Special to the Financial Independence Hub
It is no longer a universal vision to work towards having a better retired life. Instead, everyone is trying to achieve financial security or independence. This means you should have sufficient resources so you can choose whether or not to work on a daily basis; or, you can choose work where you’ll get complete job satisfaction, instead of worrying about the amount of your monthly paycheck. Here’s a discussion about why you need to work towards having financial independence or “findependence,” and how you can achieve it.
Why should you make Findependence your ultimate goal?
Here are more reasons to build a financially secure future:
You don’t have to care about job security – In today’s world, your job is not secure. No matter how competent or talented you are, no one can guarantee your job. Even if you run a business, your sustenance depends on your customers and shareholders.
You can choose work that you like – If you want to explore alternative work models, then at first, you need to be “independent.” Being financially independent or findependent means you have more time, resources and flexibility to explore your skills and abilities.
You can help others and tackle complex problems – Not having to worry about your finances can give you the flexibility to tackle complex problems and help others. If you derive pleasure by helping others, then at first, you need to have a solid financial footing.
4 Tips to become financially independent
It should go without saying that you need to save more and lead a frugal lifestyle in order to build a financially secure future. However, there are other aspects to this, which may make it difficult to achieve your goal of becoming findependent. Here are 4 tips that can help you get there:
Acquire the necessary knowledge regarding managing personal finances – To become financially independent, you need to make correct financial decisions that will help you achieve your financial goals. Therefore, make yourself knowledgeable so that you can make correct decisions at the right time and fewer mistakes. Doing so, you can confidently make decisions that will work in your favor in the future.
Realize that you are your own greatest financial asset – First, look at yourself as your greatest financial asset. The name of the game is to convert your Human Capital to financial capital. We all start out life with a lot of the first (i.e. future earning potential) and not much of the second. Ask yourself – what do I need to have in order to achieve financial security? Saving money? Yes, that’s true. But at the same time, you need to work towards increasing your value. It can be through hard work or improving your skills so you can become indispensable in the job market. This will help you make smart career choices. Even if you’re an entrepreneur, you need to establish a solid footing in the business world.
Never take out a loan to finance a lifestyle – Taking out a loan is good when you invest the amount for a better return in the future. However, using your credit cards every now and then to finance a lifestyle is never a good habit, especially when you want to achieve financial independence. Therefore, adjust your lifestyle so that you can save a considerable amount after meeting your daily necessities.
Strike a balance between your present and future life – You should try to enjoy every moment of your life. To be sure you’ll be able to enjoy every moment, you need to strike a balance between your present life and your future life. You have to decide what you spend today and what you want to keep to spend in your future.
Checklist to declare yourself financially independent
So you’ve followed the tips discussed in the previous section and are now saving a decent amount every month. You’ve adjusted your present lifestyle so that you can enjoy life now and are also confident of enjoying life in the future. You’re working towards achieving financial independence.
Now the question is how will you know you’ve become financially independent? Here are a few parameters on the basis of which you can be sure that you are findependent.
Your passive income can cover your expenses – When you know that your passive income is sufficient to cover all your expenses, this is the time when you can stop worrying about money.
Your health will improve and you’ll be stress free – Financial worries bring stress. So when you stop worrying about your finances, you’ll be stress free and your health will improve too.
You make friends as per your liking – When you struggle to manage your finances, you might have to spend time with people you need to be with but don’t really want to. The reason may be you need their recommendation or their support to grow your business. However, when you become financially independent, you can choose your circle of friends as per your liking because you don’t need anyone’s favor, any more.
So if you’ve already started dreaming of such a day, take the first step forward. Analyze your finances and plan your goals to achieve financial independence.
Be findependent and enjoy life!
Good Nelly is a financial blogger based in Milwaukee, Wisconsin and writes for sites like debtconsolidationcare.com, as well as the Financial Independence Hub. Her articles help others manage their finances and solve their money problems. Follow her on Twitter here.