Why You Need To Be Financially Independent: Series #1
Financial independence is one of the most important things you can ever accomplish in your life. In the next few posts I’m going to be talking about financial independence and why you need to make it a part of your life. I will be explaining what it is, suggestions on how to achieve it, what will happen to you and your family if you don’t achieve it, as well as how to track it.
Today I’m going to be talking about my definition of financial independence to give you a good context for the next few articles.
So What Exactly Is Financial Independence?
I came across this term for the first time a few years ago while reading Rich Dad, Poor Dad by Robert Kiyosaki. His book completely changed my thoughts about wealth and how to achieve it, and I would strongly recommend you to read it if you haven’t already. I’ve read almost everything he’s written, and I love them all.
Simply put, it is when your passive income is higher each month than your expenses.
Your expenses would consist of anything that you need to pay for each month. There are 2 ways of going about this. 1 is that you only list the absolute necessary expenses, such as your bills. The other way, the way that I follow because I feel it’s more realistic, includes other expenses such as entertainment. You can figure out what you spend on entertainment by keeping track of what you spend for a month on things that aren’t bills, such as going out to eat or to the movies.
Your goal is to make the money you receive from passive income higher than all your expenses combined.
For example, if you own 10 pieces of rental real estate property which are giving you a total of $5,000/month cashflow and your monthly expenses only come out to $4,500/month, you are considered financially independent.
You may be wondering, ok thats great, but what is passive income? I’ll go into further detail on it in a future post, but for now you can think of passive income as something that will put money in your bank account even if you go on vacation. It should require little or no work to maintain.
A great example of passive income is explained in my post about a new company that paid out over $120 million to it’s users in less than 2 years – Agloco. This will be a great way to get started in your quest to be financially independent. Remember, the first step is always the hardest but everything becomes easier after that.
Being financially independent means that you don’t have to work. The people who have achieved this level of wealth and still work are either very much in love with their jobs or are trying to put an even bigger wedge in between their income and their expenses – which is always a good idea.
Can you imagine what it would feel like to wake up in the morning and go to your job for pure enjoyment? I would guess that at least 80% of people aren’t entirely happy with their jobs. Even if you already love your job and wouldn’t leave it for the world, financial independence is still something you should achieve. Having more money is always a great thing, even if it’s just to have a safety net. Companies are constantly downsizing, tragedies happen, unexpected events come up. You can’t predict what will happen in the future.
On your own personal road to the perfect life, you should put financial independence at the top of your list. The only thing above it, in my opinion, should be health. After you achieve financial independence, you can work much more on your other goals! By being financially independent you will have fewer worries, less stress, and the quality of your life will grow in leaps and bounds.
Make it a point right now to start brainstorming ideas on how to achieve your own financial independence and put your life in the fast lane to success. Don’t let fear get in the way. I recommend heading over to this page to get you started.
Your perfect life awaits,
Jeremy
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