MyMoney Online

Financial Fitness: 3 reasons why you will never be financially independent

Image: girlsjustwannahavefunds.com

Financial Independence is achieved when your investments reach a point where they can generate sufficient income for you to live off. It puts you in a space where you don’t need to earn an income any more. It empowers to to do the things you really want to. Many of us don’t get anywhere near being financially independent. We, instead, assign ourselves to having to work for as long as possible compromising on our standard of living along the way. Here are some reasons that stand in the way:

1. Living it up

If you are borrowing to maintain your lifestyle your standard of living is too high relative to your income. You should be able to service your debt comfortably after having firstly set aside the appropriate amount for savings.The cost of your total debt should not exceed 30% of your monthly income. If it is higher then you probably should be living in a smaller house or driving a cheaper car. The higher your debt the more you are paying the bank instead of yourself. The opportunity is lost in diverting interest repayments to compounding investment returns.

2. The idea that we will all make it one day

Many of us dram that one day in the future we will strike it rich in some business or win the lottery. We then don’t see the need to save along the way which ends up in starting to save to play catch up and often ends up being too late. The only realistic way to have a chance of building enough capital is to take full advantage of compounding. The sooner you start saving the less it will cost you as the power of compounding increases exponentially the longer you save. Its the only magical way to reach financial independence, but it does need time to make it happen.

3. Ignoring the value of money

Image: blogordietryin.files.wordpress.com

Ignoring the value of money now and into the future will stand in the way of being financially independent. Many of us are more ready to spend now rather than save for the future. Think how hard it is to earn your money and how easily you seem to part with it. As the costs of living rise into the future the value of your money needs to keep pace to compensate. Furthermore, your investments need grow ahead of inflation if you want to get wealthier and set you on the path to financial freedom.The future cost of living needs a hard and honest evaluation especially with the essentials like medical aid, electricity and even water. Just these three necessities alone will take a huge slice out of your income needs into the future. The value of your money is important now but will become even more so into the future if you truly want to become financially independent.

Paul Roelofse, Certified Financial Planner® presents 'Financial Fitness' on Radio 702 and Cape Talk on Weekend Breakfast with Africa Melane and Azania Mosaka on Sundays just after 08h00. Visit http://www.investforlife.co.za/ for more.


This article first appeared on 702 : Financial Fitness: 3 reasons why you will never be financially independent


CapeTalk welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

  • Racism (including offensive comments based on ethnicity and nationality)
  • Sexism
  • Homophobia
  • Religious intolerance
  • Cyber bullying
  • Hate speech
  • Derogatory language
  • Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the CapeTalk community a safe and welcoming space for all.

CapeTalk reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

CapeTalk is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

Read More
What you must learn from the Steinhoff and EOH share price collapses

What you must learn from the Steinhoff and EOH share price collapses

The Money Show’s Bruce Whitfield interviews Galileo Capital Personal Financial Advisor Warren Ingram.

3 JSE shares you should consider buying right now (by JM Busha Investment Group)

3 JSE shares you should consider buying right now (by JM Busha Investment Group)

The Money Show’s Bruce Whitfield interviews JM Busha Investment Group Managing Director Joseph Busha.

3 wealth creating shares to buy before yearend (by Anchor Capital)

3 wealth creating shares to buy before yearend (by Anchor Capital)

The Money Show’s Bruce Whitfield interviews Anchor Capital Fund Manager Tamzin Nel.

Are you missing out? Bitcoin (‘Zimbabwean dollar in reverse’) revisited…

Are you missing out? Bitcoin (‘Zimbabwean dollar in reverse’) revisited…

The Money Show’s Bruce Whitfield interviews Personal Financial Advisor Warren Ingram.

3 shares that’ll grow your wealth, if buy them now (by Ashburton Investments)

3 shares that’ll grow your wealth, if buy them now (by Ashburton Investments)

It’s stock pick time on The Money Show! Bruce Whitfield interviews Ashburton Investments Deputy CIO Nkareng Mpobane.

'The South African stock market is massively hedged against a weak rand'

'The South African stock market is massively hedged against a weak rand'

The Money Show’s Bruce Whitfield interviews Galileo Capital Personal Financial Advisor Warren Ingram.

Popular articles
'This puts pressure on Jacob Zuma to vacate office earlier'

'This puts pressure on Jacob Zuma to vacate office earlier'

The Money Show’s Bruce Whitfield interviews Daniel Silke, Political Economy Analyst at Political Futures Consultancy.

Judge Mlambo: Zuma's application amounts to abuse of judicial process

Judge Mlambo: Zuma's application amounts to abuse of judicial process

EWN Barry Bateman explains the High Court proceeding on President Zuma's application to set aside parts of Madonsela's report.

It's chicken for Joburgers and Durbanites, but what do Capetonians feast on?

It's chicken for Joburgers and Durbanites, but what do Capetonians feast on?

Stephen Grootes spoke to founder and CEO of OrderIn to find out more about South African's eating habits.

Predictably awesome new Nando's ad reminds South Africans ‘we can fix our sh$t’

Predictably awesome new Nando's ad reminds South Africans ‘we can fix our sh$t’

Watch the Guptas pack their bags and run in Nando's inspiring new advertisement.

PSG Chair Jannie Mouton opens up (kind of) about Steinhoff

PSG Chair Jannie Mouton opens up (kind of) about Steinhoff

In 2012 Steinhoff acquired 20% of wealth manager PSG, reportedly infuriating Mouton. Bruce Whitfield interviews him.

[LISTEN] Caller challenges Eusebius on land disposition

[LISTEN] Caller challenges Eusebius on land disposition

‘I need you to provide me with an answer' - John from Edenvale, Gauteng