You will need a plan to achieve your goals. Many people believe that financial independence is something only the wealthy, lottery winners and investors can achieve. They are wrong.
It’s possible to achieve financial independence with a little bit of effort and the right mindset. This article will show you how almost anyone can attain financial independence, if they are willing to work hard.
What if you lose your job? Could you still live off your savings and assets, without having to spend them? rely on their earnings only? Financial independence is possible if you have the means. Financial independence is dependent on your income and living expenses.
Are you impressed? Is that you?
You will be relieved of some of the stress that comes with losing your job. It also allows you to pursue a hobby or develop your skills in other areas. It allows you to express your ideas more freely. You are free from the “strait jacket” that many people feel compelled to wear – both job-wise and in relation to opportunities. It allows you to help people you wouldn’t normally be able to. It may also be your ticket to freedom, to preserve your liberty.
These aren’t necessarily bad benefits. It is possible to achieve financial independence, regardless of your level of living, even if you do not choose to work. This is a responsibility for both you and your family. It’s possible if you are willing to work hard for it.
Let’s first consider that your annual working income is $50K and that you live on this income. If you had $50K in savings per year, you’d be financially independent. To earn $50K, you would need to have $1million if your savings were earning 5% per annum.
You would only need $500K if your savings earned more than 10% per annum. You could also reduce your living expenses by moving overseas. If that happens, the amount of savings required would be lower. You have the option.
Perhaps you are near retirement and have social security benefits that will supplement your income. You’ll need to supplement your income with savings.
How can you increase your savings to be financially independent? Three actions are required to increase your savings.
1. Your savings account should be able to contribute 10% of your annual income. However, you must remember that this is your minimum yearly contribution.
2. Your savings should always be earning. Your savings should earn 8% annually to compound.
3. You must always keep your savings safe from being used for other purposes.
With the numbers above, you can achieve financial independence in around 30 years, even if you start with nothing. You can shorten the time it takes to achieve financial independence by following these steps:
* Contribute more every year – The earlier the better
* Earn more with your saved money
* Have accumulated some savings to start with
* receive pension or government benefits that may reduce your need for’savings income’
* You can live well with a lower living cost by following these guidelines
Financial independence is often where people fail. When you consider the benefits you’ll get, saving 10% of your salary is a small sacrifice. Many people who contribute to their savings fail to make them earn the money they deserve. It is not enough to contribute. The majority of your savings must grow from the earnings. Stocks and conservative real estate investments can provide better compounding rates over time than the 8%.
Investors will often accept poor earnings and pay too much tax or fees. They also don’t place their savings in investments that are more profitable. They believe that this is someone else’s job. They are wrong. They’re wrong. It’s their job, an important part-time occupation.
Finally, people who are decent and on the path to independence often neglect to protect their wealth. Insuring the wrong insurance could make them more vulnerable to losses due to health issues or accidents. They also failed to take advantage of asset protection strategies to protect themselves against unfair lawsuits.
