What is financial freedom?

Basically, financial freedom is when you can draw the life you want, according to your own preferences without having to depend on a monthly salary. In terms of finance, achieving financial freedom is when the total amount of passive income you have will be greater than your actual expenses.

Financial freedom is considered a goal for many people, but why do some young people still fail to achieve their goals? Here are some common mistakes young people make.

Not allocating expenses properly

There are many methods of reasonable spending allocation for young people to optimize, however not many people follow these principles.

Nowadays, most of the salary or income that young people receive will be spent on self-satisfying expenses instead of investing or saving. The nature of financial freedom is that the total passive income must be greater than the expenses. Therefore, young people should spend at least 10% of their income on investment, using capital to implement long-term plans and achieve their financial freedom goals.

No specific long-term planning

Nowadays, instead of having to make a clear long-term financial plan to serve their goals, many young people freely spend to satisfy their interests and needs. When they have used up all their salary, they tend to borrow money to continue to satisfy their needs.

Without a long-term financial plan, young people can easily fall into a cycle: Receive salary -> Spend it all -> Borrow -> Pay off debt, making it difficult for them to accumulate enough capital to invest in order to achieve their financial freedom goal.

Lack of knowledge and strategy for investing

Young people are quite hasty and hasty in investing when they have no knowledge and experience. This will easily lead to losses and lose money quickly. Accumulating knowledge to create an investment strategy is not easy, but this will be the key for you to be able to invest intelligently and effectively.

How should young people invest and save to achieve financial freedom?

So how can young people invest and save effectively to achieve financial freedom? Here are some tips for young people to refer to and apply:

Learn how to maximize your income

To achieve financial freedom, a basic principle that you need to understand is to maximize your income and minimize your expenses. This will help ensure your spending balance. You can increase your income by doing a second job, investing,...

Take advantage of idle cash flow

To achieve financial freedom, young people need to accumulate enough capital to achieve the goals set out in their long-term plans. Capital accumulation can be through investment channels such as: investing in stocks, gold, real estate, etc.

In addition to accumulating enough financial capital, young people need to accumulate knowledge capital. For example, when you go to save money, you also need to research which bank to deposit your savings in to bring the greatest profit, what the interest rates and risks of each bank will be,...

Applying financial knowledge as well as understanding the profitability of channels will help young people invest and save more effectively.

The goal of financial freedom is not easy to achieve. This requires young people to be disciplined, serious, have a reasonable spending and investment plan to achieve.

VINA SECURITIES JOINT STOCK COMPANY

Website: https://www.vnsc.vn/

Address: Room 702, 7th floor, Capital Building, 58 Kim Ma Street, Kim Ma Ward, Ba Dinh District, Hanoi

Hotline: 024 777 789 96

Email: [email protected]

Bao Anh