For many, financial independence means that you can do whatever you enjoy doing without ever having to worry about money. The allure of retiring young means that work becomes an optional activity and you are the master of your own destiny. This is a worthwhile goal to go for; after all, who would not want to live such a life while in their 40s or late 30s?
If you are reading this, you are already on your way to attaining financial independence. You might not be close yet, but you have already taken the first step of educating yourself. Here are 3 ways you can achieve true financial independence and retire early.
Embrace a Frugal Lifestyle
The simplest way to gaining financial independence is controlling your expenses. Many people have no idea how they are spending their money on a monthly basis. Once the paycheck comes, all the money in there is gone before the end that month.
In order to for your journey to financial independence to begin, you need to start tracking your monthly expenses. You need to reduce your expenses (for example by learning how to get approved for a mortgage loan that you can afford) or, at the very minimum, keep them steady for a chance to build on your savings. Many people find that expenses increase with increased income, which is the wrong way to building wealth.
Instead, minimize the inflation your lifestyle is having on your finances and channel the increased monies into investments. Your investments should generate income that can propel you to your final goal – financial independence.
Your Income is not Your Wealth
For many, a high-paying job means wealth. In part, yes, because it makes it easier for you to increase your assets, but the truth to increasing your net worth lies in spending much less than you make. As cliché as this may sound, it is a fundamental, undeniable truth when it comes to attaining financial independence.
Your wealth level should be a measure of the length of time you can maintain your current lifestyle without an extra paycheck. Meaning that if you had to stop going to work today, would you still be able to pay for cars you have, clothing, college tuition and others? The average person is not lucky enough to understand this fundamental truth, which is why they are constantly working towards financial independence and security even when they seem to be making a lot.
Have a Complimentary Spouse
No matter how much success you realize in your business or career, unless your spouse is equally investment-oriented, frugal and disciplined, the efforts you are making towards a financially secure future will be like swimming in quicksand. Marrying the wrong person will see you take on overwhelming social, financial and emotional burdens that eventually take over your life and overwhelm any progress you are making. As you work hard to build a life, your spouse is on the other side spending the money on status symbols, making it virtually impossible for you to get to financial independence.
In order to get ahead in time, you need to have the support that gives you space to take on risks because no matter what happens, there is someone, who loves you unconditionally, waiting for you at home. Surprising as it may sound, a huge amount of success is based on psychology and temperament. If you are constantly worrying about the situation at home, there is no way you will focus on your work and achieve the life you have always wanted.
The journey to financial independence is long, but you can get there in less than 20 years. All you need to do is make financial independence your goal and start working on it immediately.