Financial Independence. Why is it so important?
Financial Independence means liberation from Wage slavery, a situation in which a person’s livelihood depends on wages or a salary, especially when the dependence is total and immediate.
In other words, it is a condition that you reach when you have enough money and investments to afford the kind of life you want for yourself and your families.
To reach this condition you must have a constant increase of your savings and investments that allow you to retire if and when you want, or do a job you really desire to do.
When you reach Financial freedom you can stop working to make money, because your money is working hard for you.
When your money makes even more money, you are on the highway to financial freedom!
Reaching F I R E is a matter of Shockingly Simple Math.
To reach Financial Freedom you have to reach a number: this number is your passport to Freedom.
How to calculate this number?
When will I be free?
To make it simple, calculate your total annual expenses and multiply that number by 25.
This is the amount of money needed to achieve financial freedom.
If your annual expenses are $40,000, multiply that by 25 to see your financial freedom number. In this case, It is $1,000,000.
Here some great calculators:
What if your Financial Independence number is too high?
It simply means that there is something really wrong with your life, that you should seriously ask yourself some questions, and that the problem is urgent and cannot be further postponed.
The problem can be posed in these terms: you are spending too much or you are wasting your time and your vital energy for a job that gives you a very low income.
There are only two options.
1) reduce your expenses.
2) increase your income.
This is up to you and your intelligence.
Consider this simple principle that underlies any planning for your future financial freedom and repeat it like a mantra: “Earn more than you spend. Invest the surplus. Avoid debt”
The journey to financial freedom is not an unbridled race to get rich quickly, but a slow journey where you can enjoy the view, being careful of the holes and obstacles you will encounter.
Financial freedom does not mean that you are “free” from your responsibilities to manage your money well.
Totally the opposite.
Having complete control over your finances requires sacrifices, suffering, time and hard work.
But don’t worry, one day you will be amply rewarded for all this.
What you need to do, first of all, is to establish life goals, both large and small, monetary and lifestyle
Next, you need to create a plan for achieving these goals.
The achievement of your goals must necessarily take into account the principles I said before: “earn more than you spend, invest the surplus, avoid the debt”
Add two more principles to scrupulously follow and your path to financial independence will be smoothed out: “Live below your means; be frugal”.