Financial independence is a goal everyone should have. The reason is because the lack of money is the biggest cause of problems in life. Fifty percent of all marriages end in divorce and the majority of those divorces is caused by some related to the lack of money. Stress is one of the biggest causes of illnesses and one of the biggest reasons for stress deals with lack of money. If you have a job you can care less about, most likely, it causes you some headache and even some depression. If that is the case, why not just leave? Oh right, you need the money. Can you see why being financial independent should be a goal for everyone?
So how exactly do you go about achieving a goal like this? What does it even mean? Before you can accomplish a goal, you must first be able to clearly define it. Being financially independent means that if you wanted to, you can choose to not work another day in your life. For many people, they think that in order to achieve this, they have to be filthy rich or win some lottery or inherit a fortune somewhere. Since so many people believe this, financial independance is practically impossible for them.
The good news is that achieving financial independence is a lot easier than most people think. Well, let me rephrase that. It takes a lot less money than people think. What you need to achieve this goal is simple and can be done in three simple steps.
The first step is to figure out what your expenses are on a monthly basis. This includes everything like mortgage, going out to each, gifts, food, etc. If you have payments that you make on a quarterly, bi-yearly, or yearly basis, just divide that amount up into 12 months and add it to your average monthly expenses. Once you have your monthly expenses amount, add on 30%. This will cover anything you may have forgotten.
The second step is to find different ways that you can generate income without having to constantly trade your time to earn it. This is the hardest part but it's easier than trying to be filthy rich. This is called residual or passive income. There are lots of ways to earn it such as interest on a savings account, royalties, rent if you're a landlord, or even income from a self-running business. Any type of income where you don't have to physically be there in order to make that money will fall into this category of income.
The third step on how to achieve financial independence is to keep building that residual income until what you make monthly equals or exceeds your monthly expenses that you figured out in step one. Once you get to this point, you will have to option to not have to work again. Of course, you will probably want to build much more than you need just in case something goes wrong with your sources of residual income. Make sure you have more than one source of income. Don't put all of your eggs in one basket.
Now that you know how to gain financial independence, your goal should be to constantly work on building residual income until you generate enough to cover all of your expenses. This can take you 30 years or it can take you 3 years. It all depends on how you go about creating this income. If you're going to spend your life working, you might as well spend it doing work you actually love. When you have financial independence you can do what you love and not have to ever worry about money again. Now that's life.
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