Many people believe that having financial independence means having a stable job, earning a good salary, or not depending on others to pay for daily expenses. Of course, it is very important to exercise a function that provides a fair monthly profit, to the point that you do not have difficulties. But that is not enough for the much dreamed of financial freedom.
Having financial independence is much more than having rivers of money flowing in (even because, the more we earn, the more our lifestyle changes, which may also increase our expenses).
What you really must understand is that regardless of how much you earn now, to become independent some practices will help you achieve it, what is that?
Do you want to discover what are the practices to have financial independence?
Then read this post you will learn what is essential to achieve that much-desired status.
1. Control expenses
To have financial independence is to maintain a good quality of life with our income. Therefore, the first practice that you need to start having now is to control your expenses according to what you earn. what does that mean?
When we think of control, the tendency is to believe that we should stop spending on what is superfluous or that serves only for our satisfaction. But that’s not what we mean!
We all deserve to be able to spend a little of what we earn on a desire, whether it’s eating at a different restaurant, buying a new pair of shoes, investing in a hobby, or taking a trip. But beware! Whenever you go to spend, remember how much you earn!
The calculation is always the same, regardless of whether you have a very high or low income. You can never spend more than you earn. This seems obvious, doesn’t it? But, in practice, it can be more difficult than we imagine.
2. Financial expenses out of income
let’s assume that you have a monthly income. When we think about using that money for personal expenses, we remember that we have the gross amount and that is why we end up spending more than we should. The truth is that you need to analyze your essential expenses before deciding how much to invest in something that is not extremely necessary.
Separate the amount of the rent of a house, or a loan, and your expenses additions, in the form of water, electricity, gas, food, Internet and all kinds of expenses to maintain a house. What you have left you to need to manage better!
Before you go out there wasting, set aside a little to save or invest and define a percentage to spend with yourself. You may not be able to make that dream trip in 3 months, however, if you know how to control your savings well, the trip will be done in 8 months or a little longer.
3. Use organizing spreadsheets
Spreadsheets are great for showing the reality of what we have spent. And to have financial independence it is very important to know how much you earn and how much you spend.
we discussed learning to control expenses. number 2 is a complement to the first. When you put together a spreadsheet to organize your accounts, whether they are daily, weekly or monthly, you get used to having tighter control of what is within your reach or not.
Create a table with all the amounts you spend throughout the month, even if they are a few cents chocolate. When you record what comes out, it is easier to create strategies that can help you save more.
If you are not sure how much you spend each month, it is very likely that you are “out of control” and cannot think of a way to further dose your expenses. That is why we advise you to record all your money movement, even if at first it is only personal.
4. Be careful with credit cards
Many people make the mistake of thinking that the credit card limit is the amount they can spend per month. However, that is not true, because buying on credit means that you do not have the amount to spend at that time and you will have to pay it the following month.
Let’s see an example:
Imagine that your monthly net salary is 2000$. You already know where you need to spend that money and you manage to pay your essential expenses each month, but what is left over is not much and you invest or save it.
In turn, you have a credit card whose limit is 1000$. As you have nothing left over from your salary to spend, you then decide to use the card and believe that you can use its full limit.
This is where the big lies. Some people manage to control their expenses by thinking about how much they earn, but when the issue is the credit card, they end up going out of line and spending what they don’t have. And the more the credit card is used, the more debts accumulate. All this without counting the bank interest through the roof, which will increase your debt even more.
Well then, do not buy with the credit card on instinct. Whenever you need to use it, analyze precisely if you will have the money to pay the card bill next month without having to withdraw the amount of your savings.
5. Try to improve professionally
Every time we climb a stair on the professional ladder, we get a reward, and when it is salary, even better. So, always try to improve professionally to increase your income.
Invest in training: take courses that can help you in your role (a good option for those who do not have time to go to a physical educational institution are online courses), participate in events in your acting market, attend conferences aimed at your niche.
