Use These Five Habits to Become Financially Independent
Besides paying off debt or savings for a specific purpose, financial independence is the ultimate goal of anyone interested in getting their money in order. It simply means that you have reached a point where you no longer need to earn your living; you are doing great with your investments and equity capital. If you want to do this, focus on these five areas.
Financial independence is not much different from a pension. When you are retired, yes, you became financially independent. But retirement means you quit working, and being financially independent is when you no longer need to worry about money.
Author Jonathan Chevro talks about the concept on his FindependenceDay website. He tells Forbes five “rules” for achieving financial independence:
1. To pay off the house in full. “This is really the foundation,” he says.
2. Find multiple sources of income for retirement. This can be interest and dividends from your investment portfolio; Rental Property; freelance or consulting work; Social Security; annuity; and possibly a guaranteed pension.
3. Develop habits of “guerrilla thrift”. Chevro calls this the “Frooger transformation.” Reducing the cost of working full-time will make it easier for you to retire and reduce the amount of savings you will need to retire comfortably.
“If you spend like a millionaire, you will remain a beggar,” says Jamie, the protagonist of his book. “Spend like a beggar and you have a chance to become a millionaire.”
4. Save 20% of your gross income. For many it will be impossible, for others it will not. If you can’t save 20%, try 15 or 10%.
5. Invest with a Lazy ETF portfolio. This means choosing, say, three exchange-traded funds – a US stock fund, an international stock fund, and a US bond fund – and holding them.
Light? Of course not. None of these habits or concepts are easy to adapt or implement. But financial independence is that easy. If that’s what you want, you have to work hard and focus your energies on these five tasks. Check out the rest of the post at the link below.