Financial Freedom for Generation Z, Here's How to Make It Real

Financial Freedom is defined as a condition in which a person is free from all types of debt, has a passive income that can meet the necessities of life, is financially protected from all risks, and is no longer a headache when it comes to spending money for fun.

To realize financial independence, we all must have good financial planning.

However, financial planning has never been taught in schools or colleges. Therefore, not everyone has a good education about this one.

Financial planner as well as financial educator Lifepal, Aulia Akbar, CFP®, AEPP® explained, there are several things that Generation Z must know in achieving financial independence.

6 steps to financial independence

There are six stages to go through to financial independence. Anything?

The first is the dependency phase, which is the initial phase in which a person is still dependent on others for life.

The second is followed by the solvency phase, when a person already has an income because he has just entered the world of work.

The third stage, there is the stability phase, which is when a person's finances have started to stabilize. In this phase, a person receives a higher income and can save with more funds Health Insurance, and have sufficient emergency funds.

The next stage, namely the fourth phase, is to be free from all forms of obligations in the form of debt.

In the fifth stage, there is a safe phase, which is when you already have investments that provide passive income equivalent to spending on basic needs.

Meanwhile, for the sixth phase, namely the independence phase where a person is said to be financially independent. Passive income from his investment can finance basic needs or other things he wants per month.

This is how Generation Z achieves financial independence

For generation Z, according to Aulia Akbar, there are several ways to achieve financial independence.

“There may be many goals in life, but only some of us can achieve them because we can set priorities. While still young, prioritize investments according to specific goals," said the man who is familiarly called Akbar.

Even though he is still in college, continued Akbar, he can start saving pocket money from his parents or as a side job.

In addition, you also have to pay attention to inflation. The formula is easy, look for savings that are higher than the inflation rate in Indonesia itself.

Here are three ways that you can start to achieve financial independence:

Know how and diligently check financial health

The following is the formula for financial health from lifepal.co.id what Aulia Akbar said:

SMART method for life purpose

In determining our life goals, both short and long term. Get in the habit of implementing the SMART strategy.

SMART stands for Specific (specific), Measurable (measured), Achievable (achievable), Relevant (relevant), and Timebound.

Examples of SMART objectives can be seen in the following table:

Without this strategy, the goals that have been planned from the start will be difficult to measure properly. That is what ultimately makes us fail in achieving financial independence.

Pay attention to the rolling flowers

You have to pay close attention to the compounded interest feature or rolling flowers such as existing deposit instruments.

Revolving interest is interest that will return interest from the principal borrowed or invested. Interest from compounding results can be obtained when the money you make from investments starts to generate profits again when reinvested.

Those are the things that millennials need to know in achieving financial independence. Make sure you are the one who can make this happen.

College is a golden age for someone. Therefore, you must wisely go through it.

One way that can be done is to start investing while in college. When you invest as early as possible, it will make our investment process lighter for long-term goals.

“Financial independence is indeed not easy to achieve, but it is not impossible that we can achieve it. College years are the most valuable time for a person. If a person is able to be disciplined in financial planning at this time, then in old age he can more easily achieve financial independence, “said Akbar.