Financial Independence Decoded
Everyone is always on the move, which is not usually a problem. The problem arises because many people are moving without bringing any positive benefits to their lives. Most people rush off to work, sit in traffic, stress about bills, fear the impending downsizing at their jobs, and even stress about what stress is doing to their bodies.
It is a never-ending cycle of unnecessary stressors. The more we work, the more the bills pile up. As soon as we save enough for a vacation, something like the A/C or the family car breaks down and puts us back to zero.
Worse yet, these examples are all too familiar for far too many people. The whole process is surreal when you take a step back and look at it all together. You will most likely stress over your job, bills, and finances until you hit the age of 65 when you can finally retire. After all those years of working, you can enjoy spending time with your family or pursuing your passions.
In the meantime, you pay for this future freedom with 40 or more years of stress. This is a bad investment by any standard. Although this cycle is difficult to break, you can do it by achieving financial independence well before 65.
What is Financial Independence?
Being financially independent is both a financial goal and a state of mind. Financial independence is when you have complete control of your finances to the point that money is no longer a stressor in your life. For some, this is a fully paid retirement. For others, it is the freedom to pursue a job they love, not one they don’t enjoy but need to keep to pay the bills. Also, for a handful of people, financial independence is assuring money is not constantly on their minds because of well thought out planning and automation.
For complete financial independence, you need to achieve the following set of circumstances:
- A lack of stress regarding your financial future.
- Adequate savings for both emergencies and retirement.
- A system to collect, sort and grow the money you make.
What are the Benefits of Financial Independence?
Before striving for financial independence, you should understand what this choice means from both a cost and a benefit situation. Some of the more obvious benefits include:
- Less stress and lost sleep. You’ll worry less, feel happier and more relaxed, and sleep better without all those money worries.
- More time to spend the way you want. You’ll be able to do things you enjoy every single day.
- Less debt, more freedom. You’ll have the ability to purchase vacations and other big tag items without accruing additional debt.
Many benefits are not as obvious, yet they can have a more significant effect on your future, such as:
- Being able to assess risk differently. Perhaps you have always wanted to start your own business but never had the financial security to pursue it. Maybe you have always wanted to invest, so now you can take the risk.
- Asking for a raise or switching careers. You can make a change without fearing the negative repercussions if things don’t work out. Now you can be comfortable knowing you can survive any transition.
- Your money can go where you want it to go. If you’re going to help a family member or make a material donation to your favorite charity, you can. You can use your healthy financial situation to help make the lives of others better.
The only questions are, how do you do it? How does someone get to the point of financial independence? What does it take to get there?
How Do You Achieve Financial Independence?
The benefits are only as good as the effort you put into achieving a goal that few come close to reaching. The mindset needed for achieving financial independence includes:
- Having a deep understanding of your finances.
- Focusing on self-efficacy, or the ability to accept giving up something now for a bigger reward later.
- Practicing patience instead of harboring the need for instant gratification.
- Making smart and calculated financial decisions.
- Understanding the impact of a dollar spent today on your tomorrows.
- Measuring items by the happiness they bring you instead of price or status.
This site revolves around understanding and controlling these factors so that you can have a better chance at financial independence. If you would like to learn more about financial independence, there are lots of articles here to provide the information you need to achieve it.