Financial independence is something that all smart people aim for, but something very few achieve. People who don’t know what this is may think that they can save money and get to a place where they are happy with their finances, but unfortunately, this is rarely the case.
The thing with saving money is that it’s going to depreciate as the years go by – it loses value, and therefore the money you thought was substantial 10 years ago will no longer be as much as you need.
Financial independence is for people who want to become free when it comes to their finances. It’s for people who want to be wealthy – not necessarily a millionaire, but have enough money to pay the bills, buy things, and even spend a little on entertainment. Here’s a little secret that might shock you: financial independence is not usually achieved with a regular job. If you want to feel free around your finances, you’re going to need to take matters into your own hands.
Stop Saving, Start Investing
Having some money saved as a bit of a cash cushion in case anything goes wrong is great. You will be smart to have money put aside for emergencies, and this can stop you from taking out credit when you need to pay for that emergency, whether it’s something to do with your car, home, or health. However, once you’ve saved up say 6 months to a year of living expenses, you need to look at investing instead.
Investing is one of the only things you can do with your money that can make you wealthier over time if you are consistent. Here are some pointers and things to remember:
- Start small using an app or a robo advisor if you don’t understand it.
- Small investments now are better than nothing.
- The earlier you start the better.
- Tolerate your risk level.
- Set aside an amount to dedicate to investing each week/month.
- Forget about the money you’ve invested, as it’ll be awhile before you see returns.
Live Below Your Means
Nobody ever got financially independent by living paycheck to paycheck and spending all of the money they earned. Start living below your means.
- Pay yourself first.
- Come up with a realistic budget.
- Have different envelopes for each thing, e.g. food. Place money in there and use it to force you to stick to your budget – don’t take money out for anything else. If money is left over, allow it to build up.
Get Out Of Debt
Get out of debt faster with services like The Ascent. The longer you are in debt the more money you waste due to the interest rate. Make it your focus to get out of debt as quickly as possible.
Don’t Worry About What Anybody Else Has/Is Doing
Worrying about others will only make you feel pressured into having the biggest house or flashiest car. Don’t fall into the trap!
Explore Your Options For Making More Money
How can you make more money? Passive income ideas are best as you can make money with as little work as possible, just performing maintenance to keep things moving along.