Oran A Hall | How your personal financial independence mirrors Jamaica’s Independence

Just as Jamaica’s Independence represents freedom, self-determination, and responsibility for the nation’s future, personal financial independence empowers you to take control of your money, make purposeful choices, and build a secure future.

Independence gives both you and Jamaica strong decision-making powers, free from the dictates of others; but it carries great responsibility, for poor decision-making has a way of destroying hard-won gains. Financial independence now does not necessarily mean financial independence in perpetuity, though that is highly desirable. It can be destroyed by unwise decisions and behaviours.

Decision-making is just one aspect of self-governance. The citizens choose their political representatives; the political party with the majority of seats forms the government, headed by the prime minister. The legislature makes laws, including those relating to the operations and oversight of the financial system – the Bank of Jamaica regulates the deposit-taking institutions and the Financial Services Commission regulates insurance, securities and pensions – and the government determines the economic and other policies. Independent Jamaica, to the extent that it manages its affairs well and does not have to borrow from the International Monetary Fund, for example, can exercise independence in managing its financial affairs.

Likewise, if you are financially independent – owning financial resources that generate the income you require to live at the level you determine, and to pursue your goals without having to depend on employment income and debt – there should be no need for others to determine how you make your decisions because you must first meet your obligations to them.

Jamaica achieved independence on August 6, 1962, but it came after many years of effort by its leaders up to that time to arrive at the point where it could cut its umbilical cord from Britain. It took time for Jamaica to lay the foundations for the structures and institutions it would need to function as an independent country, as well as to give Jamaicans the levers to have the decision-making powers previously wielding by foreigners.

In the same way, your financial independence did not come overnight and without effort and preparation – and with setbacks, too. You are hardly likely to be one of the very small minority that inherited the resources required for financial independence. Quite likely, it was produced by hard work, disciplined saving, prudent investing, smart budgeting, sensible risk management, and effective debt management when it became necessary to incur debt.

Jamaica’s leaders who led the thrust to Independence did not do so just for the sake of Jamaica winning independence. They had clear goals for Jamaica and its people, even if they did not always agree on every issue, and believed it would empower Jamaicans to determine the path to prosperity.

Similarly, as a financially independent person, you would have had to make a plan with clear goals - and even visualised the end result.

Jamaica’s leaders who led the Independence thrust were clear that political independence without economic independence did not have much value, so it was necessary to have the right structures and environment in place to foster economic activity that would meaningfully affect the country and its residents.

To attain financial independence, you would have had to establish all or most of the following framework: awareness, that is, knowing where you were; spending control; savings automation to build consistently; risk protection; debt management; income growth, by increasing capacity; investing, by acquiring productive assets; wealth protection; and accountability, by reviewing and improving your programme.

But whereas you can lose your financial independence by managing your resources poorly, Jamaica, like other countries, effectively sacrifices much of its independence if its leaders mismanage the economy and put it in dire financial straits, thereby making it necessary to borrow.

Although Jamaica is an island, it does not stand alone. It can be affected by external developments like the weather and international financial crises – and has been – but independence does not mean it has not had to get support from outside. It has also had to take positions as part of a bloc such as CARICOM, in the regional interest, but primarily in its own interest. That does not mean it is not independent.

You, no doubt, have had to join with others to take action to protect your own interests, perhaps contributing financially.

Whereas Jamaica’s Independence is about the people saying they will govern themselves, free from external control as they build a self-sufficient country, personal financial independence is about you saying you take responsibility for funding your life with your own plan without depending on others.

Oran A Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel.