Financial independence is a buzzword flying around at the moment in many different circles. To some it’s the ultimate goal, to others it is something to aspire to and work towards in the hope it can be achieved as early as possible. Whatever your reason or however passionate you are about reaching financial independence, it will take dedication, consistency and a good pinch of hard work.
If you’re wondering if you’re on the right track, or you want to start out, today’s blog post will give you some tips you may find useful along the way.
1. Reduce spending
The easiest lever in most cases. It stands to reason that the more you can reduce spending, the more you’ll have to save, simple as that. Not wanting something is as good as having it.
2. Increase income
Obvious. Increase your income by getting a better job/salary or by taking on a side hustle. The more you can increase your income, the more you’ll have to save.
3. Stay out of debt
The simple rule here is if the debt will increase your net worth or it has future value then it is good debt (low interest mortgage or business loan). If it does not (high interest credit cards and consumer loans), it is bad debt. Stay out of bad debt.
4. Invest savings
Ensure you have your emergency fund in cash or other liquid instruments set aside (enough to cover 3-6 month’s worth of living expenses), and then invest whatever you can save. Monthly, quarterly or yearly, do what works for you. The earlier you invest, the earlier you will reach financial independence.
5. Track wealth
Keep all the information about your wealth in one place so you can easily view everything you own, and give access to a loved one or any other relevant third party to help you in this journey. You can’t manage what you don’t see.
6. Understand performance
It’s crucial to be able to understand the performance of your assets and investments, see how they’re growing, compare them to each other, so you can make better decisions on your future investments. You can’t manage what you don’t understand.
There you have it. It’s a journey, success doesn’t happen overnight. Mistakes will be made, but hopefully lessons will be learned and you’ll only get better. Keep going, stay consistent and make your way to financial independence.