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- Financial independence meaning
- Financial freedom vs. Financial Independence
- Financial independence characteristics
- How to achieve financial independence?
- Financial Independence Plan
- Financial Intelligence Books
- Financial Independence Quotes
Financial Independence is a lifestyle. It means being totally free from money problems.
But how do we really get to that point in life?
To be financially independent, you’ll need to put in some efforts to backup your dreams.
What does it really mean to be financially independent?
In this article, we’re going to be looking at financial independence in great detail. See this blog post as an answer to all your questions about financial freedom.
We’ll walk you through how to set up a plan that will help you become financially independent, and also explain how to act on those plans to help you become financially independent.
Financial independence meaning
To be financially independent means to have enough income to cater for your living expenses for the rest of your life without having to work, be employed or be dependent on others.
It means you no longer have to work for a living, because there’s enough cash in your bank account that allows you live your current lifestyle year in and year out, and till forever.
This income or cash could be in form of rents, dividends, interests, etc., which usually comes from your assets (cash, shares, bonds, property, etc).
This money coming in constantly saves you from things that might happen:
1. Not having to panic about emergencies that might occur.
2. Not having to panic about a slight failure in your business.
3. Risks that might occur when you lose a job, move out of the country or launch a start up.
4. A life threatening ailment.
5. Death of a loved one
As interesting as it sounds, it takes a lot of effort and planning before this is put in place.
Financial independence should be a long term goal for every individual.
We’ll explain in great detail how to achieve financial independence and how to structure a plan to guide you in being financially independent.
Financial freedom vs. Financial Independence
According to Oxfords Learners Dictionary, the best definition of independence is “The freedom to organize your own life, make your own decisions, etc. without needing help from other people”
What this means is – you don’t need to rely on anyone but yourself to meet your financial needs.
Financial freedom on the other hand, means living the lifestyle you want without having to worry or become anxious about the fear of not having enough money.
These words are often used interchangeably, they might mean the same thing but it isn’t really the same thing.
Financial independence is the first step to financial freedom.
Financial independence characteristics
What are some of the characteristics or qualities that best describe a person who wants to be financially independent?
Let’s take a look at some of them below:
To reach that point of being financially independent, you must learn to keep going even when it seems tough.
You must always take it one step at a time too, and never relent when it feels like things aren’t going your way.
Don’t ever lose sight of the goal.
Always remember why you started the journey in the first place.
Even if you have a detour along the way, like having an unexpected expense that sets you back temporarily.
All you have to do is contend with it.
3. Self control
As Horace once said ‘Rule your mind or it will rule you.’
You can’t afford to spend your money on anything you set your eyes on.
To control your finances, you must control yourself.
Don’t waste your money on things that don’t add much to your life.
4. Be knowledgeable
You can’t be wealthy if you don’t have adequate information about certain things.
Knowledge sometimes comes from experience, but a great deal will also come from study.
So, as you invest in buying assets, invest in getting good study materials or courses, too.
How to achieve financial independence?
The following steps will require patience and hard work.
Disclaimer: Building wealth can never be gotten through get-rich-quick-schemes.
So, be ready to put in the work as we discuss ways you can achieve financial independence
1.Have a consistent budget
Live within our means, you can’t afford to spend more than you earn. Now, that’s you going on a suicide mission.
Have a budget and stick to it.
Your budget should include a percentage that goes to your living expenses, assets and so on.
2. Self control
Whenever you’re about to buy something, consider if that is the best investment for your long term financial goals.
The more you limit expenses on certain things, the more money you can keep for smarter investment goals.
4. Avoid debt like the plague
Get out of bad debt. Avoid debt too.
Stop borrowing money for unnecessary reasons.
Avoid the type of debt that has you paying interest on non-necessary items like the plague
Yes. The rich and wealthy people are no way different than you.
Truth be told, they don’t work twice as much as you do.
They spend their time educating themselves in the principles of wealth and put it into action.
Study the rich, study wealth patterns, then act on it.
Learn all about budgeting, asset allocation, investments and the rest.
6. Use your time wisely
Time is money. Make sure you spend your time on things that will help you reach your financial goal.
Don’t ever feel bad to turn down an offer that isn’t in line with your financial goals. Use your time wisely.
Financial Independence Plan
A financial independence plan is a personal guide to building wealth, so you don’t have to rely on others for your needs.
This is important because it helps you evaluate where you are and where you are going.
The first thing you need to do is – Determine your short and long term goals.
Secondly, automate your savings and have a budget. Put about 20% of your monthly income into savings. Create a budget within your means.
Thirdly, avoid debt and pay off outstanding debt.
Lastly, have a retirement account and start investing. You can choose to invest in the stock market, crypto currency, etc.
Financial Intelligence Books
Study is important, if you want to succeed in any area of your life.
Below is a list of 5 books you need to read to build financial intelligence:
1.The Millionaire Next Door by Thomas J. Stanley
2. The Simple path to wealth by J.L Collins
3. Rich Dad Poor Dad by Robert Kiyosaki
4. I will teach you to be rich by Ramit Sethi
5. Think and grow rich by Napoleon Hill.
These books will give you succinct tips for financial independence. Click on the link above now to get started with reading!
Financial Independence Quotes
Financial quotes are really motivating.
See some inspiring quotes from wise people below:
‘If you are not financially independent by the time you are forty or fifty, it doesn’t mean that you are living in the wrong country or at the wrong time. It simply means that you have the wrong plan’ – Jim Rohn
‘If you want to be financially free, you need to become a different person than you are today and let go of whatever has held you back in the past’ – Robert Kiyosaki
Financial Independence requires patience, hard work and knowledge.
The best time to start is now.
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