Top 10 Ways to Become Financially Independent

by Mrs Money

Pop quiz: To be wealthy is to A) have a handsome salary or B) have absolute control over your time. If you picked A you’re…. wrong. The truly wealthy, those that are truly financially independent, are those who have the ability to do whatever they want whenever they want without having to worry about the consequences.

Even the professional footballer making millions of pounds a year has to show up for practice at a certain time and be on the plane with the rest of the team before it leaves for the big match in Munich. Whereas the guy who owns a chain of pizza restaurants, a car park, a convenience store along with some stocks and bonds is lounging on a beach in the Bahamas with no one to answer to and no alarm clock to bother him in the morning.

From Working Hard to Not Working

Achieving financial independence is not as complicated as one might think. What it takes is a willingness to embrace the mundane, a long term plan and the ability to stick to that plan. If you have those 3 things you stand a fighting chance of becoming financially independent at some point.

The following are 10 tips that will help set you on road to wealth accumulation and financial independence.

1) Spend Less Than You Make – Duh! Right? Well, yes and no. It may seem like a no-brainer but you’d be surprised at how many people cannot put this principle into action in their lives which often results in people having to seek debt advice. The truth is that if you can’t grasp this one the rest of the tips don’t matter much. It is the cornerstone of any wealth creation plan and the only one that is completely non-negotiable.

2) Ditch the Credit Cards – A pocket full of credit cards and the fees and interest that go along with them are like an anchor keeping your ship in port. Pay down any outstanding credit card debt then cut the cards up once and for all and redirect your money toward acquiring income generating assets.

3) Speaking of Assets – Sure the fancy car and inground pool might impress the neighbours but how do they help you achieve financial independence? The answer is they don’t. So don’t waste your money on them. Instead buy a car wash, invest in T-bills, open a self-storage business and buy real estate. These are the things that will truly set you free.

4) Work with a Purpose – You can go to work every day just so that you can make your credit card and automobile payments each month. Or you can work in order to save money to purchase income generating assets. One path leads to financial stagnation the other to financial independence. Can you guess which is which?

5) Cut Back – Embrace the notion of short term pain for long term gain. If you’re smart in how you do it that long term gain will be very gainful indeed. Cut back on non-essentials and direct the savings toward investments and assets that will generate income. Whatever you do don’t spend the savings on stuff. You know, stuff. Like huge TVs, sound systems, cars and cruises.

6) Reduce Your Tax Burden – People with big salaries but few investments tend to have lots of taxable income while those who have invested in real estate, businesses, tax free retirement accounts and more tend to owe minimal taxes at the end of the year. Invest your money wisely before the government takes it from you.

7) Review Your Situation Regularly – It would be great if we could make a few basic decisions, chart a financial course and put things on auto pilot. However, we live in a world where conditions and situations change at breakneck speed and so it’s important to stay on top of things by reviewing the effectiveness of your strategy at regular intervals. Don’t be afraid to make adjustments when needed.

8) Save, Save, Save – So far we’ve talked a lot about funneling your money toward income generating assets but that won’t be possible if you don’t exercise discipline and save, save, save. The person who can transcend the salary trap and reach financial independence is more of often than not the person who had the funds necessary to make that life-changing purchase or investment when the opportunity arose. And that was only possible because they saved enough money.

9) Don’t Depend on Education – Some people think if they go back to school to enhance their education they’ll wind up financially independent. Few things could be further from the truth. Education can be valuable in giving you a well-rounded world view and higher education is essential for careers in medicine and law, but for most people purchasing a car wash will be a better allocation of funds than going back to school.

10) Marry Wisely – Few things will torpedo a plan to gain financial independence faster than marrying someone who doesn’t see eye to eye on the importance of savings, investments and the purchase of income generating assets. Accumulating wealth is a long term process that requires everyone to buy into the game plan. Otherwise you could come home one day and find your spouse has bought a car with the money you were going to use for a down payment on an investment property.

Remember: no asset that generates income is a bad asset. While waste disposal isn’t a glamorous profession everyone needs to have their trash taken care of. Don’t be shy about purchasing or investing in things that aren’t sexy headline grabbers. Your only criteria for deciding whether to invest in a particular business should be “is there money to be made here?”

The road to financial independence is paved with discipline and lit with income generating assets and investments. There are no secrets. No magic spells to conjure and no substitutes for careful planning and long term commitment to the goal. Follow the above tips and never lose sight of the fact that your job should be a means to an end, not an end unto itself.


How to raise money to start your own business

by Mrs Money

Self-employment in the UK is at the highest level since records began and job uncertainty and low wages is prompting more people to ditch conventional employment in favour of starting their own business. If you fancy turning your dream of becoming your own boss into a reality but you don’t have the cash to get it off the ground, here’s a few tips that might help you on your way.

1. Look at ways you can save money

It might surprise you to learn this but it is possible to save money simply by cutting back on your outgoings. You can do this without earning any extra money if you are stringent and frugal with your approach. Make a list of all your outgoings such as food, insurance, travel costs, leisure activities, phone and internet costs etc. Cut your food costs by eating out at restaurants and cafes less, shopping in cheaper supermarkets and swapping ready meals for homemade dishes. See if you can get better deals on phone or TV packages and cut your travel costs by walking as much as you can or asking friends or family to help with lifts. It isn’t forever, it’s just until you have saved enough money for your business.

2. Think about things you can sell

Most people have a few things around their homes that they don’t need, are unused or are simply taking up space. Have a good look through your draws and cupboards to see if you have anything you could get rid of. Clothes, computer games, electrical equipment. You can sell them on one of the online selling sites or by setting up your own shop ata local car boot sale. You might be amazed how much you can make by selling your unwanted stuff and it is also a good excuse to get rid of some clutter too. If you have a car, could you sell it and buy a cheaper one? If it is a gas guzzler could you replace it with a more efficient model?

3. Apply for a loan

If you have done all you can to raise money to start your business and still don’t have enough, then it might be time to apply for a loan. To approach lenders you will need to have a solid business plan, detailing how much everything will cost, where you will get your equipment/stock from and how much money you expect to make. It is worth making this comprehensive so that no stone is left unturned when it comes to costings and profit margins. If the bank refuses to give you a loan or you have bad credit then there are other options. Some people use their credit cards as a short term option and others use guarantor loans to help kick start their new company. You will need a friend or family member to guarantee this kind of loan for you but while they are usually more expensive than bank loans, they can be easier to get.

Related Posts Plugin for WordPress, Blogger...FacebooktwitterrssinstagramFacebooktwitterrssinstagram