Do you want to be financially independent?
Imagine a world where you have amassed enough wealth never to have to work again…
Isn’t it too good to be true?
It’s feasible, but not impossible.
Many people have accomplished this seemingly impossible task before you.
To different people, financial freedom implies other things. Having the financial freedom to buy anything they want or not having any debt is essential to some people. While it may entail safeguarding one’s financial future for some, for others, it may simply mean the ability to retire early or merely be affluent.
But, whatever financial independence means to you, achieving it successfully will involve a lot of hard work and forethought.
Let’s take a look at seven financial methods you can use to get closer to your goal of financial independence in 2022.
Take a peek around.
- What Is an Appropriate Amount of Money?
This isn’t a question I’ll answer for you; it’s a question you must answer for yourself…
…ask yourself how much money you’d be happy to retire on.
This may appear to be a simple question to answer. If you’re in your 30s and plan to live to be at least 80, you’ll need to budget for fifty years. Or just hover over google and search for a paystub generator to get your answer.
For argument, let’s say you’re content to live on $50,000 a year, which works out to around $2.5 million.
The problem is that this sum of money may not be sufficient.
Inflation, unanticipated costs, investment failure, and so on must all be considered. No matter how many calculations you undertake, the world’s financial markets are intrinsically volatile, making it challenging to prepare ahead.
As a result, double that $2.5 million figure by two or three.
Seriously, that’s how much you’ll probably need. Even if we assume a 3% annual inflation rate for the next 50 years, anything that costs $50,000 now may easily cost more than $200,000.
That’s a significant difference and one you’ll have to account for when calculating a sum of money you’d be satisfied to live on for the rest of your life.
- Make More Money While Spending Less
Isn’t it self-evident?
Sure, it’s self-evident, but it’s still crucial.
Cutting back on spending and raising overall income is crucial for obtaining financial independence in 2022.
Minimizing your expenses could entail looking for more cheap accommodation, lowering your transportation bills, cooking at home, and so on.
What about earnings?
Maximizing your income isn’t always easy, but it’s the only way to achieve financial independence in 2022. Upskilling, looking for better-paying employment, seeking better-paying roles inside your current employer, or even asking for a raise are all options.
If a corporation believes in you and your abilities, it will pay to keep you. If they don’t, don’t be afraid to leave and find someone who does.
- Self-control is essential.
It’s not easy to give up some of life’s conveniences. Unfortunately, to fully achieve financial freedom, you’ll almost certainly have to give up a few guilty pleasures.
You’ll overspend or, worse, take on unneeded debt if you don’t have self-control.
You will prolong your need to work and delay your potential to retire early if you do so. However, if you can acquire financial self-control, you will save a tonne of money, “protect your energy”, and retire much sooner.
- Raising Your Savings Rate
The average person puts less than 5% of their discretionary income into savings. Many financial gurus caution that this is insufficient to retire on.
As a result, it’s a good idea to calculate how much of your disposable income you may be saving. Put aside that amount in a savings account, whether it’s 10%, 15%, or 20% of your salary.
You never know when that money will be helpful.
Not only is it money you can retire on, but it’s also the money you’ll need if a significant investment pops up out of nowhere.
- Put your money to good use.
Learning to save money is essential for early retirement, but you must also be prepared to put your money to work.
Always ask yourself, “How can I get my money to generate more money?”
This type of thinking can open up a lot of opportunities for achievement. For example, if property or shares are purchased at the correct time, they can make a significant impact throughout a lifetime if carefully invested.
Mutual funds and bond investments are two other options for investing your money. These investments can yield a solid return with little know-how.
Another investment option to consider is high-yield savings accounts. There are numerous options available. Shop around, lock in a set amount of money, and sit back and watch your money work for you.
- Side Businesses
A good side hustle can significantly improve your financial situation. This extra income in your savings account or investments might make a massive difference over time.
Also, depending on your side business, you may be able to establish a financial asset that you may sell for a profit later on.
You may read more about side hustles you can conduct from home in this recent article we wrote.
- Broaden Your Financial Understanding
You’ll need to broaden your financial knowledge if you’re serious about obtaining financial independence in 2022.
You are consolidating in your mind strategies to gain money by doing so strategically. Investments may not appear as intimidating as they previously did, and with a bit of know-how and sound financial practices, you may seize investing opportunities as they occur.
You can’t expect to make money unless you know the fundamentals.
Get out there and read all you can, listen to podcasts, and keep an eye on the stock and real estate markets. Before you know it, you’ll have a strong sense of where to invest your money and when to sell any assets to make a profit.
You now have some guidelines to follow to obtain financial independence. Everyone’s journey to financial freedom will be different. As you travel, adjust your spending habits to balance your immediate necessities and your long-term goals.
What steps are you taking to become financially self-sufficient? Let us know what you think in the comments!