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We have a great contributed post today on how you can attain financial independence from Mark Daniels from Mid-South Title Loans, a title loan agency in Memphis, Tennessee. Enjoy!
A goal for everyone in life is to achieve financial independence. We all want to reach a point where we can comfortably afford to pay all of our expenses without relying on a full-time job.
One common way of achieving this is by saving and investing for years, resulting in a comfortable retirement. Another way is building a business that can earn generous income without the need for daily supervision.
The forms of wealth creation are numerous, making the pursuit of financial independence simpler than you might realize. Outlined below are some of the habits that can move you closer to the achieving the dream of financial independence.
One great impediment to financial independence is the use of credit cards to purchase goods and incur a debt. This form of consumption ultimately only benefits banks and not the card holder. Loans such as car and payday loans are other examples of how creditors make money from consumers.
To avoid the trap, one must avoid debts with high interest in order to have money available to work for you. If you own property or assets such as a car, you can get lower interest rates on secured property loans or car title loans. If you’re smart, you can use this money to pay off higher interest debts such as credit cards.
Many Americans spend a lot of hours watching the television. There is nothing wrong with watching TV as long as you are watching a program that will draw you closer to your dream. However, if you spend the majority of your free time binging on the latest TV series or playing video games, then you need to check your priorities. Reduce the time you spend on frivolous entertainment and switch to something more constructive like reading a book on investing. You could even start a business at home to take advantage of the tax breaks businesspeople receive and earn money on the side. You can look for people who have achieved financial independence and ask for their advice. One way to become successful is to learn from other successful people.
One of the main impulses that drive us to buy goods is to be on par with neighbors and friends. We must avoid spending cash on things that we do not need. Before you get that luxury car or rent that trendy deluxe apartment, ask yourself if you really need it. You need to understand that life is not all about competition or accumulating vain wealth. Avoid competing against friends or neighbors and focus on investing your money; with time, you will be ahead of them financially.
This is the most important point in this post. It is the ultimate secret to financial independence. You can do this by avoiding bad loans and impulse buying. This is easier said than done, and requires a lot of discipline and diligence. The most effective way to know your expenditure is to keep a record of your expenses. This will allow you to cut unnecessary purchases and keep living a simple lifestyle. Another way of keeping your expenditure below your earning is to have more than one source of income to widen the gap between income and spending.
As much as this sounds selfish, putting your needs before others will help you attain financial independence. You need to save first before anything else. Save some money before you spend on other people. Similarly, don’t rely on other people. By paying for yourself, you learn to survive on a tight budget while cultivating the habit of saving.
Once you have saved a substantial amount, you need to put the money into an asset that will appreciate and generate income. One good example is investing on the stock market, which is a good long term plan. Do good research and buy a diverse range of assets that will grow your money, instead of accumulating a pile of electronics or cars which only drop in value.
Keep investing for long term success. For instance, if you choose the stock market, you have to brace yourself for the good and bad years. Do not quit during the bad years; instead learn to weather them. Buying stocks when the price is falling might be a difficult choice to make. However, you never know when the market will recover. One of the best ways to avoid gambling on the stock market is to keep buying a set amount of stock on a periodic basis regardless of the behavior of the stock market, all with the aim of building long term wealth. When you get close to retirement, adjust the manner in which you acquire assets to lower your risks.
You must be flexible and adjust your expenditure according to the financial times. There are moments when you experience financial difficulties and will be forced to adjust by cutting certain aspects of your expenses. For example, if you lose your job, you need to cut your spending before you can continue savings. Or, your investment in the stock market could fall by 50% and incur significant losses. Rather than withdraw your shares, you could look for a part time job to get you through the difficult time. You can only adjust successfully to difficult financial times if you are flexible.
You can achieve financial independence regardless of your net worth at the moment. However, you need to be disciplined enough to follow the points outlined above. The beauty of financial independence is that you will have a lot of free time to do other things that you love like travelling or hiking.