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5 Reasons to Pursue Financial Independence

5 Reasons to Pursue Financial Independence
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    Do you crave a life without financial constraints?

    Too often our ability to make progress towards our passions has been limited by the “rat race.” In the rat race, we work for our employers, the government by paying taxes, and the lenders (ie, of our mortgages, credit cards, car loans, and student loans).

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    Usually, our own passions are dead last, relegated to when we can find free time — if they get focused on at all.

    Fortunately, you can have a very different plan. Here are five reasons to pursue financial independence…even if you love your job.

    Financial Independence is Important Because Job Security is an Illusion

    Financial vulnerability often motivates entrepreneurs. Many entrepreneurs work ridiculous hours, risk their entire life savings, and neglect important relationships for a dream with no promise of success. What sane person would take such risks?

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    Well, one thing to note is that regardless of whether you are self-employed, a traditional employee, or a business owner, you are in business for yourself. The primary distinction is who are your customers? For a typical employee, your “customer” is your boss. He or she is the one who is purchasing your services. However, if you own a business, you have many customers (or bosses).

    Accordingly, many entrepreneurs feel it is inherently more risky to have a single boss than having many “bosses.” For example, if you own a thriving business where you can control costs, growth, and marketing, then a whole bunch of customers would have to effectively “fire” you before you were forced out of a “job.” A business owner’s sustenance is no longer determined by single person’s opinion or by shareholders who may not even know his or her name. This is why financial independence is so important to traditional employees: no amount of education or experience can guarantee that even the most talented and faithful workers won’t be unemployed by the end of business tomorrow. If you are an employee, the reality is that you are constantly interviewing for your job.

    Financial Independence is Important Because it Means You Are No Longer Trapped in the “Rat Race”

    Sometimes there is an outright disdain for work nowadays. We marvel at those who retire early. However, I have come to the conclusion that the idea of leaving the “rat race” excites me infinitely more than the idea of retirement. For example, there’s an internal yearning to make a difference that would be very hard to achieve if your idea of retirement is sitting on the couch everyday watching The Bold and the Beautiful. Stephen Covey said that we all want to “live, to love, to learn, and to leave a legacy.” The right work can help us fulfill such aspirations.

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    Rather than eliminating work, I suspect that many people crave eliminating their need of provision clouding every decision that they make, stopping them from chasing their dreams, and robbing them from spending time with the people who matter most. A financially free person possesses insights and goals untainted by concern for sustenance, can pursue opportunities that are generally perceived as risky but high reward, and can control his or her time in ways those stuck working nine-to-five jobs can only dream of.

    Financial Independence is Important Because It Means You Are in an Even Better Position to Help Others

    It was Margaret Thatcher — The Iron Lady — who said that “no one would have remembered the Good Samaritan if he only had good intentions.” Some people piously say that they just want enough for their families. It’s as if they have outright indignation for anyone who craves more. Ironically, they completely miss how ridiculously selfish they sound.

    If we want to live extraordinarily, then we often have to look beyond our own four walls to see who we can serve. Just because charity starts at the home doesn’t mean it should stop there. One reason it is so important to expand your vision is that it will often be the stimulus prompting others to get involved in your dream. For example, part of the reason Oprah, Rachael Ray, and Dr. Oz are so successful is because they “major” in helping others. It is the problems that you solve for others that serve as the doors to your next promotion. One of the benefits of being financially free is that you are also free to tackle some really complex problems!

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    Financial Independence is Important Because it Means Fun is Amplified

    While happiness can’t be bought, fun can. I personally have no problem if someone wants to walk into his dream home or drive his dream vehicle, as long as he has been financially responsible. Recently, billionaire heiress Petra Eclestone purchased the old Aaron Spelling 57,000 square foot mansion for a staggering $85,000,000. In an interview, one reporter asked her response to the many detractors arguing that there were so many better uses for her family’s money. She replied she was extremely active and generous to her chosen charities and felt no responsibility to stop living her life based on what others have to say. One takeaway point was that just because you can have fun with less doesn’t mean you have too. Money is merely a tool. It only amplifies what’s already there, so if you have fun and give with your existing income and assets, just imagine what fun you can have and charitable deeds you can perform if all your financial resources were amplified.

