Welcoming the euphoria of independence that will arrive in a few days, we will now discuss financial independence. Who does not want financial independence? Before going far there, have you known what financial independence means and how to achieve financial independence? Check out more in the points below:
What Does Financial Independence Mean?
The definition of financial independence itself actually varies from one person to another. This happens because everyone has different financial goals. There are those who think that by having savings with a nominal amount that is already quite independent, there are those who think that if they already have a number of luxury cars already independent. On the other hand, there are those who think that if they already have their own house without having to rent, they are already quite independent. In other conditions, there are those who think that new financial independence is obtained if he is free from all the debt problems he faces.
So, the definition of financial independence must indeed be adapted to your personal conditions and targets.
The definition of financial independence according to Studs Lonigan is if someone is free from credit card debt or KTA that ensnares him. If you are free, usually the person has a new debt-free beginning, which allows him to take steps to change in his life. For example, you can start repaying your house, save for emergency funds, and of course a calm and prosperous life without interruption of debt collector!
How to achieve financial independence?
Create a Definition of Your Financial Independence Personally
It is undeniable, how can you achieve financial independence if you do not set personal goals. By making a personal definition of financial independence, you will find it more difficult to determine direction. Think about what strategies should be built, and how much money must be collected to achieve that independence.
For example, you make a definition that new financial independence occurs when you already have a private home and stop living from a contracted house. Obviously, you also have to make specific goals. What kind of house, in what area, then what number of houses is considered to be sufficient? After knowing the type of house you want, then you can start to develop a strategy so that these goals can be achieved. So in the period of time ahead, you really can have a house that has been dreamed of.
What is the definition of financial independence in your opinion?
Evaluation of Current Financial Conditions
After setting your desired target, you can start evaluating the current financial condition. From here you can only assess whether these conditions can make you quite sure about the current financial condition. You can also know whether you are at the point of financial condition that you want or even a lot of financial problems that must be resolved. You can also see, from the target of financial independence that you have made, what percentage of your current success? Do you still have to experience improvements?
Create a Short and Long Term Strategy
To achieve financial independence, you also have to start forming short-term and long-term strategies. For example, the definition of your version of financial independence is to be able to retire early with sufficient money, so you do not need to work to old age. That means you also have to take into account everything from today’s productive age. Calculate what nominal should be set aside to save every month, then what expenses should be cut, then is there a financial problem that must be solved first so that you can achieve financial independence. See also, do you need to find a side job to get additional income to achieve the target of the financial independence you want. Do you need to invest, or do the other side to achieve the expected nominal target?
In essence, you have to know how much the nominal target must be successfully collected within one, five, up to ten or even the next few years. So, you can run a long-term and short-term strategy with more order and direction.
If Currently Still Have Financial Problems, Finish Now!
In achieving financial independence, there will usually be a barrier that makes it difficult for you to reach that target. If your current barrier is because of the many sudden costs that often arise, it means that there must be a solution to overcome this. For example, by routinely saving emergency funds.
Other problems can come in the form of debt. For example, the purpose of your financial independence is to have a private home. However, this is hindered because there is still a credit card arrears, which makes it difficult for you to apply for a mortgage to the bank. That is, the problem that must be solved now is to resolve the arrears so that later on you can start applying for mortgages that last for several years to come. If indeed the problem of credit card debt or KTA that you have is really burdensome and feels difficult to resolve, then try to look for options that can be utilized. It is not impossible to start by looking for a debt problem consultant, so you can start managing money properly, and start resolving debt problems in arrears slowly.