Whenever people think about financial independence, they think of a bulk sum of money that they can use to change their lives. They usually think of winning the lottery or getting an inheritance from some rich distant relative they didn’t know about. Truth be told, however, achieving financial freedom isn’t about getting a huge injection of money into your bank account, but a lifestyle. Financial independence means that you have enough of an income to sustain your living expenses for the entirety of your life without the need to work a full-time job.
We’ll look into ways that can help you achieve financial independence and find what works for you.
1. Keep a buffer on your budget
It wouldn’t do well to spend as much money as you’re earning. While only you can decide how much of your paycheck you have to live with every week, it’s generally a bad idea to use up 100% of it every single time. It really doesn’t matter if you’re earning 10 times of what you are now, if your savings have nothing to show for it, you’re still going to stress over your finances. Whenever you plan for your weekly or monthly budget, allow breathing room on your expenses, so you can actually save a bit of money in case of emergencies.
2. Set aside money for investment and real estate
A huge mistake many people make is living paycheck to paycheck, with very little regard for the future. There will come a time when you are no longer physically able to work, and the money will stop flowing. What will you do then? Putting money into investments will allow your finances to grow and allow you to secure your future, even if you no longer have to work.
Real estate generally is a good place to start for a savvy investor. If you don’t know a thing about real estate, however, there are advisors and resources you can make use of to help you maximize your investments. One such article on 1031 Exchange Real Estate talks about making the most of the money you earn in your prime and help you improve your real estate portfolio.
3. Live within your means
One of the best ways to achieving financial stability is by simply curbing your expenses. Many people don’t have an idea how much they spend every month and find themselves constantly struggling days before getting their paychecks. By simply keeping track of your expenses and spending less, you can ease up a huge strain on your money.
A good way of lessening your expenses is to not rely too much on your credit cards. Don’t buy something you don’t actually have money for, because that basically mean debts, and debts mean interest rates, meaning you’ll end up paying more eventually. Pay with actual cash or use a debit card instead.
Living a frugal lifestyle to achieve financial independence doesn’t necessarily mean living cheaply. It basically just means that you need to put more effort into saving your money for the future and for investment. If you have a decent salary, you can live off of as much as 50% of it and still be comfortable. Discipline is the key. You should own money, not the other way around.