Achieving financial independence is more than just about having more money at your disposal, but is rather about having the freedom to be where you want to be, do the things you’ve always wanted to do in the way you’ve always wanted to do them. It’s basically about living on you own terms and enjoying a good quality of life, regardless of what life throws at you. So if you’re looking to enhance your life by becoming financially independent, then read on for smart tips on how to achieve just that:
1. Avoid Debt
“We spend money that we do not have, on things we do not need, to impress people who do not care”. This quote by award-winning actor Will Smith accurately illustrates the reason why a lot of young men today end up in debt. Avoid the trap by spending within your means, or better yet, spending less than you earn.
You can achieve this by budgeting well so that you always have money left over at the end of each month. “The goal behind sidestepping superfluous spending is to hold onto your money long enough to grow it, so that you can invest it wisely later. Once you learn the habit of deferring temporary pleasure in lieu of long term investment, you’ll be well on your way to creating lasting wealth,” says Gerald from www.nextpayments.com.au.
2. Invest in Yourself
Adding a new set of skills to your expertise is a great way to improve yourself in order to gain more credibility as a leader within your chosen industry. Regardless of whether you’re an employee or self-made boss, bettering yourself at what you do will not only set you apart from the competition, but will also enable you to increase your income earning potential based on the improved value that you bring to the table.
Living a healthy lifestyle is another great way to invest in yourself, as it enables you to achieve better productivity and perform at your peak, which in turn translates to more dollars.
3. Get a Side Hustle
It’s almost impossible to achieve financial freedom when you’re working a nine-to-five, and no matter how many extra hours you put in, there will always be a ceiling on your income potential. However, this doesn’t mean that you should immediately quit your day job and go straight into doing your own thing. Creating a successful business takes time and dedication as there are many hits and misses on the way, so you’ll want to hang on to your day job to pay the bills while you build a business on the side.
When creating a side hustle to supplement your income, it’s important to start small and base your business on something that you really enjoy doing and are good at. With a full time job to consider, you’ll want to create a business with low overheads that won’t demand too much of your time, so that you can dedicate yourself to it without compromising on your office work.
Luckily, one can run most enterprises from a laptop these days, regardless of whether you’re selling a product or service, so you’ll want to look into flexible businesses such as drop shipping or start a home improvements blog that you can run from home. This might mean less sleep in the beginning and lots of hard work, but it’ll totally pay off when you finally grow your business and say sayonara to your day job!
It’s tempting to delay saving for when you earn more money, but the reality is that your expenses tend to increase in tandem with your income, so it’s important to develop a habit of saving now, regardless of how much you earn. The easiest way to start saving is to put aside about 10% to 20% of your salary each month, on top of your pension fund and IRAs.
If you still feel like you don’t have enough money to save, then perhaps it’s time to review your budget and analyse any daily expenses that might be eating away at your income. For example, that extra cup of coffee per day or adding a few items to your wardrobe every season can actually be the obstacles preventing you from having enough to save each month. Instead of making excuses about how you don’t have enough to save, take a proactive approach and commit to saving no matter what impediments stand in your way.
5. Protect Your Income
Living from pay check to pay check is no way to spend one’s life, especially in today’s volatile market where anything can happen to shake up even the most seemingly solid enterprises. For example, what would happen if you were to suddenly lose your job and the perceived security of your pay check? Chances are you’d be broke within the first month, unless you’ve taken the necessary measure, to protect your income so that you’re able to live comfortably for at least six months while looking for work or figuring out your next step.
One way to do this is to create an emergency fund which is separate from your investment and savings accounts. You can use this emergency fund to accumulate cash each month, which you can easily access in the case of emergencies like getting retrenched or having your car totalled. Essentially, an emergency fund is a smart way to plan ahead so that you don’t end up in debt when faced with life’s uncertainties.
6. Set Goals and Stick to Them
As any millionaire will tell you, having a written plan with clear goals is an essential step in achieving and maintaining financial freedom. A detailed plan is like a compass needle that helps to keep you focused on and on track with your financial goals. You plan should have different categories that contain detailed goals for each financial year, and you should review your goals each year to ensure that you’re still on track to achieving your ultimate goal, which is to become financially independent. Plus, each review will give you a glimpse into the progress you’re making and that will encourage you to do even more.
7. Lower your Taxes
Paying high taxes can really eat away at your income at an alarming rate. However, you can reduce your taxes and increase your ability to save at the same time, by investing more in IRAs, 401 (k)s and real estate. These accounts place you at a tax advantage, because they rarely get taxed. So instead of earning your income through regular labour, diversify your investment portfolio to enjoy tax free income that increases over time to help you realise financial independence faster. Make sure to get advice from a professional tax advisor services firm, they will save you a ton of money.
Another way to pay lower taxes is obtaining a citizenship in a country where you will pay less taxes (tax haven) like Malta for example.
Find a Complementary Spouse
A man can never achieve financial independence if they have a spouse that doesn’t support their goals. Look at successful couples like Robert and Kim Kiyosaki or Mark Zuckerberg and Priscilla Chan for inspiration on how to find the right spouse to help you achieve financial independence.
Marry someone with whom you can build a successful life, someone who will support your goals instead of dragging you down, a woman who is as driven, goal-oriented and disciplined as you are. Avoid women that shop excessively, or ones that derive their sense of self-worth from status symbols, and instead invest your time on a woman who will always be there to give you the emotional and psychological support that you need without being a drag. Qualities like discipline, strength of character, frugality in spending and being investment-savvy are just some of the tell-tales of a good spouse that can help you to realize financial independence.