Financial Freedom From Saving
Financial freedom, to many people is a dream. Do not think that you can only get financial freedom only when you have won the lottery. You can do it strategically. One of the strategies is saving and investment. People usually underestimate the power of saving. The truth is that if you do not learn to save, you are never possible to have that large sum of money for investment in order to attain financial freedom.
Very unluckily, the saving rate in America is very low. This low saving rate explains that most of the Americans have to work for their whole lives without financial freedom. In fact, many Americans have the saving concept in their mind. The problem is their saving concept is not 100 percent correct. Most of them save all the money that is left after their spending. For a real saving plan, you should only spend all the money that is left after your saving.
If I ask you to save 20% of your monthly salary, you may find it very difficult. When the money comes to your hand, you want to buy, buy and buy. Therefore, the best solution is not to let the money come to your hand. You may join the monthly investment scheme in the bank. Such scheme requires a fixed monthly salary deduction from your account to be the principle of investment.
You may doubt about the possibility of financial freedom by just saving a part of your money every month as investment. Then, you may need to know the power of "compound interest". For example, assuming you had $100 investment every month at a 5% return rate. In half a year of time, your total investment is not just $100 x 6 months x 105%. You can get around 8% more because of the compound interest effect. The principle and return from the first month together become the principle in the second month. When this principle and return relationship keeps on for 20 to 30 years, you are going to have a large sum of money.
Other than saving, you also need another concept - control. Control is especially important for your spontaneous possessive desire. Controlling your spontaneous possessive desire frees you from the interest burden of credit card. As you may know, the interest rate from credit card is very high. When you default the payment, you have to pay the high interest. Also, the principle and interest is counted on a daily compound interest!
Finally, you have to monitor your financial status. When you know your financial status, you will do everything to help yourself escape from the financial problem. Also, you are going to find new ways that will improve your financial status.
Article Source: FxTradingStock.com
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Learn more about currency investment: trading system forex
by: Simon Wong
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Date: Wed, 26 May 2010
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