Financial security is something that we all aspire to, even if this means something slightly different to each individual. There are certainly different ideas about the precise amount of cash that would make you financially independent, while the motivations for pursuing this objective will also vary from one person to another.
In technical terms; financial independence means having enough wealth to cover costs and living expenses without being dependent on others, such as employers or benefactors.
However, the idea of achieving this status without a job is fanciful in most instances, and in this respect financial independence often refers to being free from debt, mortgage repayments and holding assets that can sustain you into your retirement.
Regardless of what financial independence means to you and your own personal circumstances, you’ll need to take proactive steps to achieve this aim. These can include:
Minimizing Debt
We’ve already touched on the spectre of debt, with Britons owing a whopping £72.5 billion on credit cards as of January 2019.
This can place a significant strain on your finances, particularly in instances where interest has started to accumulate and your monthly repayments are no longer servicing the original debt.
You therefore need to take steps to minimise your debt, initially by calculating your total liability and ensuring that minimum payments are maintained each month and on-time.
This should prevent interest and late charges from inflating the debt, enabling you to reduce it gradually over time.
Seek Out Financial Advice
Let’s face facts; you’d never dream of rewiring your entire house or building an extension by yourself, at least without the necessary qualifications or experience.
With this in mind, it makes sense that you should also seek out expert guidance from advisors when looking to achieve financial independence. So long as you partner with a reputable and licensed advisor, you can access tailored advice that allows you to make the most of your short and long-term finances.
During this process, your advisor will try to understand your own unique interpretation of financial independence, while determining how much you want to spend now and save for retirement.
It will also highlight viable investment opportunities, which can deliver long-term yields over a sustained period of time.
Consider Increasing Your Earning Potential
There’s an old adage which states that “you have to speculate to accumulate”, and this typically refers to investment and the pursuit of additional income streams.
It can also apply to any type of additional or passive income, which can be established alongside your day job to boost your earning potential and help you achieve greater financial independence.
You could consider marketing your skills as a freelancer in some instances, for example, or consider risk-averse and reliable investments such as dividend stocks. In the case of the former, just ensure that you can complete such work without breaching any contracted terms with your main employer.