Don’t be afraid to grow up and change roles. It is always good to face a new challenge, and that can be one more step towards achieving your financial independence. But be careful not to want to change just for a higher salary, because you can end up doing something that you do not like, which generates demotivation. (If you are unmotivated, we have here on the blog a text that teaches ways to motivate yourself).
6. Develop additional profitable activities
If you have a natural gift for playing an instrument, making crafts, decorating environments, or any other activity different from what you do every day, why not think about developing an extra profitable activity?
Of course, this activity cannot be another weight in your routine. Then you have to go in search of something that you already know how to do and that does not harm you. But if you manage to reconcile an extra activity on weekends with your weekly tasks, you will have another source of income at the end of the month.
And since you can already do everything, you need with the fixed income you earn, use that extra money to invest or save to have financial independence in the future.
7. Generate passive income
In the advice above, we gave you the idea of developing some profitable activity in addition to your main job. But if you don’t have time to have an extra job or you can’t use all your weekends for it, an excellent option is to start generating passive income.
Passive income is those that you can generate even if you don’t need to work for it, for example, when you rent a house to someone and receive the money every month or when you collect royalties for a book you wrote.
An excellent way to generate passive income is info products, that is, products in digital formats that are sold over the Internet, such as online courses or eBooks.
This type of business allows you to generate passive income because you only have the work of creating your online course or your eBooks once and then you can sell it to thousands of people (and around the world!).
In addition, you can also work as an Affiliate, that is, spreading the info-product of another person and receiving commissions whenever someone makes a purchase.
8. Think about long term financial goals
To have financial independence it is very important to think long-term. Unless you have inherited a large fortune, you will not achieve financial freedom overnight.
It is necessary to have a very clear plan that is to carry out complete planning that allows you to achieve your goals in the desired time.
For example, imagine that you are 35 years old and you want to stop working when you turn 55.
How much money will you need to save to support yourself from that age, considering that your quality of life cannot be lower than it is today?
In what ways will you save money? Cutting some expenses that you have? With an extra job? With passive income?
What exact amount can you save per month?
How are you going to invest the money saved?
Thinking long-term and defining your strategy well is essential to achieve the desired financial independence.
9. Create achievable financial goals
It is great to create specific goals to achieve something we want. When we talk about financial independence, that is also important.
Think about what you want to achieve financially in the short, medium, and long term, but remember to set achievable goals. Thus, you can save focused on a goal and, when the time comes to use your money on what you have planned, there will be no big surprises. You will be ready to spend on what you need!
However, a very important aspect is not to neglect the goals. Why will you stop saving after indulging in the trip of your dreams? Once you reach a goal, create new goals.
That way you will always have a reason to stay financially stable and in control, which will help you to have financial independence.
10. Learn to invest money
Another practice to achieve your financial independence is learning to invest your savings.
It is not very common to make financial investments, however, you need to start thinking about how the money you are saving can pay off. You may prefer to leave it standing in a savings account yielding some interest. But the problem is when we start to use a lot of the value that we put in that savings account.
We are not wanting to say here how you should invest your savings, but if you are interested in this topic, talk with people who know how to apply their money to an investment that may be profitable for you. Always think like an entrepreneur and look for new opportunities that can make you grow.
11. Always study on the financial subject
The last tip to achieve financial independence is always to study this topic to learn good techniques that will allow you to have more money and save more.
Watch the videos of YouTubers that talk about savings, take a course in personal finance management, read books on the subject, look for blogs focused on that niche …
Never stop learning!
Now is the time for financial independence Yes, it is possible to have financial freedom, and you will achieve that dream Do not fool yourself and think that your independence will come in the blink of an eye. We have already said that, for that to happen, you need to have a lot of focus on your goals, know how to spend with caution, and learn to control all the values that enter and leave your account.
And remember the most important thing: inputs must exceed outputs.
Do you already use any of the practices we mentioned to achieve your financial independence? Share your experience here in the comments!