Is cost-cutting the key to financial freedom? | Wangechi Njogu

Financial freedom remains a challenge for most individuals worldwide. Folks, including myself, toil every day in a bid to have sufficient investments, savings, and funds to afford the lifestyle we desire. The majority of people dislike cutting costs. After all, no one wants to give up on a newly acquired comfort or luxury. However, I reckon that cutting costs is an important step to attaining our wealth goals. But is cost-cutting the key to financial freedom?

Can I attain financial freedom by cutting my monthly expenditure?

While you can attain financial freedom by cutting costs, your ultimate concern should be the outlook of your money habits and your income streams. Let’s use two individuals, June and Avery for our case scenario.

June has secured a top position in a notable organization with great pay and benefits, and she is over the moon. However, we take a look at her expenditure and we are in dismay. To start, June does not have any notable savings and investments, despite having a high-earning job. And since she does not have a budget, June cannot explain how she uses her income, other than housing, insurance, and the latest loan to service her luxury car.

Avery has an admirable role at a renowned company. We request to see her budget, and it’s quite impressive. You can see her monthly budget allocations, from school loan repayment, entertainment, annual holiday savings, and car loan. Avery also has an impressive investment portfolio with a mix of high and low-risk options.

From the two simple case scenarios, you can see the different financial planning and spending habits. For instance, June’s lack of budgeting is a prevalent habit that can delay how soon you attain financial freedom.

Takeaway

Money can afford you comfort and luxury and pave the way for additional income. However, if you do not have financial discipline, your costs will exceed your income. Thus, focus on your money management habits, and growing your income and most importantly, live within your means.

Notable quotes:

“The single biggest difference between financial success and financial failure is how well you manage your money. It’s simple: to master money, you must manage money.” — T. Harv Eker

“Financial stability is much more about doing the best with what you have and not about achieving a certain level of income.” — Erik Wecks