do not make any investment with the money of your active income, it will never become passive income. After earning, we all spend it on various necessary works and save some money. But rich or capitalist people never save this money and invest it with it and keep the flow of their passive income. You have to learn to invest and invest with your savings. You can learn to invest by reading books, but if you want to be financially free, you have to invest.
- buy his guardian before he buys things
As children, we had a guardian to take care of all our expenses, including maintenance. In most cases it was our father, in many cases our mother, and in some cases both parents. They were our guardians. They gave us what we needed. If for some reason they had stopped doing that, we would have had more problems with our studies, eating and so on. But such different needs are not only of human beings, but also of different things and many different needs that we have to bear as the owner of the thing. Like if you own a car, you have to bear the expenses in many other places including tax, diesel, garage, maintenance. But most of us want to save money and buy a car / house without worrying about these expenses. Just as people need a guardian, things need a guardian, and that guardian is you. But you have to take the responsibility of that guardian away from yourself and hand it over to a passive income field. It will be a kind of fund that is only for your car, which we call the car guardian. So if you have the money to buy a car, before you buy a car with it, try to build a small business / enterprise / side hustle so that from there you have this amount of money with which you can bear all the expenses of your car. Borrow the money and then buy your own car. Always remember, capitalists never satisfy hobbies with an active income.
- Determine your cash flow.
We understand passive income, but what is the direction of this passive income? And what about income? Many of us are studying vectors in class 9-10 or 11-12. There we were learning that if two vectors act at an angle of 180 ° opposite to each other, they have the same negative result. Same is the case with money. The two vectors that work against each other here are income and expenditure. The minus of income and expenditure will be the cash flow, and the direction of this cash flow will be towards the larger of the income or expenditure. Passive income is income outside of your job. This income is only income (if it is not someone's guardian), there is no expenditure on the contrary. So the direction of passive income is generally towards income. As I said before, there are many types of expenses after buying your car or house. If you can't make any income through that house or car, then your cash flow will be negative i.e. the opposite side will go to the expense side. So before you buy anything, you need to understand whether it is capable of bringing money into your pocket. If so, you can buy it. And if not, then you have to make a guardian for that thing so that you can bring a balance between income and expenditure. But in no way can the money earned from your job cover the expenses of your car house. But if you want, you can rent a house, you can rent a car, that is, they can be their own guardians.
Time management or money management?
Time management and money management are closely linked. If you want to do something good with your money, you must first learn to use your time properly. We see a common profession in our country everywhere, that is to earn money by teaching privately. The profession of a teacher is undoubtedly a profession of respect and is of great importance to any society. But most of the people who do this private study spend a lot of time behind it. Many students start their classes in the morning and finish in the evening. A little pleasure work is far away, even eating food on time becomes a big challenge for them. Friday was a holiday. For those who want to invest in themselves, this Friday is the time, which does not go near enough for self-improvement. Many of these teachers earn as much as Rs 2-3 lakh a month. It's a lot of income, which is good. But how many of these teachers or people from any other profession who earn this much are seen to be investing most of this income for a good passive income? Most don't. Most of them are afraid. Some do, and then some don't. Why this fear? They don't know much about investing. If you have an idea about investing, then you do not know what to do if the return on investment is low or negative, how to prevent it, how to learn from here. If you want to be financially independent, you need to invest. But this experience is much more important. You have to learn how to turn around from here, and most of the things you will learn through experience. You have to read a lot of books, do research on the market. You need to give yourself time. But most people don't have that time. They work hard all their lives to master a subject and get a job, but they never learn money management. Once they start working, they never get this time. After that, the workload increases. Remember, even if you earn 3-4 lakh rupees a month by working, it will never be enough for you. The more you earn, the more you get what your people want. Your income will be high but expenses are possible to increase. Your cash flow will run in the negative direction. Is it wrong to work too much? Never ever But you have to work so that you get time to learn about your own improvement and money management. You have to make time for it every day. Most people make mistakes when they get a good job at a young age. The more money they get, the more they work, so they can't devote time to their studies. You will get more money in private rent throughout the day, but if you do not learn the use of that money, the power of that money, you do not understand, then what will you do with that money? Do you want to save in the bank? What if there's an accident one day? If tomorrow your private student does not come and if tomorrow your job is gone, do you have any artificial guardian who will tell you, "Don't worry brother, I am there. Use that money. I got your back "That is what you have to do. Your co-worker has done real-state research, not overtime like you. He's invested there. The company went down, you and he both lost their jobs. But with the rent he gets from his real estate, his month goes by in which you have already started eating up the bank's money. Think it.
That's how it is to this day. I'm just talking about the basics. The purpose of this post is to encourage you to learn more. I hope I've done that.