Steps to Financial Freedom

Financial freedom is having enough residual income to cover your living expenses. It is not about being rich and having tons of money, but having enough to cover your expenses so that you can spend your precious time doing what you like rather than doing things just to earn money.

Most Kenyans have their finances on a hamster wheel with 51% of the income-earning population estimated to be living hand to mouth. This is made worse by overdependence on quick loans, unexpected events like the Covid-19 pandemic, and other financial emergencies.

We have previously discussed reasons why you need an emergency fund which is one of the steps to financial freedom. The below points sheds light on more steps that can put you on the ideal path to financial freedom;

  1. Cash flow management

Cash flow management is an important aspect of financial planning. It is the building block for wealth creation. A positive cash flow means you have more money coming in than what you are spending while the opposite is true for negative cash flow. A well-managed cash flow enables you to meet your obligations on time and have surplus cash to save and invest. You can only achieve this by spending less than what you earn. Start by evaluating your spending habits and you will be surprised at the things you can do without. Also, find ways to boost your income. This could mean starting a side hustle or finding a better paying job. Your ultimate goal should be to have a positive cash flow.

  1. Investment

Investing is the surest way to growing your money and ultimately achieving financial freedom. It is a long term process that requires planning, discipline and patience. You don’t have to have a lot of money to start investing. You can start by setting aside a percentage of your income regularly and putting it in an investment plan that best suits your financial goals. For instance, you can never go wrong with Amica Sacco Treasure Account. It allows you to save your money over a specified amount of time and earn attractive interest rates of up to 7% p.a. You may opt to save a lump sum deposit or grow your deposits on a regular basis through monthly and periodical standing orders. Remember the best time to start investing is now.

“A good financial plan is a road map that shows us exactly how the choices we make today will affect our future” Alexa Von Tobel

  1. Insurance

A sudden unexpected event can derail you from achieving your financial goals. Such events cannot be predicted but on occurrence, they can cause untold financial loss. Insurance provides you with protection against this potential loss at an affordable rate. It gives you peace of mind knowing that you are covered in the event of such an unfortunate eventuality. Some of these events include property damage, theft, fire, accident, sickness or disability.

Here are some of the policies one can take to mitigate against these risks:

  1. a) Fire and burglary insurance

In the wake of existing threats of fire, lightning and burglary, it is very important especially for business owners to ensure their properties in order to forestall any losses. It covers stock, equipment, machinery and buildings in the event of fire or burglary. With this cover, you are assured of business continuity in the event of a loss.

  1. b) Motor Vehicle Insurance

A motor vehicle insurance cover is necessary to protect your vehicle from costs incurred by theft, fire or accidents. There are different levels of covers available with the comprehensive policy covering you, your car and third parties against all possible risks. At Amica, we offer some of the best covers to protect you from incurring financial costs arising from some of these unforeseen occurrences.

Amica insurance agency offers Insurance Premium Financing enabling you to pay insurance premiums in instalments on a monthly basis.

Visit any of our branches for more types of insurance at affordable rates or visit our website at Amica Sacco.

Watch more about simple steps to financial freedom.