Financial Freedom Years

If you were saving 10% of your income and an additional extra income equals to just 5% of your total income.

RS 50000 was your income of which you saved 10% equals RS 10000. Now if your income rose by just 5% of total income equals 5% of RS 50000 equals Rs 2250, you do not speed up your financial freedom by that additional 5%, but by 50%.

Yes, that's true!

This is because what contributes to your financial freedom is your savings and not your income.

A majority of the income goes to maintain your monthly expenditure while it is the savings that matter most to us.

This is an extremely powerful concept.

It often gets overlooked because of its simplicity.

Let us look at the same example a little more in detail;  that you earn 50,000/- per month and save 10% of your income (10% of 50,000/-= 5,000/-).

This 5,000/- builds your wealth corpus slowly but surely.

Now, if you are able to increase your income by just 5% and therefore your income now becomes 50,000/- × 1.05 = 52,500/-.

You are now earning 2,500/- through margins (extra income).

This entire 2,500/- can be saved since your expenses were already covered by your regular income.

So now, you can save 5,000/- (which you were already saving earlier) + 2,500/- (extra income that can be saved) = 7,500/-.

Look at it carefully.

Now your savings that go to building your corpus have gone up by 50% (7,500/- in place of 5,000/-) which increases your speed of journey in almost the same proportion.

A 5% increase in extra income leads to almost 50% jump in corpus savings.

Isn't this powerful and incredible?

It is. But no one cares for it because it is too good and too simple to be true.

Unfortunately, what most people miss out is that the most powerful things are also the simplest.

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