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Good day to all! How to gain financial independence, where to start and how to achieve financial stability are questions that are not raised in the classroom at school or university. These questions are not able to answer many parents, even those who have managed to succeed. Therefore, today I decided to touch on this important topic for every person.
Types of economic condition
- Money hole. In this option, income does not cover expenses at all, so you have to constantly borrow money to pay off the previous ones. Accordingly, there can be no talk of savings. This state is very difficult, but it is quite possible to get out of it.
- Instability. The ratio of income-expenses is approximately equal. If debts happen, then for a short period of time. Due to the fact that there are no savings, any unforeseen situation (loss of a job, illness …) can drag you into a money hole.
- Stability. In this case, it is possible to receive more than to spend. And even if a crisis situation happens, a person in this state may well hold out for several months.
- economic freedom. In addition to the fact that income significantly exceeds expenses, existing liabilities do not need to be included. And there are also significant savings that can be sustained for a very long period of time.
Types of cash flows
- Expenditure capital. These are your monthly expenses for food, utility bills, clothing, and more.
- Savings. These are deferred amounts that you plan to spend after a certain period of time on a planned goal. For example, a vacation at sea in the summer, or buying a new fur coat for your wife, a car, and so on.
- Reserve capital. This is exactly the money that is set aside in case of unforeseen circumstances.
- working capital. These are the means by which you can confidently call yourself a financially independent person. And accordingly, they are always at work, whether it is an investment, an investment in a bank, real estate or the stock market.
10 Tips for Financial Independence
1. Attitude towards money
To begin with, let’s define what money is for you, what does the concept mean? Because if you think that this is punishment or dirt, it is unlikely that you will be able to go against your convictions in order to increase the punishments in your life. Thus, an internal conflict arises that is important to resolve in order to begin moving towards financial freedom.
2. Goal setting
We have already talked about this, but still, it is necessary to clearly set a goal. Not just, in general: “I want a lot of cash”, but a task that will motivate you to work hard, someone has a car, someone has their own house, it doesn’t matter, the main thing is that you understand what it is and how much is needed for achievement.
I recommend reading a previously published article: “How to set goals correctly in order to achieve success in any activity.”
3. Income distribution
Learn to distribute your income. In addition to the necessary payment of bills, it is important to allocate an amount that you can spend on yourself. Because it often happens that people fall into extremes — from excessive savings to buying a bunch of unnecessary things. You have probably heard more than once that you need to look for options where to earn money, and not save money. But at the same time, sound control of profits and expenses is simply necessary. You should not overly limit yourself, otherwise there will come a moment when you break loose in order to satisfy your “bare” needs.
4.Responsibility
Money is a responsibility, and the more money, the more obligations. Therefore, try to honestly answer yourself: “Am I ready to take responsibility for my choice? For the consequences of the decision? After all, if you take a risk and decide, for example, to open your own business, are you ready to tirelessly invest in its development in order to get results only after a certain period of time? Cope with a series of difficulties, limit yourself in some way due to constant employment?
5.Credit card
Try to use only cash for payments. Credit dependence does not allow you to control your expenses, and besides, it sucks you into a debt hole. You quietly fall into traps, making unnecessary purchases, for which you also owe.
6. Faith in yourself
Send the right thoughts to the Universe, or, in other words, believe in yourself. If you constantly think that you won’t succeed, that you don’t have such opportunities as others, your energy will be wasted, causing constant anxiety, dissatisfaction, and as a result, irritability.
7. Alternative income
Think about alternative income, maybe you have an apartment that you can rent out, or unnecessary things that you can sell? Yes, in the end, a bank deposit at interest can also bring, albeit minimal, but still passive profit. There is even a formula for material independence: Passive income — Expense => 0. And if the result is just 0, it already indicates its absence.
8.Money energy
Money has energy. And if you are fixated on the desire to earn a lot, being angry that it doesn’t work out, do you think it will be possible to attract this energy to yourself? If you love her despite the fact that she is absent at some times, and will gladly accept when she appears, this will help to establish the process. After all, you also do not want to go to visit friends who are angry with you? Not much fun, right?
Likewise, monetary energy resists being present where it is not accepted with gratitude. Have you noticed people next to whom money is in the air? Whatever business they undertake, they always make a profit as a result? All because they know how to appreciate it.
9.Savings
Always set aside at least a minimal portion of every income in reserve. If an unforeseen situation happens, you can use it instead of borrowing or applying for a loan. In this case, financial freedom is out of the question. Calculate so that the amount is enough for you for six months, in case you lose your job. Set it aside separately from all the distributed parts, and do not touch it under any pretext.
10.Home bookkeeping
Keep a home bookkeeping, it will be much easier to track and control waste. Most often, they answer me that they calculate and hold information in their heads. But this approach is wrong and does not work. Even billionaires know where their every penny goes, not because they’re cheapskates, but because they’re so good at managing entire fortunes because of this ability to track and be aware of everything.
Exercise to understand your attitude to finance
Most often, we ourselves stand in the way of our financial independence, sometimes without understanding the inner fears that stop us from achieving. Ask yourself the question: “If I have more money, what will I lose in this case?”.
Listen to the answers that come up, allow yourself to reflect, and believe me, some of the answers may surprise you, revealing the true cause of money-related difficulties.
For some, it is the fear of losing self-respect, for others, family or friends, for someone their freedom or reputation is too valuable … You may have a completely different option, different from the examples, but at the same time limiting opportunities and the path to material well-being.
Recommendations
Learn
Study the stories of successful people, look up to them, explore the history of their progress, perhaps their ideas or situations are similar to yours, and then this similarity will be support and inspiration for you. Consult with acquaintances who are successfully doing business, be more in their environment, make useful contacts. Soak in this “money aroma” that hovers around people who know how to attract and keep it.
I advise you to read the article on the blog: “Real stories of people who have achieved success with their work and perseverance.”
Bring your talents to the masses, even if it’s just the ability to bake delicious pies. Many great people offered their services in the markets, there is nothing terrible about that. Promote yourself, and over time, when you get comfortable, you can move into the phase of passive income, when these skills already work for you. Gradually, gradually, you will orient yourself and be able to achieve financial freedom.
Explore
Explore the market in order to find a niche that does not yet have fierce competition. Or, if you already have ideas, write a good business plan that you can present to investors. And it rarely happens when a potential investor is immediately found, so do not lose hope and do not stop, even if you hear “no” 15 times in a row. Knock on other doors, and they will surely open for you. There is a famous author under the pseudonym Doctor Suess. His first book was rejected by 27 publishers. Now his literature is the market leader among popular children’s authors.
Learn
Learn not to make hasty decisions. Yes, you have to think fast, but when it comes to finances, you have to consider all the pros and cons, risks and rewards. Panic and fuss can play into your hands, money does not like it.
Invest
In addition to investing in stocks and the like, invest in your education if you can move on to a better paying job or expand your knowledge to run your own business with the help of advanced training.
Save money
You can also reduce costs by breaking bad habits, by buying only the things you need from a pre-compiled list, during seasonal sales, or in wholesale stores. Close loans and pay off debts.
Work
But you can also increase the level of profit with the help of part-time work on the weekends, in the evenings on the Internet. Think about how a hobby can bring you money.
Conclusion
Overcome all your fears and doubts, take risks, keep track of profits and expenses, and in time you will achieve financial freedom, when your money will work for you, requiring only a minimal involvement in the process. Good luck to you and prosperity!