How To Become Financially Independent

How To Become Financially Independent

Financial Independence is something that many of us desire but very few ever achieve. Here I will share with you how to become financially independent.

For myself, I worked hard for many years and it wasn’t until I started focusing on the important things in life that I made any progress toward Financial Independence.

The journey of becoming financially independent can be described as a long and winding road. There are no shortcuts to financial freedom, which is why I’m sure you’re reading this. You’ll face setbacks and you’ll need to overcome challenges along the way. 

When those setbacks occur, it’s easy to give up or become defeated, but these challenges are meant to strengthen your resolve and determination.

In the last year of 2020, when so many people lost their jobs, so many people had their Pay cuts in their salaries.

Here are seven tips to become financially independent.

#1. To Become Financially Independent Investing On Yourself

What you need to understand is that there are a lot more interested in gaining knowledge through podcast, books, courses, seminars, or experiences, in which they would network with other people,

Knowledge is power and if you devote time towards it, you can learn a lot about how the world works or how a particular industry works. which then will allow you to start your own business,

If you understand, if there is a pain point that people have, just keep learning as much as you can. As Warren Buffett has famously said, that's pretty much it. The best investment that you can make is to invest in yourself.

#2. Make Money Using Mind Not Time

Making money using your mind not time is what I am going to give you in this section. The main motive of sharing this section with you so that you can achieve financial independence and get rid of the financial problems for once.

If I write a book about my experiences about something. Let's say, write a book on entrepreneurship or networking or something like that. And I get to sell that book to people out there. There is no limit to how many books I can sell.

Now, this is where I am using my mind to make me more money, here I am not going into a job. I'm not gaining linear returns, I am getting exponential returns.

The concept of This exponential return is what you need to understand whenever you want to understand how the wealthy are thinking about providing value and also gaining value in return.

This is the concept of creating businesses of having your equity in a business of having passive streams of income that will generate returns even when you are not working on that.

One more example, let's say you put in a hundred hours and you build a fantastic course that can help people to get their jobs to get started with their journey into their careers.

Now, you can theoretically sell that course to an infinite number of people, there is no cap that you have, let's say you're working at a company. you get paid around 75 thousand rupees every single month.

that might seem really good but that would be in that you have linear returns, okay, 75,000 rupees every single month. That would be about nine lakhs every single year. That is a cap that you have that you cannot make as more than that.

#3. Investing On Assets 

Number three is going to be the fact that is investing into assets and then they wait for the long term. They are a lot more about building their wealth over the long term. A lot of people right now are trying to find that get-rich-quick scheme, that crypto coin, that can get them a hundred times more returns.

By most of the richest people out there. They are just in it for small gains. but consistent gains over a long period of time and when I say long period, I mean like 10 years, 20, 30 years.

But the more important concept that you need to understand is the concept of compounding. Basically, what happens is that let's say you have a hundred rupees, you invest that hundred rupees into. Let's say a simple index fund and gets about 10 percent returns every single year 100, 110, and then that 110 gets another 10% increments.

So now it makes you one 121 rupees and Then it gets another 10%. So what is basically happening is that your money makes you more money, which then makes you even more money. and then that just keeps continuing and That's how you end up with a compounding curve.

Now, the best part is that you don't need to have a lot of money to get started. It's a lot better when you are investing small amounts of money when you are young versus investing a lot of money.

When you are older, let's say you are at 30, 35, 40. That is when most people, Start their investing journey.

Warren Buffet started investing at the age of 11. If he had started investing at the age of 30, he would now be sitting at, only 11 billion dollars, that might seem a lot. But right now, his net worth Is about 80 billion dollars when I last checked.

So you need to understand the concept of compounding, the earlier you can start the better it would be for you. Most people think that buying a car is going to be an asset for them. you buy the car, let's say for 5 lakh rupees

You use it for one or two years, then when you try to sell it, it is going to be sold for a lot less than what you bought it for. So, it would be a great way for you to build your wealth using real estate.

#4. Increase Investing Habits

There will be ups and downs during your investing journey, like in any other activity. Financial freedom isn't as impossible to achieve as it sounds. 

If you're willing to pay yourself first and spend less than you earn, then you'll be well on the road to independence. 

The key for most people, however, is learning how to start investing so that your money is growing while you continue working toward your financial goals.

The hardest part about investing was to start. But once you have started, there will be no turning back. You will soon see the rewards for all those investments, which will give you the motivation to save more and invest more. 

If you are not quite able to save money regularly, then you can start with accounts that allow you to invest part of your income.

#5. Don't Spend More Than You Earn

Have you ever heard the saying "don't spend more than you earn"? This advice is given often but rarely practiced. 

Spending less than you earn can be incredibly difficult, but being aware of your actions and behavior regarding spending will help you live a financially stable life. 

We have to spend in order to survive and to get by day after day, but if you're being irresponsible with your money then it's going to be hard to save any.

#6. Don't Get Loans

Nowadays, getting a loan is no longer a difficult thing. All you need is an internet connection to be able to fill the online form or apply for the loan.

But do not get loans to become financially independent. If you want to be financially independent, do not get any loans and start saving money as soon as possible.

Hence, the best way to have financial freedom is to stay away from borrowing and debts and learn how you can save more money.

#7. Emergency Funds

Life is unpredictable and the emergency fund will allow you to cope with situations beyond your control. It's always good to have an emergency savings fund handy. 

There are a lot of financial experts who will tell you that in order to build a secure future, you need to create an emergency fund. 

This is essentially money that is put away for unexpected expenses or a financial disaster like losing your job.

Hopefully, this article will help you on the topic of how to become financially independent.