When it comes to personal finance, financial independence is the ultimate goal of every person. When we talk about financial freedom, it means you can do everything you want, and get everything you need without worrying about money. I’m not yet financially independent to fail to work and again enjoy all savings as I have to offer customer services at Riveria Beach Tow Truck to different clients across the country. However, we are all working our way up to retire before our time, and enjoy the financial fruits of our hard work.
If you are a family person, you are tasked with the responsibility of taking care of your family and meeting all the bills. With many debts in our midst, financial independence is not on every person’s radar. In this article, we break down what financial independence means as well as steps you can follow to achieve this independence.
Living a Frugal Lifestyle
The easiest way to live a more rewarding and financial independence life is to control your expenses. Many people have zero ideas on what they spend money on every month. Tracking all of your monthly expenses is essential. You need to bring your expenses down to a manageable level. Most people let their expenses build up with their increasing income, and this is very wrong. You need to minimize your lifestyle inflation and use those funds to increase your investments.
Grow Your Earned Income
Most people have the perception that a good career is the best way to grow their income. This point is highly debatable. Some careers are naturally suited for financial independence journey while others are not. You may get a better income from careers such as being a financial analyst, investment banker, engineering, IT among others. If you have a good career, you need to invest in yourself and get some raises. You should also pay yourself first and use this amount to invest.
Invest in the Stock Market
The stock market presents a very significant way to grow your wealth. Historically, the stock market returns about 7% annually and adjusts depending with inflation. Although this percentage doesn’t sound big enough, the fact is it will add up your investment over decades. You need to understand the power of compounding at a young age. The easiest way to invest in the stock market is to set out some predetermined amount of your income and invest it back. You can max out your 401k and IRA and invest the dividends in stocks.
Invest in Rental Properties
The stock market is a significant investment, but it can take many years before it can accumulate to a substantial amount in your portfolio. A better way to build wealth quickly is through investing in real estate. To get started in real estate, you can find a mentor, read investment books, listen to podcasts and tutorials that can help give you the required real estate knowledge. You can also choose to invest collectively in REITs and other investments. Another way to get out of debts and be in a financial independence state is through starting a business. Starting a business can be a daunting task, but once everything works well, it can be gratifying.