Financial freedom eludes so many people these days who by all logical conclusions and observations should have obtained it. It’s commonly cited as one of the most important and sought after goals in life and yet is rarely attained. This article does not attempt to give you a magic formula for success but I do share with you the choices that made a difference to me and can, if you choose put you well on the path to freedom. Are You Ready ?
1. Consumption vs Investment
You can choose to spend some or all of your money on “consumption” items. These include food, entertainment, holidays, housing, motor cars, hobbies, and so on. These are things we need to live on a day-to-day basis. They also consist of items that service the things we want and so improve lifestyle.
The first factor is that spending on consumption items results in reducing the total value of your assets (net worth). Spending on investment items aims to increase your net worth. The second factor is that you have choice. You can choose between spending on consumption or investment items.
Of course, the best spending patterns are those that aim to attain a balance between spending on consumption and investment items.