Money can make you free

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Financial freedom is a goal for many of us. We hate the idea of living from month to month hoping to make enough to survive until our next payday. Being able to make our own decisions about how to spend our time and where to live, is a goal for millions around the world. Why do so few people achieve financial freedom? Is the system rigged against us? Do we have any control over our future? The answer lies close to home — in fact, it is staring at you when you look in the mirror.

It starts with you.

I have spent more than 20 years working with financially free people. They come from diverse backgrounds; they earn their money in many different ways and they have varying levels of education. In other words, they are very different from each other. The only characteristic that they all share is the drive to control their lives and their money. They are not prepared to work every month to earn a salary that is completely spent by the end of the month. All of them want to ensure that they are saving money every month so that they build their own assets. That means they find reasons to save. Most people with money problems find reasons not to save — they can always create a good excuse. Let’s face it, saving is hard, and it requires sacrifice, but it is possible for anybody. The financially free always make the sacrifice because they want to be free more than they want to live without a clear purpose.

Money problems are often debt problems.

South African income earners often have a lot of debt. This is obvious when you know how few people earn enough to buy expensive cars with cash. However, we have a thriving car industry that sells thousands of expensive vehicles every year — mostly to people who cannot afford them. How is this facilitated? With lots and lots of debt. Between the banks and the motor vehicle dealers, it is really easy to dig yourself a deep debt hole in order to buy an expensive vehicle to impress friends and family when a much cheaper car would do the same job.

If we spend correctly, we can make ourselves happier.

Conspicuous consumption is a real problem. There is a perception that we need to show our financial success through spending on branded clothes, expensive cars, flashy accessories and extravagant parties. We feel pressure to show that we have “arrived”. Unfortunately, this form of spending makes us unhappy. Buying material goods, especially expensive ones, can lead to a financial hangover where we regret our purchases. This problem is compounded if we incur debt for these expensive goods because the temporary joy of the spending is replaced by a long-term monthly debt repayment.

However, it is worth spending money on experiences like music concerts, travel and holidays because this has been proven to provide lasting joy. Importantly, there is the initial happiness of anticipation, then enjoyment of the actual experience and then the new memories that can last for many years. It has also been proven that our happiness from these experiences is boosted when we share them with others. If you are not in a position to spend money on major experiences, doing small things for your family, friends and colleagues will increase happiness. For example, buying coffees for your colleagues as a surprise, can have a lasting impact on your happiness.

Take control of your spending.

There are some great tools like 22seven to help you understand how you spend your money. Once you know where all your money goes every month, it becomes easier to take control of your spending so that you can find ways to save more. I find that it really helps to set goals for your savings, especially for things that motivate and inspire you. For example, saving for a child’s education is much more real than saving for retirement in 20 years. This makes it easier when you find yourself in a situation where you have to choose between saving for your goal and spending on something that adds no value to your life (e.g. fancy shoes, flashy car). I always choose one hard goal and one fun goal for my savings. For example, once I have reached my annual retirement savings goal, I save for holidays because they inspire and motivate me. Take the time to work through 22seven’s offering — understanding your spending and goal setting can be done very easily and safely in one place.

Educate yourself about money.

There are lots of great sources of financial education. The more you learn about money the easier it will be for you to take control. There are lots of blogs on Financial Freedom, books, websites and podcasts available to you. To start, try the Honest Money podcast or the 22seven blog.

Warren Ingram CFP®, is the host of the HonestMoney podcast.

Thoughts, observations and insights. About money, life and 22seven. Visit

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