7 Practical Steps to Financial Freedom


At some point of our life we may find ourselves trap in the financial rat race. Two years ago I found myself in that position where I struggle with finances. Yes maybe I’m earning more than the average Filipino employees at my age, yet I still found myself in lack, broke…

It was a tough two year journey for me where I don’t just have to work hard, save and increase my passive income. It’s a decision, a commitment to change and decide to be a good steward. Personal finance is more than that, I think it’s a heart issue, a lifestyle and a lifelong commitment. And to do that you have to build a strong foundation. As for my foundation is God’s word, I embrace the truth that the Lord is the owner, provider and controller of every resource we have. “The silver is mine and the gold is mine,” declares the LORD Almighty Haggai 2:8 (NIV). We have to remember that everything belongs to God, we are just managers of His resources, therefore we should manage His blessings in way that brings glory and honor to Him.

1. Tithe and give. As a Christian, if we embrace this truth, then it will be easy for us to give a tithe of everything we receive and to give generously. This is my first step of obedience and expression of faith, believing what God has promised in Malachi 3:10 “Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the Lord Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it.” God promised that He will bless our storehouses (source of income, investments, business, savings) when we give 10% of our income to church. As for me the big question is should I tithe in gross or net. I personally struggle with this, first I tithe based on net income, then until I experience God’s abundant blessing and later decided to tithe from gross income. Tithing is a matter of the heart, it is an act of obedience. God is not after our money, He doesn’t care if we tithe on gross or net. What matters to Him is our faith, that if we tithe and give, we’re confident that we’re not losing money rather we’re positioning ourselves to greater blessings.

2. Commit to lifestyle change. This part is very hard as I need to give up some comfort and indulgence which I used to enjoy. At first I feel like being so hard on myself, but every time I think of short-term sacrifice = long-term gain, this means giving up some comforts such as excessive clothes, shoes, bags, frequent spa and salon treatments, dining-out, milk tea, movies, driving from home to office, etc. It doesn’t mean I don’t buy any clothes, or don’t eat out or don’t get a hair cut… No, I just reduce the amount of money I spent on these things, and savings from this optional expenses to investment and travel. Where travel is my short-term reward and investment is my long-term reward.

3. Pay your debts. Then, I decide to pay all my debts. I created debt inventory, where I list all my debts, including housing and car loans, credit card debts, debts from other person, SSS/Pag-ibig loans, etc. Then I used a “snowball” approach to debt, in this approach you will focus paying the smallest one first before moving on to the bigger one. It effectively works for me. After two years, I’m debt free!

4. Build an emergency fund. Emergency fund is 3-6 months’ worth of your living expense. You set aside this money for emergencies like sickness, job loss, etc. This money should be available anytime; you can put this money in a savings account. I set aside part of my budget and targeted one year to build my emergency fund. Building emergency fund is like storing up for rainy season, let’s be wise and work hard like ants, “Four things on earth are small,yet they are extremely wise: Ants are creatures of little strength, yet they store up their food in the summer” Proverbs 30:24-25.

5. Secure. Being secure means protecting your source of income. In my case, I’m the one working for my family, so I have to protect myself by getting life insurance. So in case, something happened to me, there would be enough money available for my dependent needs. I did a research which insurance should I get, I got to talk with financial advisors from Insular Life, Philam-Life and Sun Life. Based on my needs I decided to get Unit-Linked Protection Life Insurance from Philam-life. Aside from Life Insurance, I also purchase Memorial Plans and memorial parks for the family.

6. Invest. This is an exciting part! Because this is where I can see my money working for me. It’s like having another person working for you (without all the problems in managing people). I enrolled in BDO Easy Investment Plan and commit to save part of my budget to purchased equity funds. I like this product because it applies the Cost Averaging Method in investment. To ensure good returns, it’s best to invest your money at least 3 years. I like this because it’s automatic, your fund is linked to your savings account. I also start investing on myself by continuously learning personal finance. A special shout to my online mentors Randell Tiongson, Chinkee Tan, Fitz Villafuerte and Marvin Germo. I’ve attended their finance seminars, Steps to Financial Freedom and ICON 2013, read their books and blogs, followed them on twitter and learned a lot of financial nuggets from them.

7. Enjoy. This is the most exciting part, where you can now enjoy the fruit of your short-term sacrifice. I’m excited to retire working at early stage so I can spend more quality time with my family, travelling around the world and being a blessing to those who are in need. The Bible says in Matthew 6:19 “Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. “But store up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal… ” I’m looking forward on this season…

10 thoughts on “7 Practical Steps to Financial Freedom

  1. Pingback: How I Fund My Wanderlust? | My Journey, His Glory...

  2. Pingback: Before You Invest | My Journey, His Glory...

  3. Pingback: 10 Money Mistakes I Made in My 20’s | My Journey, His Glory...

  4. Pingback: 10 Money Decisions I’ve Done Right In My 20s | My Journey, His Glory...

  5. Great post, regarding tithing, when we tithe we should also set aside the thought, na ibabalik ni Lord yun ng liglig siksik at ng uumapaw. When we tithe we should think na we had been blessed kaya tau mg bibigay, not because we are expecting something in return

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s