We all dream of attaining financial independence, but only a few people achieve it. Financial independence is different for everyone. For someone, financial freedom means to enjoy a comfortable life with no worry about money or a job and for others, it may be a step more than a comfortable life i.e, luxurious life.
Financial independence formula:
Financial independence can be achieved easily by generating passive income. For most of us, this means investing. It’s easy in theory, but you would need to invest a lot of money to generate enough passive income to cover your cost of living. Savings are nothing but income left after expenses.
Here are the 3 paths of financial independence,
1. Improve your income
The first path to financial freedom is to improve your income. If you make more money, then you’ll have a better chance of saving more. It is not difficult to grow your income. Here are a few ideas.
- Accomplish more at work and get promotions and raises
- Get advanced degrees or certifications to increase your pay
- Change career if you’re in a low paying field
- Rent out a spare room
- Work extra hours
2. Live a moderate lifestyle:
Not everyone is as good at making money. If we can’t make more money then we should focus on the expenses. everyone can learn how to live a simple life. Living economical doesn’t mean you have to eat noodles or bread every night, you just need to spend significantly less and invest more. You’d need to save at least 20-30% of your income to reach financial freedom in a reasonable timeframe.
Here are some ways to save a few bucks,
- Cook at home
- Take public transportation
- Live in an inexpensive home
- Try to fix broken things yourself
- Live in a mixed-income neighborhood
- Seek out free or cheap entertainment
3. Create Something Valuable
Many people achieved financial freedom through rental properties. This is a great way to go if you are able to manage things like a landowner. Financial Freedom isn’t that difficult. When it comes to financial freedom, you have to go with your strength and creativity. If you are good at making money, then work on increasing your income. If you’re good at living moderately, then focus on minimizing lifestyle expenses. The answer is to grow your saving so you can invest more. The more you can invest, the faster you will achieve financial freedom.
Lastly, there is a unique way. You’ll have to figure this one out for yourself. Ernie Zelinsky who is an author. He semi-retired when he was 31 with a negative net worth. He didn’t start saving for retirement until he was 40 years old. He used his creativity and wrote many books including The Joy of Not Working and How to Retire Happy, Wild, and Free. Now, he is making more from book sales than most people from their day jobs. Ernie was able to use his creativity and achieve financial freedom in his own way.
Thus this path is surely interesting. If you think creatively and have the courage then good things start happening.
“Do not save what is left after spending, but spend what is left after saving” -Warren Buffett
These paths can improve your productivity and helps to achieve financial independence and can foster your early retirement.
What are your ways to achieve financial independence?
If you need more tips on financial independence and early retirement or investing in real estate, call Raj now, at 720 5151051 for professional assistance.
Photo by Sharon-Mccutcheon, on Unsplash