“Happy Financial Independence Day Ghana” was a message I received from one of my friends and business partner on Ghana’s Independence Day.

I smiled after reading the message. I started reflecting on that very IMPORTANT message. Ghana is 60+ years since independence.

Is Ghana financially independent?

Are the citizens financially independent?

This remains a rethorical question!

Financial independence and building wealth doesn’t happen by accident. We need to plan things meticulously and implement those systematically. 

Financial Independence is available to those who learn about it and work for it.

What is Financial Independence?

Financial Independence is that state of mind which can be felt when you are totally worry free about your finances. You stop thinking frequently about money matters at the back of your mind. You have enough assets (cash and income generating investments) available to cover all your expenses even without a paycheck.

What are the benefits of Financial Independence?

Every one’s dream is to have high paid but stress free job. In reality, it is next to rare. But if you make yourself financially free by following proper financial plan your dependency on job will be minimal, and you can achieve FIRE —Financial Independence Retire Early in your life.

There are a number of reasons why financial independence is important and beneficial. It can provide you with:

• Peace of mind.  We can enjoy life without worrying about money when we know we have enough to support ourselves. As a result, we will feel happier and more relaxed.

• Freedom. When we’re financially independent, we’re free to decide what we want to do with our lices. To make ends meet, we don’t have to work a job we don’t enjoy. It’s also possible to follow our passions and live a life we’re passionate about.

• Security. We can avoid financial hardship if we are financially independent. We won’t have to worry about paying for unexpected expenses if we lose our job or get sick.

• Opportunities. We can discover new opportunities when we are financially independent. There are many things we can do, such as starting our own business, traveling the world, or volunteering to support causes that are important to us.

If we want to change our financial life, we only need to make a few small changes, continual financial improvement.

We have to make positive change and improvement through small, steady steps.

“A journey of a thousand miles begins with a single step.”

Ask anyone who’s conquered Mount Everest, built a billion-dollar business from scratch, or achieved the seemingly impossible, and they’ll tell you the same thing… they did it a day at a time, step by step.

What steps do you need to take today for Financial Independence?

Set your goals

This step is the starting point of Financial planning. You should know what are your long term goals as well as your short term goal. Long term goal may include retirement planning and buying a house. Short term goals may include foreign/domestic vacation, buying a car, setting aside some money for higher education, etc.

Save before you spend.

Create a separate account where you can transfer stipulated saving amount on the first day of the month from your salary account.

Go for standalone Insurance Package (for you and spouse) or family floater health insurance plan as your base plan and buy a top up health plan apart from the one your employer provides. This arrangement will save your premium outgo.

Decide your saving rate and be firm in implementing it every month. 

One should invest at least 20% of his/her salary. According to your age and risk profile you can have an asset allocation of 80% equity and 20% debt if you are young or 60% equity and 40% debt if you are in the mid-40s.

Expenses can also be categorized as Needs and Wants.

But for a healthy financial life, one must understand how to segregate needs and wants. Learning and understanding the difference between Need and Want makes things simple. We can easily come to know where we spend unnecessarily. This exercise helps us to alter our spending pattern and ultimately increases our saving.

Make your monthly budget. 

Once you have an idea of what you spend in a month, you can begin to organized your recorded expenses into a workable budget. The budget will help you to plan your spending and limit overspending.

Start investing for your retirement since your first pay cheque. Then allocate your investible surplus to your other goals.

Never get into the debt trap. Please never take any expensive loans to fulfill your aspiration. The debt will hamper your saving.

Understand that wealth is a state of mind much more than a physical condition. To become wealthy you must first have a wealthy state of mind. “If you always think in abundance you will eventually have wealth but if you think always in scarcity you will remain poor” -Think and Grow Rich.

Create multiple steams of income.

NEVER rely on only one source of income. You must find ways to create income while you’re not even there.

Tax planning needs to be done wisely.

Keep reviewing your portfolio once in a year and alter your asset allocation as per major changes in your life. Wealth creation is a long term phenomenon.

Stick to your asset allocation for the long term. Don’t get panic about the short term volatility in equity markets.

Last but not least, GRATITUDE. You must be grateful in every state that you’re in. Always focus on what you do have not what you lack. Give back to others, whether through money, time, or service.

On their own, none of these small, steady steps are life-changing. But together, they can change your life.

Always remember rome wasn’t built in a day. Same theory is applicable to wealth creation. Patience and disciplined always pays in the long run.

In affirmative of my friend’s and business partner’s message, I wish you a happy financial independence day🙂

Happy Independence Day, Ghana! God bless our homeland Ghana, and make her great, strong, and prosperous!!!

– Peter Kwadwo Asare Nyarko

Linkedin: https://linkedin.com/in/mrasarenyarko
Facebook: https://www.facebook.com//pkanmandate