Summary

The website provides a personal financial management system focused on saving, investing, and charitable giving, advocating for a structured approach to achieve financial freedom.

Abstract

The article "Path to Financial Freedom" serves as a comprehensive guide to managing personal finances effectively. It emphasizes the importance of saving at least 10% of one's income, with a focus on retirement and property investment. The author, Naomi Leila, suggests using investment apps like FreeTrade to make money work harder and recommends diversifying investments. She also advocates for the practice of tithing, giving 10% to charity, and encourages building an emergency fund equivalent to £1000 or three months' worth of expenses. The system includes setting aside funds for bills, creating a 'dream account' for life's enjoyments, and running the remaining money to zero for day-to-day living. Additional categories for savings include education and birthdays. The author advises automating savings to reduce the temptation to spend and ensure financial stability and peace of mind.

Opinions

The author believes that managing finances doesn't have to be difficult, especially with a regular income, and can be simplified with good habits and a solid system.
Investing is seen as a way to make money work for you, with the recommendation to diversify investments to minimize risk.
Giving to charity is a core value presented in the article, with the idea that we should care for others and share our wealth.
The author emphasizes the importance of an emergency fund to prepare for life's unpredictable events.
Automating savings is recommended as a method to avoid the compulsion to spend and to maintain financial discipline, particularly for those with fluctuating incomes.
The article suggests that following these financial rules can lead to less worry about week-to-week finances and contribute to overall financial stability and abundance.
The author shares personal experience, indicating that these strategies have been stabilizing and effective in their own financial management.

Path to Financial Freedom

A comprehensive manual to managing your finances

The subject of money is often viewed as taboo. People find it an incredibly ‘hot- coal’ topic, as soon as the word is mentioned people ‘hop off’. The downside to this is that it leaves so many people completely clueless about how to manage their finances.

For years I felt like a headless chicken, running around saving and spending without much direction. I figured the only way you could be ‘stress-free from money is to earn more. This is a half-truth. We don’t necessarily need to earn more, we need to find a way to be savvier with what we have.

Managing our finances doesn’t have to be hard. It can be incredibly easy, especially if you have a regular income. If you are self-employed it’s a little harder but by laying the foundation and setting up good habits you can create a system that works in the same way.

Below I’ve outlined the system I use to manage my finances:

Pay Yourself First

Every time you earn money set aside 10%, or an hour of each day's work and save it. The main two priorities that you should be saving for which will help you long term is to save for retirement and a property. At the moment I split this 10% in two. I save 5% in what I call ‘Distant-Future’ and 5% I invest in an app called FreeTrade. This app is an incredibly simple way to start investing as there is next to no hassle. (Quick tip: when investing, diversify). Don’t put all your money in one stock & when you join with the link we both get a free £3-£200 share. It’s good to invest because it makes your money work for you and lowers the temptation to spend it.

Tithe

Giving 10% to charity is a concept I’ve learnt about since I was a child. I’ve always given 10% away of everything I’ve earned. I view this money as belonging to charity. I feel strongly that we need to care for other people in our lives and that undoubtedly there is almost always someone worse off than you. Even if there isn’t we should extend a hand of kindness and share what we have. Giving 10% is a good rule of thumb but if you have more financial freedom give 20%. This is a sensible amount to give because you never know what will happen, and you can always choose to leave more in a ‘Will’. If you really can’t afford much or feel that 10% is too steep start with less.

“We make a living by what we earn — we make a life by what we give’”— Churchill

Emergency Fund

Try to save at least £1000 or 3 months' worth of spending. I find that to start saving 5% a week for an emergency is a good rule of thumb just to get the ball rolling. Life is full of unpredictable occurrences. It’s sensible to try our best to have a contingency plan for when things go topsy turvy.

“When the going gets tough the tough have cash” — David Bach

Pay your Bills

To make sure you are always on top of your game with bills, work out how much you spend in a year on all your bills and divide it per month. Then each time you’re paid, transfer your ‘bill’ money into a separate account. If you want to be extra prepared round the amount upwards so you have extra in case of emergencies. I also like to include dentist & hairdresser money in this category too so I never have to fork out unexpected money when it comes to having these necessary appointments.

Create a Dream Account

Set aside an amount you can afford to save monthly so that you can enjoy life to the fullest. This account can be used for Holidays, Concert tickets, Bucket-list activities. This is the ‘fun one’ as it’ll help turn your dreams into a reality. I like to split my dream account into two parts. One for Holidays and one for events throughout the year. I find it helpful to use it like this as it helps you look forward to plans whilst enjoying the present.

Run the rest to zero

After allowing for travel and expenses, use the rest of the money to treat yourself. That way you can ensure you are living life to the fullest and treating yourself well.

Other categories I save for that you might find helpful

Education — Learning is a key value of mine and setting aside money to invest in this helps me grow into the person I want to become.
Birthdays — Saving money for Birthdays helps ensure that I also am more giving which is another key value of mine.

Automate

If you can try to automate as much as possible. It will save you time and take away the compulsion to spend. I am self-employed and have a fluctuating income so percentages work best for me. Work out the amounts or percentages that work best for you to save in each category.

Although this system is relatively new to me I’ve found that these tips have been stabilising these past months and have allowed me to have more financial freedom. I no longer worry about my week-to-week financial situation because I follow these rules.

Wishing you financial stability, abundance and peace of mind

Much Love

Naomi Leila Xx

P.s. I’ve learnt these tips from various sources which I would highly recommend giving a read. These include: David Bach’s, ‘the automatic millionaire’ & Jen Sincero ‘You are a bad*** at making money’