    Financial Independence is Important Because it Increases Your Ability to Structure Work to Suit You

    Of course, choosing or creating the right kind of work is not limited to those who are financially independent. However, the two do appear to be linked. In the Millionaire’s Mind, Thomas Stanley argued that millionaires are more likely to have chosen work that uniquely suits them; the right work serves as a competitive advantage. Being financially independent means that you have more time and resources to explore your skills and abilities, your personality, and your passions and dreams and decide how best to incorporate that into your work; you have all the more opportunity to make sure that you get it right.

    Recently, there has been an explosive increase in people exploring alternative work models, such as freelance work, independent contractors, consulting, distributorships, licensing, etc. Just because one may not be a good fit doesn’t mean that you can’t find or create an authentic fit with another model. Be mindful regarding your work. Not only may your financial independence be determined by this decision but also your sanity!

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    Closing Thoughts

    Not only are financial independence and building phenomenal wealth laudable goals, they are also achievable. Consider that when you are inundated with opportunities to forsake your budget for purchases misaligned with your values. Consider that additionally when market volatility and doom pundits make you want to duck and hide rather than invest. Most millionaires consistently invest at least 15% of their incomes, despite alluring sales and tumultuous economic climates. Follow that example when you face difficult financial decisions; choose freedom today.

    (Photo credit: Growing Money via Shutterstock)

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    Last Updated on July 20, 2021

    Financial Freedom is Not a Fantasy: 9 Secrets to Get You There

    Financial Freedom is Not a Fantasy: 9 Secrets to Get You There
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    Have you ever considered your life now, and how it would be if you had more time to spend with your family and less worries about money?

    Nowadays, financial stress is one of the most troublesome weights in life. If you’ve ever encountered financial stress, you know the difficulty of not having enough income to pay your obligations or bills.

    Many people say that money is not the ultimate goal of life. While that’s true, money certainly plays a very significant role. The meaning of financial freedom changes with the different phases of our life, but ultimately, it is something that many people strive for.

    In this article, we’ll explain how to capture that financial freedom you’ve been looking for. Read on to learn the secrets to financial freedom.

    Break Free of Your Finances

    Financial freedom is about having a constant flow of cash from your assets to cover all your regular needs.

    When you are not worried about your income, or living paycheck to paycheck, you gain a great sense of freedom. It’s the freedom to be obtain and do what you truly need to make your way through everyday life.

    Gaining financial freedom, though, is a process of growth, making small improvements and gaining emotional strength.

    Though it seems hard to believe, it is really very simple to get financial freedom.

    To do so, you simply need to make sure that your assets exceed your liabilities. In other words, you’ll need to find the sweet-spot where your residuals meet or surpass your expenses. This is something that you can achieve with the proper plan.

    While not every person will accomplish financial freedom, the potential for anyone to do so is certainly there. Anyone can achieve this success, regardless of their income level.

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    Outlined below are 9 secrets that will help you in your goals of achieving financial freedom.

    1. Stop Unnecessary Spending

    We often spend money inwardly, instead of objectively.

    For example, you may spend when you’re anxious, depressed, restless, exhausted, from fear of missing out, or to please others. This is a very unhealthy way to handle your finances.

    To stop this habitual spending, log down all your spending over the course of a month.

    Just as some people keep a food diary, keep an expense diary. Remember not to just write down how much and what you spent the money on, also include the circumstances of why you spent the money. Was it an impulse buy at the checkout line or was it something you planned to purchase?

    This increased self-awareness could enable you to avoid triggering situations in the future when you are considering an impulse buy.

    2. Plan a Monthly Budget

    This is a great opportunity to get serious.

    Take a seat with your spouse or partner and make a monthly budget based on your income, not your expenses. You are never again going to spend more cash then you have on hand.

    Overspending is the thing that led you to more financial obligations. Make sure you decide every month what is coming in and what will be going out and stick to that budget… no matter what.

    3. Cut-up Credit Cards

    Perhaps you are the type of person who always pays your credit card balance in full before the end of your billing cycle, and enjoys the reward points you gain. If this is the case, then you’re already way ahead of the game.

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    If not, you may want to consider ridding your life of the burden that credit cards bring.

