Many people believe that financial independence is the state of being free from dependence on others for at least a year, but there are several ways to define it. Moreover, there are several passive income ways to achieve it.
When you are financially free, you may live the life you desire without having to work any longer. It’s a good idea to begin saving and investing early in order to reach financial independence. It also frequently necessitates developing a long-term plan and keeping to it.
What are the 2 meanings of financial independence?
Financial independence could mean different things to different people. For some, it might mean being debt-free or having a certain amount of savings. Others might view financial independence as making enough money from passive income sources so that they never have to work again.
Achieving financial independence is the goal of many people, and there are several ways to do it. Passive income streams are one of the best ways to achieve independence, because they provide you with regular income without requiring much effort on your part.
There are several different methods of generating passive income, so you can find one that suits your needs and goals. Once you have achieved financial independence, you will be free from dependence on others for your basic needs, giving you the freedom to pursue your dreams and passions.
What is financial independence?
Financial independence is not in fact a myth! By definition, financial independence is the state of being free from dependence on others for income.
In other words, financial independence means having enough money coming in from passive sources that you could cover your basic living expenses without working.
How do you know if you’re financially independent?
There are several key indicators that can help you determine whether or not you are on the path to financial independence.
1. You have a diversified income stream.
2. Your passive income exceeds your expenses.
3. You have little to no debt.
4. You have an emergency fund to cover unexpected expenses.
5. You are saving for retirement.
Financial independence is definitely achievable if you are willing to work hard and make sacrifices in the short term. There are many different ways to generate passive income, so there is sure to be a method that suits your needs and goals.
Once you have achieved financial independence, you will have the freedom to pursue your dreams and passions without having to worry about money.
3 Best Diversifying income streams
1. Rental properties:
Rental properties can provide you with a steady stream of income, and they can appreciate in value over time.
2. Dividend stocks:
Dividend stocks are a great way to generate passive income, because you will receive dividends even if the stock price does not go up.
3. Savings accounts:
Savings accounts can provide you with a small amount of passive income, and they are a great way to save for retirement.
Action Steps: Do these to start financing your independence
If you want to achieve this type of independence it’s important to take action in the following areas of your finances:
Invest in yourself:
Attend financial independence conferences, read financial independence blogs, and listen to financial independence podcasts. The best ways to invest in yourself are to learn about financial independence and to find a financial independence coach.
Benefits of a financial independence coach:
A financial independence coach can help you develop a plan to achieve financial independence, and they can provide you with accountability and support.
Build your passive income streams:
Invest in rental properties, dividend stocks, and savings accounts. The best passive income streams are those that provide you with regular income without requiring much effort on your part.
Some of the highest generating income streams are:
2. Dividend stocks
3. Savings accounts
Create a budget:
Creating a budget is one of the most important steps to achieving financial independence. A budget will help you track your expenses and make sure that your passive income exceeds your costs.
Live below your means:
What does it mean to live below your means? Cut back on your expenses so that you can save more money . Find ways to reduce your expenses, and make sure to invest the money you save.
Most popular places to reduce expenses:
What is the 4% rule?
The 4% rule is a guideline that suggests that you should withdraw no more than 4% of your portfolio value each year in retirement. This rule is based on the assumption that you will have a diversified portfolio of stocks and bonds, and that your portfolio will return an average of 7% per year.
What are the benefits of financial independence?
There are many benefits of financial independence, including:
1. You will have more time to pursue your passions.
2. You will be able to retire early.
3. You will have less financial stress.
4. You will be able to give more to charity.
5. You will have more time to spend with family and friends.
6. You will be able to travel more.
7. You will have more time to volunteer.
8. You will be able to pursue your hobbies.
9. You will have more financial security.
10. You will be able to live a healthier lifestyle.
What are some of the best financial independence books?
There are many great financial independence books, but the best is:
Don’t Start a Side Hustle by Brian Page
What’s in this book?
- How to create obscene cash flow from products, services, and property you don’t own
- How to become an “income producer” instead of an “income earner.”
- How to retire in less than 36 months and opt out of the collective retirement delusion
- How to live a lifestyle of freedom by building a passive income empire.
- Brian will teach you about Passive Income Vehicles (PIV’s) and how to launch your first one in the next 90 days