Financial independence is something all of us want to achieve. It is that which makes us wake up every day. Work or go to work. Sleep late. And probably have a troubled night.
Unlike the lucky few individuals, the majority of the people globally are poor and always strive to be financially independent.
Today we are giving you the best ways to achieve financial independence… Read through.
So, what is financial independence? Well, it may mean different things to different people in different places. But generally, it is being able to meet all your needs without having to worry about the money. There are things money cannot buy so those can trouble you but not the money itself.
Financial independence also referred to as financial freedom, for some people is having enough money to last one’s lifetime leading a comfortable life and having not to work. For others, it is having a consistent source of income that enables you not to worry about their bills. Being able to travel the world and not worried about the draining of their accounts is what it means for others. And still, for others, it means doing the work somebody loves and enjoys doing instead of the work they do only to get monthly income.
Financial independence may mean a lot of things but the bottom line is, “Money is not a problem.” This mostly happens when your passive income exceeds your expenses. passive income is the income coming from the proceeds of one’s investments.
Benefits of achieving Financial Independence.
The following are the common benefits that are enjoyed by those who achieve financial independence;
a. Peace of mind.
A stress-free life is probably a happy life. When you don’t have to deal with the stress of employment, life becomes very fulfilling. And when you have not to worry about your next source of income to sustain your lifestyle, it feels even better.
Money matters are the root cause of most human stressful factors in our lives and this in equal measure affects our families and hence our happiness. But financial independence solves these problems by providing freedom of choice, and it is the main reason we all strive to achieve it.
b. It enables you to live and work on your own terms.
Many people are slaves of unscrupulous employers. They are forced to work for many hours per week and probably earn less. But if you become financially independent, your passive income can meet all your outgoings. So, you get to decide how you work, who you work with (or for,) and how long you work.
You stop being a scavenger- taking any job that comes your way. And you get a strong negotiating power when it comes to your next job because money is not a problem; you are not after the salary but a job that will allow you to live your life the way you want. So, in this case, you take what best suits you.
Alternatively, you can decide to embark on self-employment, venture into a business, and become your own boss or invest in a personal project different from a traditional salaried role. In short, you choose how to live.
c. It ensures greater financial security.
In 2020 for example, due to the Coronavirus pandemic, many people around the globe lost their jobs. This escalated the job insecurity that already existed. And when you have no job, you don’t have money. But, when you’re financially independent, you can choose roles that suit your approach to risk rather than depending on a salary.
d. It is Unemployment insurance
When you have savings and investments in place means you don’t need to worry about unemployment when it comes because you can still keep up with your lifestyle as before.
Just because you’re financially independent, doesn’t mean you stop working. You can decide to increase your wealth or save for the future of your children. But, should you lose your job, you are safe knowing your lifestyle is protected and you won’t need to make adjustments.
e. Early retirement
When you achieve Financial Independence you can decide to retire early. For example, if you have a revenue stream that can sustain your lifestyle beyond your lifetime, you can retire at let’s say 40 or 50.
Best ways to achieve Financial Independence.
1. Develop your plan, set goals, and research.
Chuck once said,” If you don’t know what you want, you end up with a lot you don’t.” So in this case, if you know what you want, you need to have a plan with guidelines and means on how you plan to achieve it.
To achieve financial independence, you need to plan how and when you want to achieve it. You need to set goals and give them timelines.
An idea in your mind will remain just an idea if you don’t have a viable plan to actualise it. Therefore, without the plan to direct you there, there is a little chance of achieving your financial goals.
Furthermore, there is no particular way to achieve financial independence- It is a different journey for everyone. It is therefore advisable to research the best way that suits you depending on how soon you want it and the weapon (resources) you have at hand.
For example, some people may decide to start saving while others may opt to start a business or invest.
2. Start now.
To achieve financial independence is a long journey. It is not something you can start today and achieve it tomorrow; it requires courage and selfless commitment and dedication.
Procrastination kills many dreams. And so, don’t keep saying you I will start saving tomorrow or when I get a good-paying job. Time is now.
3. Become a business owner, not an employee.
The world’s most known billionaires are entrepreneurs, not salaried individuals. Building a business may seem the most difficult way to achieve financial independence but it the best way.
Very few people may decide to leave their employment/ paycheck to become entrepreneurs. This is because the success of any business is 50/50. This means that not all entrepreneurs make it big.
But if you choose this way, you have to;-
- Work really hard.
- Understand your customers and take good care of them.
- Research to identify competitive advantage.
- Offer quality.
- Invest in your staff.
- Always learn.
- Be innovative- Use modern technology to market and manage your business.
4. Limit expenses.
Stop living to impress others. Do not buy that car when you really don’t need it. If possible embrace frugal living-Living below your means- to cut living cost. Use public transport instead of a car. Cook and eat at home instead of hotels. Shop less often and when you do avoid impulsive buying.
5. Accumulate income-generating assets.
Human beings will always spend money. We all want to have a good life and enjoy life. But there is a way we can spend on things that generate income.
For example, instead of buying a personal car, you can buy a public service vehicle (PSV.) You can also buy a house strategically to sell when its value appreciates, and land, and much so on.
6. Avoid credits/ debts.
It is easy and feels good when getting into debts, its fun actually using the money but it is always a nightmare to get out of it. It can get you days to acquire a loan but it can take you years to pay it off.
Having debts is one of the greatest obstacles to achieving financial freedom. Here are some ways to get out of debt.
Save, save, save every time.
I know it is difficult to save when even what you earn is not enough but its always good to save as little as 10 per cent.
Since you are on a mission to achieve financial independence, lower your living standard, spend less, and save.
8. Spend Time wisely.
Remember the old cliché, ‘time is money.’ So, do not waste time on unnecessary things. And as we said earlier, this journey requires commitment so you need to invest your time. Commit time in everything you do toward achieving your goals to ensure that you will not only complete the plan but do so in time.
9. Invest wisely/strategically- Invest in ways that favour your situation.
Saving money is one thing, which is good but it depends on how much you have to save. You can invest the little you have and can generate more income compared to the bank interest, you would earn saving the same amount.
Your goal should be to have your money, generate more money while you sleep.
For example, investing in real estate, rental properties, flipping homes, the stock market can be a good way to let your money work for you.
Other ways of achieving financial independence include;
10. Utilizing your talents.
12. Marrying rich.
13. Winning a lottery.
There are many ways or strategies to achieve financial independence, and each has its own advantages and disadvantages. Therefore, to effectively manage your money, (to know what money is coming in and the one going out- track your expenses, etc.) it is always advisable to have a financial plan.
Planning should be the priority number one since it enables you to appropriately choose the best strategies to move towards your financial goals.
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