A letter to my children: On financial freedom

To my dearest daughters Nicole and Ava,

June 12 is the Philippines’
Independence Day. As we celebrate our country’s 120th year of independence from Spanish rule, I would also like to celebrate another freedom that we enjoy as a family—our financial freedom.

Financial freedom means different things to different people. When I was younger, I thought being financially free meant being able to buy all the nice things I wanted without having to get my parents’ consent. But as I grew older, I realized that being financially free meant way beyond being able to buy nice things for myself.

Today, financial freedom means that I can choose to work in a job that I want to do, and that allows me to spend time with you, even if it doesn’t pay the most.

Financial freedom means that I don’t have to worry about getting sick or encountering any unforeseen circumstances because I know that I don’t need to depend on my paycheck to cover for my expenses.

Financial freedom means that I can eventually retire without having to worry about maintaining my lifestyle. It also means that I don’t need to pressure you to take care of me when I grow old because I’ll have enough to spend for my needs.

But this financial freedom did not come without a price.

When I started working, I only earned P8,000 a month. I sacrificed on convenience by bringing “baon” to work and carpooling with officemates. I also wore the same clothes and shoes over and over again. This allowed me to save money so I could invest more in the stock market.

When I started to earn more, I continued to make sacrifices because I used most of my pay increase to start buying properties.

Although your father and I had an opportunity to live in a big house before, we decided against it because we prioritized growing our stock market investments and expanding our rental property portfolio. We knew that this sacrifice would allow us to generate more income in the future and allow us to reach our goal of being financially free faster than if we had decided to live in a big house that we really didn’t need because there were only four of us.

I admit that your father and I had some “lucky breaks” along the way. However, instead of spending the windfall gains on frivolous things that would make us happy for a short time, like designer watches, shoes, bags and fancy cars, we prioritized paying off debts and growing our investment portfolios.

I will not lie to you by saying that being kuripot was easy. I also got envious of friends who wore designer watches and shoes, carried designer bags and lived in big houses. However, remember that the fulfillment you get from knowing that you don’t need to depend on anyone or anything for your financial needs is far greater and more lasting than the fulfillment you get from owning nice things. Besides, when your investments start to bear fruit, they will allow you to buy all the nice things you want without you having to work for it!

Remember, too, that you don’t have to be rich to earn people’s respect. Invest in improving your skills so that you can be the best in whatever you choose to do. The type of respect you earn because of this is something that even the rich cannot buy! Also, never compromise your integrity for the sake of earning more because once you lose people’s trust it will be difficult, if not impossible, to earn it back.

In a few years, both of you will be graduating from the university. When you start working, the first thing you should do is open a savings account where you can automatically transfer at least 20 percent of your salary every pay day for your investments. Link this account to a facility that will allow you to buy index funds. That way, you will not be tempted to spend the money on things that you don’t really need.

When you get a pay increase, don’t forget to increase the amount you set aside for investments so that your portfolio can grow faster. You can also buy properties like we did. While the capital appreciation potential of properties is less than in stocks, it provides a steadier stream of passive income and allows you to leverage your investment.

Finally, enjoy the journey. Although your father and I are now close to reaching our goal of being financially free, the invaluable lessons we learned along the way has made us truly rich, far beyond the peso value of our portfolios.

Love,
Mommy