It can be hard to define financial independence as it means different things to different people. While some people think that financial independence means they no longer need help from parents or grandparents, others associate it with key milestones such as buying a house with a mortgage and paying household bills.
Whatever you define it as, achieving financial independence is clearly difficult. This is even more true at present due to the cost-of-living crisis. However, although it may be difficult, it is still possible. If you want to know how you can achieve this, keep reading below. We’ve made a list of some helpful financial independence tips to get you started:
1. Set a Goal
Before achieving financial independence, you first need to know what financial independence means to you. As mentioned above, different people have different views on what this is. Once you know what it means to you, you can start working towards it.
2. Understand Your FI Number
The next thing you need to do is to work out how much money you need to save or invest to make your dreams a reality. You can do this by calculating your FI number. To calculate your FI number, multiply your annual expenses by 25.
3. Prioritize Savings
Saving for the future is easier said than done. This is particularly true at the moment due to the cost-of-living crisis. However, it is possible to boost your savings by making your savings a priority. Or in other words, treat them as a necessity, just like paying your mortgage.
4. Invest in the Future
Bad stock markets can make people question whether investing is the right thing to do, but according to statistics, there is no better way to grow your money. However, while this may be true, knowing a little about investing is essential before you start. For example, you need to know when the best time to invest is and how to choose good stocks. The great news is that there’s lots of advice online. For example, you can find a daily list of the biggest stock losers here.
5. Learn How to Budget
Financial independence is almost impossible unless you’re living on a budget. You’ve got to tell your money where to go, or you’ll wonder where it went. Before you receive your paycheck, give every dollar an assignment and track your spending throughout the month. This will help you to get your finances on the right track.
Another great tip that can help you achieve financial independence is negotiating large purchases. For example, when buying a car, shop around, and ask car dealers if they can do you a better deal. While negotiating on just one purchase might not save a significant amount, doing it regularly will help you achieve your goals.
7. Choose Your Job Carefully
Your biggest wealth-building tool is your income. You need to bear this in mind when choosing a career. To achieve financial independence, you will need to choose a career that supports your goals of financial security. Here are a few things you should keep in mind when choosing a career:
- Where you want to be in the future – You want to find a job that can help you achieve your overall goals.
- Can you progress? – Is there a possibility for you to move up and grow professionally and personally?
- What is the salary like? – It’s important to ensure there’s opportunity for your income to increase.
- Does the job come with benefits? – Jobs that offer health insurance and retirement savings can affect your ability to build wealth.
Financial independence has different meanings to different people, but whatever it means, the rising cost of living is making it harder to achieve. However, that being said, there are some simple things you can do to increase your chances of becoming financially independent, including those listed above. Why not give them a try?
Featured Image by Olya Adamovich from Pixabay