For many who are working hard every day, it may be about covering various living expenses, much like being stuck in a never-ending cycle of earning and spending. But if one day, you no longer had to worry about your living expenses, would you continue with your current job? What would you want to do, and what kind of life would you choose to live? To enjoy life with “options”, some may choose to work tirelessly, start a business, or simply dream of getting rich. But young people nowadays are increasingly aiming for financial freedom.

Simply put, financial freedom means that a person or a family has enough passive income to cover daily living expenses and long-term financial objectives (such as healthcare, education and retirement) without having to rely on their salary. The advantage of passive income is that it is continuous and does not require active engagements or a significant amount of time and effort. It is not constrained by time either. That’s why passive income is often described as money that you can earn while sleeping.

There are two ways to generate passive income in general:

1. Acquiring assets: you can earn income or returns from investments or assets you own, such as rental income from real estate, or income generated by financial assets, like stock dividends, bond yield, fund distributions and bank deposit interest. However, you need to save money and grow your wealth before being able to purchase these assets.
   
   
2. Creating assets: passive income can also come from sales, copyright/intellectual property royalties, or advertising revenue of creative works, such as videos, songs, books or software programmes. You need to create these assets or content.

First, investing in yourself is the best investment you can make. By acquiring new knowledge and skills, gaining work experience and seeking career advancement and personal growth, you can boost your earning power and active income. This will help grow your wealth for the acquisition of assets that can generate passive income. If time allows, you can also increase your income by taking up part-time or freelance jobs. Besides, you can build your personal social media channels, create videos, write songs and books, or develop software/programmes to generate income from sales, copyright/intellectual property or advertising.

However, making more money may not be enough. The key is to save more. Therefore, it is crucial to manage your expenses wisely and get into a savings habit. You can adopt a “save first, spend later” strategy, such as putting part of your monthly salary (e.g. 20%) into your savings account first before using the rest for daily expenses. You can use IFEC’s “Money Tracker” App to develop a monthly budget and track your expenses so as to improve your financial wellbeing.

While most people believe that savings simply mean “putting money aside”, you may also try to develop the habit of growing your pool of assets, which does not only help grow your investments, but also facilitates the generation of passive income. However, you should never focus on the returns only. It is important for you to understand the source of returns, how the investment works, and its associated risks. You should do your research and start your investment plan early to take advantage of the dollar-cost averaging feature and compound interest offered by monthly investment plans and long-term strategies to grow your assets and passive income gradually.