How to Become Financially Independent.

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Are you sick of your job? Fed up with the daily grind? Do you wish you had enough time and money to do whatever you want without having to worry about work? If you were financially independent, all your worries and stresses would just disappear. But what does this mean?

In simple terms, financial independence means having enough money to cover your living expenses for the rest of your life without having to work. Although many people are essentially born into financial freedom due to having wealthy families, anyone can achieve it through a combination of hard work and frugality.

Most people wish they didn’t have to work, but very few people realize that this dream is actually possible. If you want to achieve financial independence, you need to be willing to commit to your goal and do what it takes to attain it. To get you started on your journey, here are some key actions you’ll need to take in order to become financially independent.

Make a plan

Before you can start working towards financial independence, you need to determine what this lifestyle is actually going to look like. Are you happy with an average standard of living, or are you the kind of person who needs expensive sports cars and frequent luxury vacations? Knowing what your financially independent life will entail should help you work out how much money you need to make it happen. The path to your goal will require a lot of sacrifice on your part, so take a minute to step back and decide whether this is really what you want.

Budget

You can’t become financially independent without keeping track of your money. Maintaining a budget is essential for knowing where every cent of your money is coming from, and where it is going. You’ll need to track your monthly income and expenses and put aside the difference to contribute to your long-term goals. Having a birds-eye view of all your finances will help to rein in spending and observe any areas for improvement.

Spend less than you earn

It seems obvious, but the only way to achieve financial independence is to have more money coming in than going out. But many people do live paycheck to paycheck and see their earnings as something that needs to be spent. It’s important to maintain good spending habits and put aside as much as you possibly can. You may need to tighten your belt and downsize your life in order to live below your means.

This could mean living in a smaller house, selling your belongings, or moving to an area with lower living costs. It might also mean regularly checking websites like Raise to find the latest coupons and discounts for major retailers like Kohl’s. There are so many ways to get money off your purchases nowadays so do not be afraid to do some research if you would like to learn some more budgeting tips.

Make sacrifices

In the years leading up to your independence, you will have to make a lot of hard sacrifices. Things like eating out, expensive vacations, and buying designer clothes are pretty much off the table. You’ll have to shop as frugally as possible and eliminate unnecessary expenses. It won’t always be enjoyable, but if you keep to your plan, then your hard work will pay off in the end. You need to decide whether these sacrifices are worth the end goal, and weigh up the risks of failure.

Eliminate debt

If you’re paying off a mortgage or other debts, then you’re far from financially independent. You should be striving to get out of debt as soon as possible. If you’re a homeowner, you can shorten the length of your mortgage with a refinancing HDB loan. Make a plan for eliminating all of your debt, whether it’s credit cards, student loans, or mortgages. It won’t happen overnight, but with a comprehensive plan, you can make steady progress. And once you’re out of debt, stay out of it!

Generate passive income

One of the best ways to achieve financial independence is to have streams of passive income. This means you are earning money regularly without having to work at it. Investing in property and renting it out is one way to achieve this. Alternatively, you could invest in stocks or buy collectibles or real estate that appreciates in value over time. There are many highly lucrative ways to achieve passive income, and here are just a few.

Becoming financially independent is extremely hard work and is certainly not for everyone. In the early stages, you’ll need to sacrifice your immediate pleasure in exchange for a brighter future. Before you start, you’ll need to be sure this life is really what you want, and that you have the dedication required to achieve it.

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Like Minds is a global thought leadership platform delivering world class events on business development, knowledge and insight aimed at entrepreneurs and business leaders to engage, stimulate and empower them to become global businesses of the future. We also offer a bespoke service for corporate clients and training programmes under the Like Minds U brand. For more information please email bespoke@wearelikeminds.com