In my previous post, one of my readers, CreateWealth8888, commented that my ex-colleague might have achieved financial freedom and therefore resigned from my company without a job.
Well, I am not going to dwell on the issue of his resignation reason but I think CreateWealth8888 brought up an interesting topic and that is being financially free in Singapore.
Everyone has his own definition of financial freedom. For me, being financially free in Singapore means you need not work but can still live comfortably without having to worry about the bills. And I think this is an important fact.
Most Singaporeans derive their incomes from their jobs or businesses. It is crucial that after we retired, retrenched or resigned from our jobs or businesses, there are financial mechanisms or means in placed to ensure that our quality of lives do not suffer as a result of the lack of mainstream income.
There are a few who became rich overnight after striking lotteries or inheriting assets, but normally this sort of wealth do not last. So essentially, being financially free does not mean you have to be rich. But what you need is to equip yourself with the know-how on how to kick-start your life journey to financial freedom.
The reason why I used “journey” is because achieving financial freedom is a continuous learning process that requires you to learn and earn. It is hard-work and requires you to remain curious on different aspects of life. In return, you gain a life-skill that can potentially bring you much intellectual and financial fulfillment.
So what are the key aspects of financial freedom? Well I am still learning the process but perhaps would like to share my thoughts with the readers. The first key element of financial freedom should be having safety nets in place to protect our earning abilities should anything untoward happened to us. That should be the first and foremost thoughts for every Singaporeans. We should have a comprehensive hospitalization plan and term life insurances to cover our health-care needs and to ensure that our loved ones do not suffer as a result of our earning disabilities. The key thing is to be comprehensive for hospitalization plans. In Singapore, the medical bills are very high and so don’t be stingy on the premiums. Make sure your hospitalization covers you for both public AND private hospitals. Also, do buy riders to cover the co-insurance and deductible portions. They don’t cost much.
2nd aspect of financial freedom is to build your passive income streams. Remember, when you are jobless, income will stop flowing into your pocket but expenses will never stop! You still need to eat and pay your bills.
So we need to have passive income streams. That means having money flowing into your pocket without you actively working or laboring hard for the money. You can sleep comfortably over the night and money will still flow in to offset your expenses. So how can we achieve that? There are many simple ways to achieve this, such as subletting your flat to earn rental income or earning royalties through publishing a book.
Lastly, keep building assets such as properties, gold, endowment plans and stocks. Your career is an important asset too. So make sure you invest adequately in courses and keep upgrading your skills and knowledge. This will enhance your earning power and set you well on course to achieving financial freedom.
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SG Wealth Builder