    Many cards have strategies set up so that if you make a certain number of late payments, they will raise your interest rate much higher. This can really add up in the long run and you won’t be doing your financial situation any favors. If you’re prone to late payments or have a large balance due on your cards, cut them up!

    Without proper self control on credit card spending and payments, you are basically throwing your money away. To ensure that you have better control over your spending, use only cash or debit for all future purchases (and don’t forget to pay at least your minimum payment on your cut-up cards each month!).

    4. Increase Savings

    There is no doubt that for a comfortable retirement you must accumulate satisfactory savings throughout your working life.

    It’s good practice to save up to 15% of your income.

    Start with your workplace 401(k), if you have one. If not, a Roth IRA (if you are eligible) or a traditional IRA (if you are not eligible for the Roth) are the next logical steps.

    Increase in longevity means you might be able to look forward to 25 to 30 years in retirement, or possibly even significantly more. Investing now in good retirement plans will ensure that you have a guaranteed a stable monthly income when the time comes to stop working. [1]

    5. Invest Wisely

    Consider investing in funds.

    Specifically, you will gain higher returns if you invest in different types of mutual funds such as Debt funds, Equity funds and Hybrid funds with a proper balance, although it absolutely relies on your personal preferences and sense of risk taking.

    To get the most of these benefits, make sure you are investing in a variety of assets. Another resource of investing in mutual funds is SIP (Systematic Investment Plan) where you invest some money every month in funds. SIP works by averaging the per unit price of the stock.

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    Mutual fund investors are aware of the benefits of an SIP (Systematic Investment Plan). For one, it is the most secure way to invest in equity mutual plans so that wealth is created over a long period of time. This plan also helps you to gain a better sense of financial discipline, which will come in handy in all your financial endeavors.

    6. Invest in Gold

    There isn’t really a better way to invest in gold than to have the physical gold itself in your possession.

    You can purchase gold coins and bars from mints as well as from coin dealers and other private sellers.

    Another way to invest in gold is through ETFs (Exchange Traded Funds).

    These are is similar to mutual funds but they are exclusively investments of gold. ETFs are great because they offer more liquidity; the ETF owns the actual physical gold, stores it, and retains the value of the shares. These shares can then be bought and sold in the stock market, and one big benefit is that the transaction costs of gold ETFs are much lower than the that of physical gold.

    With its consistently-increasing demand, investment in gold can be very wise long-term investment to make.

    7. Stash Emergency Funds

    Whether it’s a cash gift or a work bonus, always try to save any extra money that comes your way rather than making unneeded purchases.

    If you get paid every other week, you’ll get an “extra” paycheck (three rather than the usual two) twice a year. Either save those paychecks towards your emergency funds or utilize the money to pay down other obligations, such as loans, credit cards or other debts.

    Make it hard to get your cash.

    Put your savings in an alternate bank, maybe an online bank that forces you to delay for several business days before transferred money hits your regular bank account.

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    8. Find Fabulous Mentors

    Find a mentor, such as a friend or family member, who has exceptional control over their finances and pay attention to everything they do.

    If you do not have any friends or family that are enjoying financial freedom, then find a mentor online! There are numerous blogs and guru websites featuring the advice of many people who have reached financial freedom, and they exist primarily to let you in on how to achieve it for yourself.

    There are also plentiful forums available that share tips and tricks on how to best achieve financial freedom. Read as much as you can and start changing your habits for the better.

    9. Be Extra Patient

    Patience is the key of financial success.

    Being patient can be quite tough, especially when you’re struggling with your finances, but having faith is worth it. You’ll continuously be on the right track if you are taking the proper steps above.

    So don’t be discouraged, even if you are only saving a few dollars a month; it all adds up. Within just a few years you’ll look back proudly at your accomplishments and be glad that you had the patience to get there.

    Financial Freedom for All

    Anyone can achieve financial freedom, regardless of their financial circumstance.

    Use the tips provided above to get yourself on the track to financial freedom and toss your monetary concerns out the window. If you wish to achieve a life with financial freedom for yourself and your family then you must adopt a disciplined approach towards your finances.

    Following the simple secrets above is a great start to making your money work for you, so you can work less and live more!

    Featured photo credit: rawpixel via unsplash.com

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    Reference

    [1] Hartford Gold Group: IRA Retirement Accounts

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