Many adults globally are attempting to achieve financial independence at a younger age. Financial independence is the freedom of not having to worry about working or being dependent on anyone else for your income. So, what is the easiest and quickest way to financial independence? There are no short-cuts, it takes dedication, steadfastness, but the below tips can go a long way in assisting you to attain financial independence.
Ready, steady go
Start today! The earlier you start, the less you need to save and the easier it will be to achieve financial independence. Many put off this important decision, giving flimsy excuses like “I don’t earn enough” “What I earn barely takes care of my need” “I will start when I get a better paying job” etc. There is never enough, there is never a good or bad time to start, the time is now. Start now and improve along the way, but, start!
Do the math
Another thing you must do is calculate how much you will need to be financially independent. Take your monthly expenses and multiply it by 300. Saving 300 times your monthly expenses will allow you to breathe easy.
Get specific
Define what financial independence means to you. Do you want to pursue your passion? Once you know what you are going to do with your freedom you will know how much you need.
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Budget
Start by assigning your income specific tasks – 50% of your income to need (house, car, groceries and education), 30% to wants (clothes, etc) and 20% to savings and debt repayments. Then work towards the second level of financial independence, 40% needs, 10% wants and 50% savings.
Downsize
You might need to go from DSTV Premium Bouquet to Access, or even Family. Cutting your expenses is the quickest way to achieve financial independence.
Stay debt-free
Paying interest on debt will not help you save, so pay off your debt either by following the snowball method where you settle the smallest debt first and then use the freed income to pay off the next biggest debt, or the debt stacking method where you start by paying the debt with the highest interest rate first.
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Save, save and save
Saving 25% of every N1,000 you earn could allow you to retire in 32 years depending on your needs. If that is too long, save 50% of everything you earn and you could retire in 17 years whilst maintaining your lifestyle. Start by saving three to six months of expenses in an emergency fund using a money market or tax-free savings account.
Invest
One day when you reach financial independence you will live on the income generated by your investments. Your investments will generate interest, dividends, rental income and profits while you spend time at the spa or on the golf course. Once your emergency fund is set up, start by investing in a set of diversified assets like stocks, bonds, and property through a low-cost unit trust investment.
Boost your income
Using your talents, interests, and passions you can create alternative sources of income allowing you to achieve financial independence faster. Sell stuff online, start a podcast or create an internet business around your hobbies.