10 tips for ultimate financial independence

By Wilson Lee Flores (The Philippine Star), June 8, 2015

I believe the most important of all freedoms is economic freedom or financial independence. No matter what our politicians claim with pious speeches every Independence Day, I will only be satisfied if and when visionary and gutsy leaders can finally deliver the majority of the people out of poverty and into economic democracy. That, to me, is statesmanship of the highest order and will achieve genuine independence for any nation. What about us entrepreneurs, professionals, housewives, OFWs, and retirees, how can we attain financial independence? Here are some of my tips (feel free to message me for more ideas):

1. Avoid unnecessary and excessive debt. It is tragic that during the time of our forefathers, banks were known to promote the habit of saving money in the bank, but nowadays the banks seem more overzealous in marketing their credit cards so that consumers can keep spending easily. The worst traps are those of falling into debt with high-interest loans or other schemes by loan sharks. Pay off credit card or pawnshop loans. In order to gain financial independence and ultimately wealth, avoid debt!

2. Always delay buying something; compare first. There’s such a thing as “impulse buying,” whether in the glitzy malls here or abroad, even for hard-nosed businesspeople procuring equipment for their enterprises. I have learned that one of the best ways to minimize too much spending and eventual regret is to delay the act of buying as much as possible. First compare other sellers, brands, and options. Study and negotiate prices and payment terms before buying. Leasing or renting might be more economically feasible than buying certain things.

3. Don’t compare yourself to others. Westerners call this weakness “keeping up with the Joneses” or trying to keep up with others’ lifestyles or fashions. This is a negative habit we should avoid so as not to overspend unnecessarily and unwisely. Do not compare yourself to your neighbors, relatives, friends or colleagues. Be free of jealousy and insecurities in order to gain financial independence for yourself and your family!

4. Spend less than what you earn. Never, ever spend more than what you earn, and never spend your future income by taking out unnecessary loans. One good way to not spend more than your income is to creatively or resourcefully increase your income!

5. Save first before spending your income. Actress and Batangas Governor Vilma Santos Recto shared with me one lesson she learned from her early days as a high-earning movie star who suffered a financial crisis due to loans and high expenses. She said to set aside first a portion of your income for savings, then leave the balance for your expenses, not the other way around. Most of us tend to spend or splurge and then put whatever is left of our incomes in our savings.

After paying monthly utility bills, home rental, food and grocery expenses, we should prioritize saving money ahead of everything else. Set aside part of your income first for savings. One thing I need to start is the Christian idea of tithing, or donating at least 10 percent of my income to charity.

6. Don’t just save; invest. Income alone does not translate into wealth, even if you earn a high income. We need to keep on investing. Savings alone in ordinary bank deposits won’t generate wealth better than wisely investing in good stocks, real estate, bonds, etc. I recommend seeking sound and honest financial advice, or analyze and study a bit of basic finance or money issues on where to invest.

7. List down all your expenses. It is so easy and enjoyable to spend money, especially if we don’t keep track of each expense and total it regularly. To keep myself from overspending, I keep every receipt inside an envelope daily and list down expenses when traveling. Those habits help me moderate or limit unnecessary spending.

8. Buy insurance for car, home, and your life. I have the “spare tire” mentality in almost all things, whether it’s having an additional accountant in my realty business to a backup aircon for a café or an extra cook or driver. Nothing on earth is certain or forever, so I always buy non-life insurance for cars or realty properties and insure even the estimated contents of a house or realty property.

The most important, money-generating asset of a business is not a computer, factory building or warehouse machinery but you yourself. Therefore I’ve always bought life insurance and have gradually added to the amounts through the years. I suggest buying from a good, hardworking and patient insurance agent, because after-sales service is very important and long-term in nature, too.

9. Analyze and plan your taxes. It’s true, all of us cannot avoid death and taxes, and often taxes might seem worse than death if not analyzed and planned for! Look at what happened to the famous Rep. Manny Pacquiao!

10. Have a wife or husband who won’t overspend and over-borrow. Last but definitely not the least, this still-unmarried person believes that having a good spouse is very important for a person to achieve financial independence and long-term success. Do not marry based on good looks or wealth; look for character, a good temperament and shared values.

I have analyzed my family’s over-200-year history as entrepreneurs in the Philippines. The ups and downs of various family members made me realize that the choice of a good spouse is not only key to financial wellbeing but also a life of fulfilment in the long term. Self-made billionaire John L. Gokongwei Jr. told me that the correct choice of spouse infinitely influences not only our success but also our destiny.