What Is Financial Independence? How You Can Achieve It - upposting

 What Is Financial Independence? How You Can Achieve It? {Step By Step Guide} - upposting

What Is Financial Independence? How Do You Can Achieve It!

To become financially independent. Like, what’s the definition? And how do you do it? And can you get there faster? So, First of all, what is financial independence? Now a lot of people when you think about financial independence or financial freedom it's like a feeling.

What Is Financial Independence? 

Definition: The technical definition is that you don't need an income from your work. So that you own assets. So that could be.....

You have cash in the bank 

You could have bonds

You could have a term deposit

You could have shared 

You could have property

You could have any of a range of assets and the income that you earn from those assets.

 

- So in the case of cash its interest that comes from the bank if, it's a bond it's a coupon that you get paid if it's sharing it's a dividend, if it's a property it's rent - those things are the things that pay for your living costs.

 And at some point, we hope that we will have enough assets paying us income that we don't have to work anymore if we don't want to. 

                               Now the big secret here is if very few people actually stop working if they get the chance to retire early.

Very few people go 'oh I'm in my 30s or 40s I'm done and dusted I'm just gonna go put my feet up because it's actually really boring and most people aren't motivated that way and if you're motivated enough to try and get to financial independence you'll probably find something else that you want to do you, 

                     Just get the choice of whether you do it. It's not a thing that you have to have the money in the income to survive you suddenly get to have a choice in your life and that's what financial independence represents. It's a choice.

                       It's this "I don't have to go to work I go because I want to"  I'm doing something that I love that kind of thing.

 It is really liberating so when it happened to me when I was 31 I had just had my first child and I was like 'do I have to go back to work?' oh hold on I'm getting enough income from my rent and my dividends it's now a choice - do I want to go back to work?

                       And that is extremely empowering and there might come a point in any of your lives When you would love to have that choice. If you work towards it consciously, and it can take you a decade or so, but the time is going to pass anyway start now. 

You have this amazing opportunity to then go well what am I going to do with my time and that is really what financial independence represents. It gets you your time back.

Now, 

How To Achieve Financial Independence?

Here are the step by step 

   Simple steps you can take to be financially free one thing to note is that these steps are simple but reaching financial freedom isn't happening overnight unless you win the lottery.

 1- create an emergency fund.

Store Emergency Funds.

 If you already have an emergency fund you can go to the next step chances are most people reading this article are at a point where they are making enough money to cover the bills.

                                     But you are not saving enough you can survive but you are dependent on your job, and if you don't get paid you might not eat this is very common for those who graduate college and just recently entered the workforce they have a bunch of student loans and not much money saved up if you don't know what an emergency fund is it is a bank account set up to cover large unexpected expenses like.

 unforeseen medical expenses 

 unemployment

 It isn't money you save up to go on a vacation there are two big reasons why you want an emergency fund.

 The first reason why you need one is that it keeps you afloat during tough times without relying on credit cards or high-interest loans.

The second reason, find another source of income like a side hustle I have this as a b step since you can skip this step for now and go back to it some other time I still strongly recommend doing this step. 

2- start paying off your debt 

Pay Your Debt.

If you made it to this step you're already doing better than 50% of Indian a majority of Indian live paycheck to paycheck and has become the norm.

                                                  Somehow debt is a huge problem since it eats away at your monthly income and how much you can save all those payments on things like...

•  Student loans

• Car payments mortgages 

• Other loans add up 

If you don't pay off your debt as quickly as you can, you might feel like you're stuck with it and it's impossible to pay off if you can pay off those loans quickly you will be saving a lot of money by avoiding interest besides saving more money and earning more money this is a step that will get you the most progress towards your financial goals.

3- start a retirement fund

Retirement Plan For Financial Independence.

Like a 401k or Roth ira, you probably heard from all your friends and family that you should start a retirement fund, and you know you should do it but you might have never really got around to it the thing is you really should try to start one asap.

                                     Compound interest adds up quickly and the earlier you start investing in your retirement fund the faster your money will compound and you will earn more money.

4 - Try to consume as much personal finance information

Consume Information.

As you can at your own pace there's a lot of information on personal finance, there's a lot of great books podcasts, and youtube channels out there that can teach you all about personal finance or financial independence even if you are pretty knowledgeable in the field.

I think it's worth reading watching or listening to personal finance stuff.

                                       It can remind you of what your financial goals are since it's easy to get distracted by all these shiny new products that come out every year you can also learn some investing tips and tricks that you can apply to earn more money.

 Before I end this article I want you to know that you don't have to follow this plan step by step.

  Some people may choose to invest their extra cash first instead of paying off debt. First, the logic behind that is that if your rate of return on the investment you're considering is higher than the after-tax interest rate on your debt you can make more money by investing before paying off debt.

Conclusion

   Some extra money isn't worth it if you are more logical proven and you don't really care about debt go run the numbers and see which option can help you come out on top once you get started with creating an emergency fund and you start paying off your debt and investing.

                                      You are on the road to financial freedom the road there will take a while but it's not as complicated as you think to keep going at it and eventually you won't have to worry about money ever again.