Beginning the Road to Wealth and Freedom two

Hello everyone! In the previous episode, we took an overview of the entire journey to financial freedom, outlining the steps involved. Today, we will delve into the first stage, which I believe is the most challenging. This stage is tough because, as they say, the hardest part of any journey is taking that first step out the door. Overcoming inertia and starting those initial steps is crucial.

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Now, let's dive into today's topic, where we will explore the first stage of this journey. The initial milestone is dealing with debt, which may sound daunting, but it's a starting point for many young people abroad. These individuals often graduate with significant student loan debt due to the culture of independence that develops early in Western countries. They must often finance their university education themselves, usually through government loans, which can be substantial. In the U.S., for example, the average student loan debt is tens of thousands of dollars, with higher amounts for those attending private universities. In Australia, social welfare policies offer some relief, but students still graduate with considerable debt that follows them for years.

In Vietnam, most students don’t face such debt because of our societal culture, where parents typically finance their children's education. So, while you may graduate with nothing but a clean slate, at least you’re not starting in the negative, unlike students abroad who may take years to pay off their loans and reach a neutral financial position.

The second milestone, which is the starting point for most young people in Vietnam, is the phase of being financially dependent on family. This is a stage where we rely on parental support because we can’t yet support ourselves. Ideally, this phase should last until around the age of 18, when you can legally start working. Although legally, you can start working at 15, I use 18 as a benchmark. In poorer rural areas, some children start working at a much younger age to help their families.

I’m not advocating that children start working at a young age. Instead, I suggest focusing on education during this period. Being financially dependent until 18, or extending it by four more years if you pursue higher education, is quite fortunate. However, even if you attend university, it’s best to start working part-time to support yourself partially. Earning some of your own income teaches you the value of money and sets the foundation for your financial journey.

The third milestone is when you start working and can fully support yourself. This is a crucial stage, akin to knowing how to swim. Once you can swim, you don’t need anyone’s support to stay afloat. Similarly, once you can support yourself financially, you can survive independently without any assistance. Even if you lose all family support, you can still manage on your own.

However, this stage also comes with risks. Without proper financial planning and management, you might fall into debt, reversing your progress. It’s essential to differentiate between good and bad debt. Mismanagement can lead to living paycheck to paycheck or worse, accumulating debt that hampers your quality of life. Even borrowing from friends or family without interest creates the pressure of repayment, and failing to manage this can harm your reputation and relationships.

The worst scenario is borrowing at high interest rates or from informal lenders, leading to significant financial and emotional stress. Recognizing these risks and managing them effectively is crucial.

Most young people might get stuck at this stage, living paycheck to paycheck, potentially their entire lives. This lifestyle is precarious and limits your ability to handle emergencies or pursue better opportunities. It’s vital to have a plan to move beyond this phase.

In the next episode, we will discuss the 'Monitoring and Building' stage, where I will share strategies for tracking expenses and managing debt efficiently. For now, I’ll wrap up this episode here. If you find this content helpful, please share it with your friends.

Thank you.