What does monetary independence mean? “Earning an income from [sources] other than paid employment that is sufficient for your fundamental requirements and comforts,” according to one author, is what is meant by this phrase. Another way to define it is as follows: Being financially independent entails choosing to work rather than being forced to. It all comes down to being picky.
Would you prefer to have this choice? You can achieve that state by following these seven steps.
- Set a goal
How will you get somewhere if you don’t know where you’re going? You want to be financially independent in the long run. But you must also have short-term objectives because they will serve as stepping stones towards your long-term objectives.
Setting a deadline for your goals will help you improve your plan for things like debt repayment, emergency fund savings, and car down payments.
- Cling to your position
To begin your journey toward financial freedom, you must have a source of income. The current objective is to keep your employment because you must ensure a consistent source of money.
Be honest, thorough, well-rounded, and avoid workplace intrigue. Be Jane or Joe.
Please go out and get a job if you don’t already have one. Get a job and do it! It’s preferable to get something done, even if it’s simply to grill a hamburger at McDonald’s, than to sit around and do nothing.
- Adopt a mindset of saving
Prior to reaching a penny, set aside a defined amount of your salary. A good amount to deposit would be 10% per month. For security and a small amount of interest, keep it in a savings account. In due order, you will deposit these savings into the appropriate investment instrument.
Boost the amount you save. Get to work on time and avoid missing any days. Spend less on household costs. like utilities, shopping, and dining out. By eating at home before leaving to buy, you can avoid doing unneeded shopping.
In his book How to Get Rich, multimillionaire J. Paul Getty makes the case that one should be “cost-conscious and profit-oriented.” For the article’s points 2 and 3, that is all.
Lastly, aim for equilibrium. Treat yourself once in a while to help the practice go more smoothly.
- Stay wholesome
Well-being is riches. This is more true now than it has ever been. Considering how much drugs and medical care cost, falling sick is sure to ruin your savings strategy.
It could be a good idea to think about giving up smoking if you do. You save money (and your lungs!) by not smoking. Avoid eating meals that are oily or salty, and attempt to get frequent exercise. Be cautious and prevent accidents.
- Protect yourself
You must insure yourself in order to safeguard both you and your dependents from time and opportunity. Upon the insured’s passing, an insurance policy pays an amount to the beneficiary. Get term insurance for yourself; it’s the least expensive.
Learn about insurance on your own by browsing the Internet. Then, inquire as to how much insurance you require from a CPA or other relevant expert.
- Ensure financial growth
The enjoyable part is now. You ought to be regularly saving money by this point. Put away roughly three months’ worth of your monthly salary.
All of the money you save after those three months of provisioning will go into your investing fund, which will aid you in your fight for financial freedom. There are many different investment vehicles available.
Mutual funds would be a viable (and profitable) investment vehicle for salaried people who don’t have the time or interest to follow the ups and downs of the stock market.
You can double your money in less than four years if you earn 20% a year in mutual funds. Keep in mind that you are here for the long run. Ignore the market’s everyday volatility.
- Set up a backup plan
Death and taxes are two things that are certain in life. Although it’s not a very pleasant topic, you must equally cover this ground.
Three things need to be included in your exit strategy:
What to do if you get sick and become incapacitated, as well as how to manage and transfer your wealth.
your plans for the funeral.
Who will make medical decisions for you if you are unable to do so yourself, as well as your detailed instructions for an artificial respirator, etc.
Talk about these issues with a trustworthy attorney and tax accountant that you know. You can cover every facet of financial planning in this way.
Start your journey to financial independence by following these seven steps!