Are you one of those individuals who have made a timeline of traveling the world after earning for a lifetime? Probably in your sixties? Let's be honest; even if you make it happen, you won't fully enjoy the bliss due to aging health concerns.
Things have changed! Unlike in olden times, you have many opportunities for achieving financial independence and planning your retirement in your forties or thirties, depending on when you start working toward your goal. Many of us want to enjoy financial stability, but we fail to achieve this goal due to a lack of understanding and timely awareness.
Here is how to become financially independent and everything else that you need to know:
How to be financially independent?
Whether it's the debate about financial freedom vs financial independence or finding the most paid job, the goal is always the same for everyone, i.e., bringing economic stability to lives. Every since the pandemic has given rise to global inflation, people have become more inclined to be mindful of their expense management and more concerned about securing their future financially.
To be honest, you cannot learn to save money and become rich in a year or two. You must adopt certain habits, make tough choices, and put intense effort into reaching your goal. It is safe to say; five years will be enough to help you attain that level where you will not have to worry less about running to work, or your salary might be deducted for late.
Here are seven best tried and tested strategies that will let you reach your financial goals:
Knowing Your Finances:
We are often so caught up with life and work that we ignore our finances or pay attention to our expenses. We prefer keeping things as they are without realizing their impact on our future until it's too late!
You need to have a keen look at your expenses, spending patterns, and income. Look carefully at what you buy monthly and how much you spend unnecessarily. Start with the saving process and make a financial independence plan by drawing a clear line between your luxuries and necessities. There might be things you might be paying for but not having enough time to use, such as a gym membership or Netflix/Amazon primes prime subscription.
Having a sound knowledge of how much you earn, how much more you need to make, which expenses are a must, and which ones can be excluded can help determine your subsequent strategies. If you can get through this process successfully, consider yourself one step closer to your goals.
What Does Becoming Financially Independent Mean to You:
We all have different aspirations and visions of the future for us. Some of us prefer a minimal lifestyle, while others aim for bigger houses and luxury. We all have different definitions of financial independence shaped by our inspirations and experiences. You must ask yourself questions such as what lifestyle do you want? How much money will you need to support it? At what age do you want financial independence and early retirement?
Sorting out your expectations and setting goals is one of the success-leading steps to financial independence. Get into the details by setting up milestones along with deadlines to get there.
Finding a Better Working Opportunity and Increasing Income:
Sticking to one job for years is never good for your productivity and finances. It might seem convenient, but one workplace cannot offer you a sufficient annual raise. Keep looking for better opportunities to get good pay raises.
Cutting down your expenses or simplifying your lifestyle is not solely enough for savings. It would help if you found ways to increase your income. You can also consider finding a part-time job, starting a small business, or adding a share to someone you know to get profit, even if it does not seem more significant. Relying on one source of income cannot lead to financial years, either in five years or a lifetime.
Invest, Invest, Invest:
Saving surely is a great habit and does add to your wealth. However, if you want to know how to be financially independent in five years, you must hear this out 'Just saving won't make that happen.'
Save money as much as you can and invest strategically to make it double and generate passive income for the rest of your lives. Kudos to the technological evolution that offers plenty of investment options such as blockchain or cryptocurrency. Putting your money is also considered to be one of the risky yet effective ways of making money.
Besides, you can use your saving to either start a business or invest it in a reliable business venture. The best investment also includes buying a commercial property and renting it out. Moreover, you hire an expert to get word on how to make the best investment considering your savings and retirement plan.
Live for Yourself:
Are you eyeing an expensive dress to wear to a next party and have all eyes on you? Are you impressed by an expensive luxury car your friend just bought? Do overly costly home décor items tempt you? Beware, you might be close to getting broke!
Falling prey to all these glittery things around and seeing your financially stable friends and acquaintances are pretty common and easy. However, trying to keep up with their way of life while earning half the amount they are can make you go broke, not just today but for the next five years too.
Start living life for yourself, your future, and mental peace rather than trying to impress others and opting for a lifestyle you cannot afford at the moment. Draw a clear line between things you want and things you need. Living below your means is the key to your success.
Do not get demotivated; you will get there with more effort and persistence!
Do a Market Research before Buying Stuff:
Every single penny you spend counts because you might be one step away from saving an extra buck but couldn't due to lack of market knowledge and stuff. Even if you want to maintain a good lifestyle currently, you can try finding places to buy stuff at lower prices.
For example, try exploring thrift stores to buy furniture or home décor items. Visit factory outlets of famous brands to purchase clothing and make it work for you. Avoid eating out; however, if you still want to, explore the places that offer good quality food at lesser prices rather than heading to overly expensive restaurants.
Likewise, if you want to travel, book your tickets after doing a comparison of all the available airlines. It would be great to book your tickets months before for lower pricing.
When shopping, do not hesitate to bargain where ever you can. In short, use all the possible ways to save as much money as possible to enjoy a comfortable and stress-free living later.
Why is financial Independence Important?
You might be young, enthusiastic at the moment and will have lots of energy and time to work and build your career. However, that motivation and potential to make a big start getting fade as you age and get burdened by responsibilities. Therefore, you need to plan ahead to keep your finances stable so you can have much time and energy to enjoy your time with friends and family and have time to live the life of your dreams.
Moreover, the recent pandemic has made us all learn an important lesson. Jobs are an unreliable channel to earn a livelihood. The globally massive layoffs and highly increased unemployment should be enough to motivate you to secure your future financially. It would help if you focused on generating a passive income to avoid getting stuck in a situation where losing a job will be your biggest fear.
What Else To Know?
We often become so invested in reaching our financial goals that we overlook the fact that health is also one of the fundamental forms of wealth. You won't realize the importance of a healthier, happier mind and body when you no longer have one. As we age, we become prone to developing physical and mental health concerns, and with the aim of becoming financially stable, you may have moments that will make you feel stressed and demotivated.
However, do not forget that you can only enjoy today's efforts if you stay alive and healthy to live through your dreams. Make your health your priority no matter what age group you belong to. Develop healthy eating habits and make workouts mandatory. Try getting sound sleep every day and keep your mind calm and less stress-free.
Poor health can lead to short-term and long-term consequences that will affect your financial goals notably. In severe cases, it can also result in early retirement, which will be a blow to your future goals. Therefore, keep yourself focused and maintain a healthy balance between work and life.
Becoming financially independent in five years is neither a far-fetched reality nor something impossible. All you need is some vigilance, motivation, knowledge, and consistency to enjoy a future free from the stress of keeping up with a 9 to 5 job and planning to make your dreams come true between paychecks. These strategies may not work as a recipe for becoming rich; however, the habit they will help you develop will ensure a financially stable future.
Make sure to use your time and energy wisely and reap the benefits of your life choices later. You surely will not want to wait to travel till your back starts hurting!