You can choose to be financially independent in your own way. Reaching financial independence doesn’t mean acquiring big mansions and cars but the ability to live comfortably off one’s savings and investments without any debt or whatsoever. This article sheds light on some core areas to provide millennials with some key insights to help them on their journey to become financially independent.
“The more money you save, the more freedom you have and the more risks you can take.”
Here we've mentioned some tips to help you reach financial independence -
The first step to being financially independent is to get hold of a steady income. It can be a full-time job, freelance work or your own business. You can change jobs but you have to make sure you hold on to a steady income as this will be the foundation on which the structure of your wealth and financial independence would stand.
The second crucial step to financial freedom and wealth creation is saving. Start saving 20-30% of your salary and then increasing the percentage as you step up in your career.
The Golden Rule - Save first, Spend Later.
3. Manage Risk
Saving is possible if you know how to manage risk. The first step to risk management is saving for a rainy day/month. Draw out your contingency plan requirements and save accordingly. Here are some key points to keep in mind -
1. Plan your goals
2. Keep track of your investments.
3. Stick to your needs and push your wants.
4. Stop living on credit.
4. Investing in assets that generate income
You can invest in the stock market with a basic understanding and market research. It’s a great way to earn passive income but takes a long time to accumulate a significant amount. Investing in rental properties is also an excellent way to build wealth quickly. You can start off by buying a starter home and renting it out when you move. You can buy more properties and start generating cash flow by renting out these properties. Eventually, you can apply for commercial loans to expand your rental business.
5. Create Intellectual properties to earn royalty income.
For all the people out there who are deep into creative endeavours, you can publish a book and earn royalty income for years which is a great way to earn passive income. If you have a skill or talent, you can turn it into a product that can be purchased by people who want to learn from you. If the product has a lasting value, then you can earn royalty income for years.
6. Manage your budget
Another crucial thing to remember is to manage your budget and control your expenses. One of the ways to start this journey is to track your monthly expenses. You need to optimise your expenses to make sure you save more in the end. Don't let your expenses increase along with the growth in your income and it will be much quicker for you to be financially independent. Tracking your monthly expenses can also help you measure your progress towards financial independence.
“Financial Independence begins when your net worth exceeds 25x your annual income"
Bottom Line -
One of the best ways to reach financial independence is to increase the gap between your income and expenses. It is a long journey which can only be achieved through a frugal lifestyle and in investing smartly. In this modern age, being financially independent is very important especially for those who are aspiring to sustain their life from a standpoint of abundance and economic prosperity.