Financial Freedom: The Unfinished Struggle

Published on 28th March 2011

Freedom Day on 27 April is an opportunity to celebrate the many freedoms we enjoy in South Africa, but it is also a reminder of the unfinished struggle for most South Africans: attaining financial freedom.

We live in a country in which our freedom and security of the person is protected and any form of slavery, servitude or forced labour is explicitly outlawed. In addition, we have a constitutional right to our freedom of religion, belief and opinion, our freedom of expression, association, movement and residence and our freedom of trade, occupation and profession. But one struggle remains unfinished in South Africa: attaining financial freedom.

How far are we, as South Africans, from also enjoying financial freedom? "The reality is that while we are free in so many respects, South Africans remain slaves to their generally bleak financial situation," says Dr Koos du Toit, CEO of P3 Investment Group. "And we are not just speaking about the poorest of South Africans struggling to survive physically against hunger and disease, but also the millions of employed middle class South Africans who live in 'relative poverty'. While they can afford a small home, a small car, food and education for their children, doing so is a constant struggle. They don't have enough money to fulfill their dreams, they are slaves to huge debts, and any pension plan they may have will, for the overwhelming majority, prove entirely inadequate." 

"With the national income-to-debt ratio at around 80%, most people are spending R80 of every R100 they earn just to repay debt. Thousands of middle class South Africans simply cannot make ends meet, and home and vehicle repossessions have skyrocketed over the last few years, as has the number of liquidations, sequestrations and debt counselling. Financial difficulties create immense stress, ruin relationships and shackle people as surely as an oppressive government," adds du Toit. 

This sad state of affairs certainly does not reflect the essence of freedom, which the dictionary defines as "the state of not being imprisoned, enslaved, or otherwise constrained". The reality for most South Africans is that they are indeed imprisoned, enslaved, and otherwise constrained by their finances, locked in a day-to-day struggle to survive, enslaved by never-ending debt and endlessly-revolving credit, and constrained by a lack of financial knowledge about how to change their financial reality.

So how can financial freedom- the freedom from financial worries, stresses and lack - be attained? "Anyone can achieve financial freedom, if only they knew what to do and then took the steps to do it," says du Toit. "There is a real solution and it is one that is available to anyone, regardless of their income level, education or experience. We can state this with confidence, because the P3 Investment Group has helped countless people who live in 'relative poverty' to create financial freedom."

P3 Investment Group shares five steps to attaining financial freedom

1. Create a financial plan to achieve financial freedom by setting financial goals, for example, to save up money to protect against life's unforeseen surprises and to make provision for your children's education and your retirement.  

2. Draw up a budget to take control of your finances and cut down on your spending -from eliminating unnecessary expenses, saving on electricity and water consumption to getting better quotes on insurance premiums - to free up money each month for saving.

3. Don't make new debt! And pay off your existing debt as fast as possible. Imagine the day you are no longer spending 80% of your salary just to repay debt! If necessary, consolidate or restructure your debt to reduce the monthly repayments or get professional debt counselling assistance if your creditors are threatening to seize your assets.

3. Start saving! Even a small amount each month adds up over time. The best place to put your savings is in your home loan account, if you have an access bond. The money you will be saving on interest payable is far more than the interest you can earn in a savings account or even most investments. Remember, a penny saved is a penny earned.

4. Instead of spending money on consumables and entertainment, get your money to start working for you by investing in assets that will produce a passive income - income earned without physically working for it, for example, interest earned on savings, dividends earned on shares or income from a business in which you do not work, such as royalties earned from a franchisee or rental earned from an investment property.

"A financial plan charting your course towards financial freedom, taking tight control of your spending, throwing off the shackles of debt, saving up for a rainy day and generating passive income “ these are the keys to financial freedom," says du Toit. "All five steps can be implemented by anyone, even step 5: investing in assets that will produce a passive income. While most people do not have the resources or knowledge to start a business or make investments that can generate a passive income, there is one type of asset that can generate passive income without requiring resources, capital or expertise: buy-to-let property. This is one passive income generating asset within reach of any middle class person striving for financial freedom. You don't need capital, because the bank will lend you the money to buy the property. You don't need a large monthly investment, because the tenant's rental should cover the bulk of the monthly bond instalments. You don't need expertise, because you can lean on tried-and-tested methods and the experience of experts such as P3 Investment Group. You don't even need a lot of time, because the best way to manage a buy-to-let property and a tenant is to appoint a professional property management company at a minimal fee."

"Financial freedom is within your reach, but as Thucydides reminded us thousands of years ago: 'The secret of freedom is courage.' Find the courage to implement the five steps outlined, get help from experts such as P3 Investment Group if necessary and add financial freedom to the list of freedoms you are entitled to as a South African," concludes du Toit.

Courtesy: P3 investment Group

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