More and more we are hearing about the concept of Financial Independence. Who hasn’t dreamed of not having to work for a living?
Most of us have to work. Few are fortunate enough to have inherited real estate assets that generate enough income for them to live without working.
In order to live without working we should rethink our current financial situation, analyze why we live and work to pay certain expenses.
Let’s think about everything we are obliged to buy and finance with a loan from the bank. Do I really need it or could I live without it? What is meant by financial independence?
Financial independence is achieved when our expenses are lower than the passive income generated by our assets, that is to say, when we manage to generate sufficient income not from our work but from our movable or real estate assets to be able to live.
Achieving financial independence means not having to dedicate our time to “work”, as we know the concept of work today.
This is the dream that, perhaps, we will achieve at the time of our retirement when we can have all the time to devote ourselves to “doing” everything we like without having to go to work.
We still have many years until retirement, so let’s focus on what we can do now to start achieving financial independence.
Reading some of the lucky ones who tell how they have managed to achieve financial independence, they all agree and have as a common point that they started working and saving from the first moment they earned their income.
The key is again in saving, in getting used from the beginning to saving.
And they also coincide in having been very strict in their expenses, they have even managed to spend only 25% of their income, an extreme that is not necessary either.
But it is key to know what our expenses are, analyze them and not “carry” our backpack with unnecessary “stones” that will not allow us to advance on our long road.
Let’s identify our financial and non-financial assets, relate everything that makes up our wealth and put it to work. We can also start, even if it takes a little longer, to build our productive assets that work for us.
It may seem obvious to allocate part of our income to savings, and when we have a certain amount of savings allocate them to an investment and reinvest the profits generated by our savings. It is so obvious to us that many times we forget and spend more than we earn, forcing us by consumerism to borrow financially more than we can.
If we aspire to achieve this financial independence we cannot spend more than we earn, and we must allocate part of what we earn to savings. If you don’t want to have to work to pay off the bank’s loan receipts, you’ll have to start doing something to achieve financial independence.