Personal Finance & Personal Freedom

You cannot look at the great reset without looking at freedom, and what it is. What is personal freedom? Besides basic things like having your human rights respected, and being able to travel and to move around freely, this also involves having your personal finances under control.

So this is an article about the basics of financial freedom. If you already know a lot about this, it might be too basic for you. If not, bear with me. The main aspects of personal financial freedom are first to get out of debt (if that applies to you) and second to work with a structured financial system.

If you are really in debt, you are not free. You can end up in a position where you spend your whole life paying off your debt, without every reaching some level of financial independence. A personal bankruptcy of this type can cause you to become a slave to your debt.

As I mentioned in a previous post, we are now in a situation where 1% of the world population owns as much as the other 99% combined. How do they do that, this rich 1%? One of the reasons is that they used compound interest to their advantage.

Whenever you have earnings, you will earn interest on your savings, and the power of compound interest works in your favor. Whenever you have debts, you will pay interest on your debts, and the power of compound interest works against you.

This is very basic stuff, but it is important to fully grasp this, because then you will understand the absolute necessity to get out of debt. I am not talking about borrowing money to build a house or start a business; I am only talking about debts related to badly managed personal finances.

The first thing you need to do when you want to find financial freedom is to do whatever it takes to get rid of your debts. Find a job, find a second job, sell stuff you don’t need anymore, look for help, find ways to live cheaper. Get above zero, so compound interest is no longer your enemy.

Once you are above zero, every month, I encourage you to adopt the system which is described in an old book, The Richest Man in Babylon, by George S. Clason. You can download a digital copy for free if here you want more background information.

The system described in this book is very simple:

  • Learn to live on 80% of your income.
  • Save 10% of your income for your pension or unexpected setbacks.
  • Give 10% of your income to charity (tithing).

There are many famous people who use this 80 / 10 / 10 system and are very fond of it. When you have the discipline to get out of debt, you will also have the discipline to learn to live on only part of your income, and then you can make this system work for you.

Maybe you can’t start with living on 80% right off the bat, then do this in steps. 96% for living, 2% saving, 2% giving to charity. Why is it so important to give to charity? Well, besides raising your self-esteem, and quite possibly improving your karma, you will bless the world in a positive way.

It tremendously benefits communities if everyone who can afford it spends 10% of his income on charity, on giving to those who are in need. By doing this, you will live in a better community. You will help to create a better world for everyone to live in.

So if this all applies to you, take a look at your financial situation. Get out of debt, and then work towards using a system to manage your personal finances, in a way that benefits you and benefits the world. This is the path to financial freedom and personal freedom.

The Distribution of Wealth

One of the most shocking facts about the distribution of wealth on our planet is that 1% of the population owns as much as the other 99%, as confirmed in this Oxfam Novib report.  “As growth benefits the richest, the rest of society – especially the poorest – suffers. The very design of our economies and the principles of our economics have taken us to this extreme, unsustainable and unjust point.”

Those who have followed the news around the COVID-19 outbreak and the worldwide lockdowns will have noticed that the current situation has only worsened the gap between rich and poor. Big Tech is doing fine in this situation. Many billionaires get richer. Poor people suffer more than usual.

Even with government support, many small companies have financial problems, and they expect a wave of bankruptcies soon. And the economic problems in the first world, combined with lockdown restrictions, will have a horrible impact on the third world.

What to do in this situation? A first small step in reversing this situation is to buy locally whenever you can. Instead of purchasing goods and services from Fortune 500 companies, see if you can buy the same or alternative options locally.

Whenever you buy products from Fortune 500 companies, you are supporting companies who hardly get taxed, because there are lots of ways for them to legally avoid paying taxes. The profit of this tax avoidance will end up in the pockets of shareholders, usually the 1% mentioned above.

When you buy locally, taxes will be paid, and this money will flow back to the community, at least part of it. You will provide local people with money they can spend, which will benefit the local community again. Instead of losing money to rich shareholders, you keep the money in the local economy, making it healthy again.

Money will start circulating among the “common people”, the 99%, simply by buying locally whenever possible. This is not the whole solution to the current extreme imbalance in the distribution of wealth, but buying locally is a first step. I will write more posts on this subject in the near future, so please stay tuned!