Financial Planning

What does financial freedom look like for South Africa?

Our economic climate means freedom is influenced by various challenges. Here’s how to practically lay down the road towards the ultimate dream.

Ask just about anyone you know what financial freedom looks like to them, and you’re likely to hear a few common themes: the ability to be free of debt, not live pay cheque to pay cheque, and maybe even afford a few luxuries along the way, like a holiday or dream car. The truth is, very few South Africans are equipped to live this dream. And fewer still are prepared to enjoy it after retirement.

According to DebtBusters, over the past six years alone, the average loan size in South Africa increased by 45%, with the average consumer spending around 62% of their income to service their debt obligations. On the other hand, the 2022 Sanlam Benchmark Survey reports that 55% of retirement fund members had experienced reduced household income as a result of Covid-19, with 18.5% having accessed some sort of long-term investment.

Considering the grim picture these statistics paint, it’s clear that for many ordinary South Africans, financial freedom might seem like a pipe dream. But the truth is, it can be unlocked. It’s important to view financial freedom as a road map, with certain milestones along the way.

What does true financial freedom really look like?

For most people, financial freedom is unlikely to occur without laying down some groundwork. With the help of a financial adviser, each of the below milestones can be leveraged to secure a financially prosperous life.

1. Secure financial stability

According to Forbes, for some this is defined as securing a job that provides a monthly income. In other words, you have peace of mind knowing where your money will come from, and when you will receive it. From this income, basic monthly expenses can be covered, like food and transport, and additional investments can be made, like retirement savings, medical aid and so forth.

2. Establish financial independence

Investopedia defines this as being able to secure an income outside of day-to-day work. You don’t necessarily need to be employed to earn money. In practical terms, this can be achieved with the help of a financial advisor who can guide you on investments like property or stocks.

3. Enjoy financial freedom

At this point you have enough investments, savings and cash to live the life you want for yourself and your family. It’s complete freedom and confidence knowing that you’re able to cover unforeseen hiccups, and are prepared for the future.

1. Secure financial stability

2. Establish financial independence

3. Enjoy financial freedom

Final thoughts

Achieving long-term financial freedom comes with short-term sacrifices, and, of course, hard work. But unlocking this level of financial confidence is well worth it. The first step is to reach out to us to help get you get started on your journey to living a life defined by financial prosperity.

References

The Real Meaning Of Financial Freedom (forbes.com)

Passive Income vs. Residual Income: What’s the Difference? (investopedia.com)