Are you looking to improve your financial situation? If so, then you might want to think about working towards financial independence. What is financial independence? Essentially, if you are financially independent, then you no longer need to work to earn. You can live your best life without ever needing to worry about putting in a day at work.
So, how does this work? Well, first, you need to think about the quality of life that you are looking for once you are financially independent. How tight is your budget going to be? Do you want to travel the world or are you more interested in staying in one place? Do you want a luxurious lifestyle or are you happiest with modest choices that won’t draw too much attention. There’s a lot to think about here.
Financial independence is usually measured in a percentage. People say that they are 20% financially dependent or even 60% depending on their situation. This reflects how far they are away from achieving their goal.
To achieve financial independence, you need to work out a figure that you must save to suit your chosen lifestyle. If you are not sure what this figure is, then it’s best to speak to a financial planner. They will discuss the key factors that you need to bear in mind and this can include everything from inflation to interest rates.
Once you have the right figure, you’ll then need to work towards saving it. Now, in the beginning, this figure is going to seem impossible to achieve. But the good news is that if you start early, you still have years and years to reach your goals.
So, now that you understand what financial independence is all about, how on earth can you achieve it? We’ve got some great ideas for you to keep in mind here.
First, you should be thinking about purchasing a property and ideally multiple properties. We’ll come back to that idea but there could already be roadblocks in your way of purchasing your first property. For instance, you might have a bad credit rating. If that’s the case, then you’re going to need to work to improve it. You can do this by thinking about cutting paying off debts and borrowing money that you know you’ll be able to afford to pay back. It’s that simple. Although it can take time.
There are other issues that you need to think about as well. For instance, you could be struggling to save enough money to purchase a home. You need about 20% of the asking price to hit the right mark here and immediately, that’s going to cause trouble. That’s why it’s worth making sure that you do look at a variety of different mortgage lending products to find the right one for you.
Another thing to think about when you buy property is how quickly you are going to be able to pay off the property. When you are working to achieve financial independence, you need to ensure that you pay off the property as quickly as possible. If it takes longer than you would hope for then this is going to put more pressure on your finances that’s the last thing that you want. That’s why it’s so important that you get a good mortgage deal that is going to work well for you in the long term.
Do note that buying one property is just the first piece of a larger puzzle. You should also think about purchasing a second property such as a holiday home. This is a great way to earn a second income and ensure that you don’t have to worry about the typical large costs that come with most holidays. If you buy your own holiday home, then you’ll always have somewhere to return to each month or each time you decide to book a vacation.
Set Up a New Income
Since we mentioned it, you should also think about setting up a new income for yourself. Financial experts argue that you should have at least two incomes set up and potentially more than this.
The benefit of multiple incomes is that you will always have something to fall back on if you are hit with an expected bill or cost. Costs can be quite large and will weigh down your budget. For instance, you might need a new boiler for your home. This can cost thousands and that is going to be a massive roadblock to you achieving financial independence.
So, what type of income should you set up? Well, ideally you want your secondary income to be passive. This means that it won’t take a lot of time or effort on your part. For instance, if you do invest in a second home, then you can think about letting it out. By using a property manager, can be a hands-off, passive experience that will deliver the benefits that you want.
Alternatively, you could also look at establishing a blog. The right blog will mean that you can quickly monetize it so that it starts earning you cash. This is all about ensuring that you create a blog that delivers the level of quality which readers expect. If you do this, then you will start to gain the attention of businesses that want to advertise products or services on your blog.
You might also want to explore other incomes that you find enjoyable but do take up some of your spare time. For instance, teachers will commonly also work as tutors to build up their income. This means that they can work in their spare time over weekends and in the evenings.
Look at Different Investments
You might also want to think about exploring different investment opportunities that are going to help you build up your income. For instance, it’s possible that you could benefit from exploring cryptocurrency. If you already have a sizable amount of money saved, then you will be able to invest in some of the more popular cryptos such as Bitcoin. Bitcoin is almost a sure investment and is constantly rising each year. So, if you invest a little, you could still see a return here which will help you towards achieving your financial goals.
There are also cryptos that are more budget-friendly which could pay off in the long term if you are lucky. However, there is a certain amount of speculative investing required here. Essentially, there’s no real evidence to show whether this type of investment is going to pay off. It’s a little bit of a gamble but one that many people are exploring right now because of the buzz, particularly on social media.
There are also more traditional forms of investments that could be worth your time too. For instance, you might want to think about looking at the stock market. People often assume that you need to be an expert for investments in stocks to pay off. That is not at all the case but it is worth completing the right amount of research and ensuring that you do speak to the professionals if this is your first time.
Finally, a lot of people who are interested in achieving financial independence are at least open to the idea of living a more frugal lifestyle overall. This means that they don’t have to worry about issues where they are struggling to save as much money as they hoped they would each month.
There are lots of ways that you can cut your costs down to size. For instance, you might want to think about exploring going green with your lifestyle choices. Green options will mean that your energy costs are significantly reduced overall. For instance, you could think about installing solar panels on your roof. This is going to provide two key benefits. First, it will add a lot of value to your home. Second, it means that you can immediately benefit from energy bills that are cut down to size.
This isn’t the only way to be more frugal of course. But it’s a great place to begin. Every little step will help here.
We hope this helps you understand some of the key steps that you must take to ensure that you can achieve real financial independence. By reaching this goal, you will be able to make sure that you are comfortable in your twilight years and don’t have to worry about limited funds to live the lifestyle that you desire.
Experts recommend that if you are interested in achieving financial independence, then you need to work towards this goal as early as possible. Essentially, this means that there is no time like the present to ensure that you are improving your financial situation.
You should also make sure that you are consulting with the experts. If you have a lot of funds to play with, then it makes sense to take steps to ensure that you are reaching the greatest potential with these options. A financial planner will help you discover the best options that are going to meet your budget and your unique situation.