One of the best financial goals to shoot for in this life is that of financial independence. Many people think that their whole life that they will be happy if they can just become rich by a certain age. While this isn’t necessarily a bad goal, it is often one that leads to disappointment. Many rich people find that when they reach the income or net worth that they were shooting for, life is not nearly as good as they expected. In fact, many people find themselves miserable at that point because getting their involved 80 hour work weeks, little sleep, and little time to build up important relationships in life.
That is why financial independence is so much better of a goal. Those that are financially independent find themselves genuinely independent of the demands of regular jobs. They are able to live their lives how they wish and how they see fit. If that means working 80 hours a week for some weeks, that is their choice. If they decide they want a week with their family in Aruba, that is their choice as well. These people tend to be much happier, even if they are making much less money. They have freedom, and that is what most of us truly seek.
All of that being said, here are four keys to becoming financially independent.
Get out of debt
This is the first and most important step because no one is truly free that is burdened down by debt. I don’t necessarily mean you need to sell all your leveraged assets such as real estate, I am talking about credit card debt, real estate debt, and perhaps even vehicle debt. If you can lower your monthly payments by just a couple hundred dollars a month, there are dozens of incredibly things you can do to become financially independent. There are a number of ways to go about paying your debts off, and what way you choose doesn’t matter nearly as much as the fact that you do it.
I am not saying go out and put your entire savings into the stock market. I am not NOT saying that either. There are dozens of ways and opportunities to invest in today’s world. Spend some time online doing research into different types of investments. Modest Money has many great resources to help you find investment ideas that work for your situation. Whether it is real estate, stocks, CDs, bonds, gold, or any other type of investment, it is simply important to make your money work for you. Money invested today can yield incredible results in thirty years, but it is extremely important to start today without any delay.
Make more than you spend
This may sound obvious, but people often do not do this. If you are spending everything that you make in income each month, you will find yourself in the exact situation you are now twenty years down the road. It doesn’t have to be a lot, but it is extremely wise to get into the habit of not spending everything you make. That money can go into investments, savings, or an emergency fund, as long as it isn’t spent that month. For different people this will require different levels of sacrifice. Whatever level it requires, it will be worth it as a financially independent individual.
Be an opportunist
Many people are simply too scared to take advantage of opportunities that stare them straight in the face. These people get nervous venturing into the unknown, and in the end they are stuck in their same job doing the same thing for years and years. If an opportunity comes up, do an evaluation. If the consequences of that opportunity falling through are minimal – take it!
These are all hard things to do. They are also worth it when financial independence is achieved. Sacrifice now and enjoy life to its fullest in the future.