Five Essential Habits to Reach Financial Independence
In broad prospective financial independence means having sufficient personal wealth or assets to live on without having to work constantly for basic necessities. And a financially independent person finds out ways to grow and generate enough income to cover all expenses. Basically generating an income which is greater than the expenses.
Over the years, I have seen people achieving this either through saving and investing or by building successful businesses that can generate income without daily supervision. There could be many other ways to reach financial independence but overall it’s actually a matter of taking the right steps early in life to develop sound financial habits. In this post we will discuss some wealth generating habits that can make financial independence a part of your future.
Say No To Consumer Debt – Interest Rates Shouldn’t Interest You
Credit cards, payday or car loans are such bugs which can bite someone to make him indebted for the rest of his life. You may be thinking it’s the best way to buy consumable goods and carry a balance but in short you are enriching the banks and not yourself. So the foremost step towards financial independence is to get rid of high interest debts as let your money work for you instead of the banks. But having said that there are few debts that help you make money. For instance education loans which eventually pay you back much bigger dividends in higher earning potential over the years. The same applies for real estate. If the profit gained by utilizing the bank’s money is greater than the interest you are paying to use the money, it’s a win-win for you.
Save First. Spend Later – Stitch In Time, Saves Nine, Remember!
To reach financial independence you will need to put your savings account in the picture first. You need to save a decent portion of your salary or income way before you set out for paying your utility bills, rent or others. You can easily set up an auto-pay direct debit into some kind of savings vehicle, so that it automatically finds its way before reaching your hands. Saving money is an essential habit to have for achieving financial independence. The earlier you begin, the less you’ll miss the money. The goal is to live with what’s left after saving – a great way to build wealth.
Invest In Rising Assets – Don’t Let It Be a Liability
Once you start saving you can’t just keep it hanging. You will have to invest the money in assets which in turn will generate your income. For instance you can invest in a property instead of giving out your money in rent or invest in mutual fund or in stock market which has a good long-term track record, and many investors build wealth that way. You don’t need much to get started – but you do need to start. And when you do simply focus on buying assets that will make you money.
AT SBS Financial Advisory we help our customers in mutual fund distribution and management with proper guidance and personalized investment solutions.
Follow a Budget – Or Debt Will Follow You
You need to have a budget for every penny you pay. Keep your expenses down to a level where you aren’t broke every month. Most people are shocked when they document where their money goes each month. You need to limit your purchases on perky items and learn to set aside a certain percent of your income for saving and investing as discussed before. You can even utilize online tools (very common these days) that link with your bank account and help yourself with budgeting. The ultimate mantra is to live within your means and save the rest to build up your long-term economic equity.
At SBS Financial advisory, we believe each customer is unique and so is their need. So we customize investment plans based on the investment goals set by them and help them attain the same.
Keep Investing – The Motto Is To Grow More
Investing over a long term will gradually bring you close to your goals. You will have to keep investing in the market irrespective of the good and bad years. It’s much easier to keep buying no matter what the market is doing. That way you’re accumulating wealth over the long haul.
Financial independence is a long-term goal, you can’t achieve it over-night. We all need to take a long-term perspective and not give up even when things look tough. But like all great journeys, patience, perseverance and the right steps will take you to your goal in no time.