Everyone dreams about financial independence—having enough personal wealth to be able to live comfortably and have all basic necessities covered without having to work actively for it. Financial independence lets you have more personal time while still being able to earn substantial income. It pays (no pun intended) to start preparing to be free from the worries of debt and financial trouble—a very important move for retirees or people who are just beginning to earn their keep. So many things could be said on how to prepare yourself for financial independence, but here are 3 important ones to keep in mind.
- Start Frugal. The financially-independent life is inextricably tied at the roots to the frugal one. Spending less than what you make, reducing expenses where you can, and setting aside a portion of your earnings to pool into a fund or savings plan like a 401k is a good way to start. Starting on such financial measures early in your career can go a long way in letting you retire early and live comfortably.
- Invest Wisely. Aside from maintaining a 401k account, investing your money into assets like stocks, bonds and other investments that create profits is also a big help to realizing financial freedom. Keep in mind that a financially independent person's assets generate income that is higher than expenses, thus, creating a surplus in money. Make sure a good portion of your money in Safe investments where you never lose principle like equity index annuities with income riders.
- Have Multiple Revenue Flows. Finally, consider entering new income-generating activities, whether traditional or non-traditional. While this may seem like an antithetical concept to the "Not Working" idea of financial freedom, getting a second, third, or even fourth source of income is often the easiest way to be financially free.
With these three sensible money management practices, you can get set on the path that leads to financial independence, whether you are young or old.