How to have financial freedom in times of inflation?

Robert Kiyosaki, author of the best-seller Rich Dad, Poor Dad, states that people must learn, from a young age, to manage your money. Because, he assures, the most important thing is not how to get the money, but how to maintain.

Argentina is one of the worst countries in terms of financial freedom. According to the Heritage Foundation ranking, it ranks 144th out of 176 nations analyzed.

According to the foundation, this lack is explained by “public spending and price controls, which distort the market, and government interference, which hinders the financial sector”.

With inflation of around 140% per year and all kinds of restrictions to take refuge in the dollar, as the peso has practically lost all its value, achieving financial freedom it’s a real challenge.

How to have financial freedom in times of inflation?

The concept of financial freedom began to gain followersespecially in the United States, thanks to Kiyosaki’s books and the FIRE movement, for Financial Independence, Retire Early, as explained on the BBVA Spain website

With a strong following among millennials, the key is essentially to combine a simple lifestyle with smart investment of your life savings. generate an income that allows you to stop working as soon as possible.

In a context of increasing retirement ages, especially in the First World, more and more people understand that waiting for retirement to start enjoying life is no longer an attractive goal. Moreover, pension systems are becoming less sustainable because there are fewer people in the workforce to support a larger number of people over 65.

At this point it is important to distinguish active income and passive income. The former are linked to the remuneration that generally derives from a job. So the equation is very simple: the more work, the higher the income (in Argentina, it is worth clarifying, it does not always work because inflation destroys purchasing power).

Income Passive, however, they can come from income (rental of properties), investments or even from writing a book and obtaining royalties from the sale of copies. In other words, it is made up of generate income without having to work.

It is precisely this passive income that can contribute to achieving financial freedom because, once the initial investment has been made, it generates constant returnswithout much additional dedication.

Of course, to achieve this financial freedom, you need to establish a strategy. Formulas from authors like Kiyosaki abound, but it is possible to establish some guidelines to start this journey:

1) We must consider that if work is the only source of income, it must be take care of employment at all costs.

2) Set priorities for control expenses and, therefore, obtain some type of savings to invest or as an “emergency fund”. Compulsive purchases, weekend outings and so-called “vampire spending” should be controlled.

3) Put one together solid strategy. That is, choose a method that allows you to generate income without taking great risks. Kitoyaki always emphasizes financial education and remembers that lottery winners or those who receive a large inheritance, having never handled so much money, usually squander it quickly.

4) People with active income, who have some ability to save, should start Maintain at least 5% of your income each month, at first. After six months, the ideal would be to allocate 10% to savings, to reach the target of 30%, considered ideal.

A portion of these savings should go to investments and another to constitute a “emergency fund” to deal with possible unexpected events, such as the loss of a job or the need for expensive medical care, not covered by social security or prepaid.

5) Finally it can be said that all the gurus of financial freedom agree in saying that those who achieve it have as a common characteristic their “great saving capacity”.