The term financial independence (FA) has gone mainstream. For the first time, people are being asked to think about FA for real reasons.
More and more people are being introduced to the idea of FA through the media. The movies Moneyball and Moneyball 2 portray people who are very wealthy but not necessarily FA. They illustrate the idea of looking at your life as a whole and how it should be complete with a car, private school education, and a nice house.
These films make people think they need to be rich in order to be independent. In fact, most people who watch these films wouldn’t leave their home unless they had a car, a home, and were well-fitted for the weather conditions would be present. These things are often perceived as necessities in order to achieve this state of financial freedom.
The path to financial freedom is often a much-debated topic
Do you need to work for money? Do you deserve to be paid for your work? These questions and many more are discussed in detail in this article.
If you answered yes to any of these questions, then Financial Independence is the thing for you. If not, then think of having the minimum needed for survival as enough.
For most people, earning a good living from an day-to-day basis is what drives them nuts. They feel like they should be able to save enough money over time to purchase a decent house or car or item, but they can’t seem to get started.
Many feel like they need more time and energy to attain their goal of financial freedom so they don’t move forward with their plans. This is totally normal and understandable!
Moving towards financial independence takes time, but it can be done in stages.
Avoid chronic debt
Having debt that’s high compared to income can put a strain on your income and ability to pay off debt.
However, if you have excess debt that’s higher than your current income level, then you’re doing a good thing. In fact, this is known as financial independence and it’s considered a good thing.
Financial independence doesn’t mean you’ll never owe money, it just means you’ll be able to afford the bills and savings you need to get rid of. It is possible to achieve at some point in time, which is why there are many people who seek out this stage of life.
Don’t go into debt because you think you must pay off quickly or that you won’t like having some extra money in your possession after. You will probably feel guilty and/ or stress out about every little bill. These things will make you stay in debt longer than you need to.
Spend less than you earn
The first step towards being able to live a life that is beyond limited spending is to understand the difference between money and expenses.
Many people spend money they did not have by shopping sprees on credit cards. While this might seem beneficial at first, as you grow and need more payments are going to be made as taxes and bills come along.
By having a balance on your credit cards that you do not owe much money at all, moves towards debt control can be slowed. It is also important to grocery shop at least once a week so you don’t run out of anything to eat with how little spending you are doing.
As mentioned before, there are two main parts to having a balance on your credit card: Being able to purchase things without paying interest for them, and being able to control how much is left when new cards come out.
Create multiple sources of income
This is the most valuable coaching tool of all – the ability to generate income sources for yourself. This includes not only creating new income sources, but also learning how to market and profit from them.
Whether you choose to focus on a full-time job or a part-time job to help pay the bills is up to you.
The point is: You control how much money you make, how much you make, and who you make money for. If you want more control over your life, finding ways to generate income is worth it.
How much money do you want to make? How much money do you need? What types of jobs are there? It’s endless! There are many ways to earn money, no matter what your level of expertise or skills. There are many ways to become paid work itself.
Invest for the future
Despite the fact that we live in the present, most of us were raised to focus on the now and how we should manage our money. This is because we were taught about financial lessons at school, but more recently through financial education courses and guidance.
As we grow up, we are taught what things are worth and what activities you should do to maintain your happiness and health. As you move into adulthood, you learn about marriage, family and what kind of job you want to have yourself.
But as soon as you start thinking about your retirement years, things change a lot. You need to build a rainy-day fund so that you can cover your needs in case of an emergency. You must also be careful about how much money you spend so that you will have room for future needs.
These are all good tips to keep in mind as you grow older. Having a plan for future goals can help maintain a sense of well-being during this period.
Avoid reckless spending
the term reckless spending typically refers to the sort of spending that you would do if you were not careful. When we refer to spending that is “rewarding” or “impulsive”, we are referring to the kind of spending that we tell someone to do when they are looking for a fun, easy way to spend their money.
More often than not, these kinds of expenditures are paid for out of pocket. You cannot really convince your bank or credit card company to allow you to pay for things like furniture or computer equipment outright without your consent.
However, paying for things in full and from start (eg: don’t buy anything until you need it) can have a huge impact on your lifestyle. In fact, studies have proven time and time again that people who live frugally have faster lifestyles than those who do not.
Featuring only stories about people who have achieved financial independence (and continue to invest their money) will help inspire others to take steps towards their own FI (funding independent).
Plan for the future
Although it may be tempting to put off planning for the future, doing so can give you more freedom and control in your life.
To illustrate this point, I will introduce you to a man named Jim. He is a great example of someone who has created a bright future for himself. For years, he lived in the present without concern for the future.
He didn’t spend time thinking about how much money he would need for now and next year, when he would want to buy a car or what type of house he wanted.
He did not focus on how he would feel if he couldn’t afford to live alone or what kind of lifestyle he wanted to create with his life. He just knew that he needed to have a place to sleep and that was that!
By living in the present without worrying about the future, Jim was able to create a legacy that was secure enough to stay in his memories.
Talk to a specialist advisor
When you’re in your early 20s, it’s easy to fall into the trap of thinking that you need to be 25 forever. You think that you must be successful in order to earn money, which is great!
However, being successful at making money isn’t the only thing you should focus on as an adult. You should also get help from a specialist advisor about how to achieve financial independence.
The reason you should seek out help from a specialist advisor is because your current advisor may not have the right skills to help you achieve financial independence. For example, if your current adviser can afford to take expensive credit card loan after-marketing services, then she or he will do it.
But, if your previous adviser has no experience in this area, then they will need to know how to help you achieve financial independence.