The plainest fact about life is that you cannot enjoy it until you are financially independent. You may be wondering what financial independence is. At this stage, your assets are generating income for you to meet your basic needs as well as for saving.
When you are financially independent you have sufficient wealth to live on and you don’t need to work very hard because your assets are generating income that is equal to or more than your expenses. That sounds great! The question here which you may be asking yourself is how to get these assets while you are a “wage slave”.
If today your boss decides to quit your services, you don’t know how you would meet ends. If you are lucky and have a business whose income you are able to pay your bills, ask yourself, “how about if my potential loyal clients decide to buy their goods elsewhere?” How would you pay your bills before you get other new customers to replace those ones?
Most people live on credits from the bank inform of loans. That is the only way to buy liabilities like your personal car and say a house. While there is nothing wrong with that, the question here goes back to, what if you lost your job or the potential customers?
By now reality has sank in and you are wondering how to get these income generating assets while your wage can barely meet your expenses.
It requires focus, determination and above all discipline. To attain financial independence you need to craft a plan. You don’t need to quit your job or close down your business. Your plan needs some income to work on.
Visualize and craft a plan
To attain financial independence, one must put in place prior planning. What are the assets you want to buy? How much do you want to invest in this income generating assets? How soon do you want to buy these assets? What will you do to attain this goal? Once you answer these questions then you will be a step ahead towards achieving your goal. Do a thorough consultation so that you can come up with an idea of the kind of assets which will generate a real income.
Adjust your spending
Overspending is a weakness for almost every person with a steady job and every business owner who has a flow of customers. This is because they reason that more money will come at the end of the month or on a particular date. If you really want to attain financial independence then you must minimize your expenditure. For example buy necessities only and shop around before buying, to see the shops which give better discounts.
Use your personal car only where necessary otherwise use public means. Move to a cheaper apartment. Avoid partying with friends because this is where so much money is lost. In fact, you have to change friends too. Your friends may not like your idea and may talk you out of it. So to avoid that, don’t spend time with them.
Minimize your groceries budget and any other budget you think can be kept to a minimum. Put off all gadgets that use electricity unnecessarily to reduce the electricity bill. Make sure the water bill is also minimized.
Save as much as you can. Open a savings account which does not allow frequent withdrawals. Deposit all your savings there. You will be surprised to see how much you can save in a month. Apply discipline so that you don’t fall into the temptation of withdrawing. Stick to that minimal budget. Look for a part time job and create time for it so that you can increase your savings.
It is a tradition for all people with a steady job to take loans, misuse credit cards and even borrow money from friends and relatives. If you took a loan to buy a car, consider selling it if you can do without it. This is because a car is a liability which will hinder your saving plans. It will require fuel and service money which would otherwise be used as savings.
You may have a mortgage taken to buy the house you are living in. By the time you complete paying it, you will be surprised at how much interest you will have earned the bank. Consider selling the house, paying off the mortgage and renting an apartment so you can save to buy an income generating asset whose income, in a short while, will buy you a good house and a luxurious car.
Work harder in your career or in your current business. Without an income to fuel your savings you cannot attain your goal of becoming financially independent. You should now work harder than before because you have a goal. If you get a promotion at work out of your hard work, that will enable you to save more and attain your goal faster than you anticipated. Your business may start generating more income and that will enable you to increase your savings.
Keep records of all your monthly expenditures and savings. This will serve as a motivator and a benchmark. You will know how much you spent on say grocery this month and therefore you should not go beyond that amount the next month. You will know how much you have saved at a certain time and how far you are from attaining your goals.
My Final Thoughts
It is possible to achieve financial independence within a year or earlier than that if you remain focused on the goal, and you apply a lot of discipline. It feels appalling to have to put up with a demining boss just because you can’t do without that job. Sometimes you do the kind of work you do not like because it is from that job that you earn your living. Once you are financially independent, you unchain yourself from having to put up with the things you do not like. You also become free from fear of the unknown.
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.