5 Steps to Financial Independence – It’s Time to Get Out of the Rat Race!

by Mike
5 Steps to Financial Independence

Fire up Facebook, Twitter, or any social media app any day of the week, and you’ll get bombarded with ads and posts promising you the world and claiming to offer the secret formula for a ticket on the gravy train.

Here’s the thing; there’s no way to get quick riches without putting in the effort, and getting out of the rat race involves much more than following get-rich-quick schemes that bank on selling dreams for desperate people.

So, how can you really achieve financial independence and end up with enough money to spend your days on the beach without worrying about your expenses?

Knowing that time is a luxury that you shouldn’t waste, here’s the blueprint for true financial freedom through proven steps endorsed by the biggest entrepreneurs.

1.Become a Cheapskate and Take Control of Your Expenses

Sure, everyone wants to eat out, try fancy restaurants, and party all night. But let’s be honest for a moment here; do you really feel satisfied after spending a whole night pouring your hard-earned cash down the drain and spending it on things you don’t even need? Not likely.

The first step towards financial freedom is rationalizing your expenses, which makes total sense. After all, the less you spend, the more money you’ll have that can be put into good use, either as an investment or a nest egg.

In a nutshell, embrace an affordable lifestyle, and you’ll be one step closer to early retirement.

The question is; how can you do that? How can you spend less money?

Set your budget beforehand

Every goal requires a strategy, and no plan equals no result. To kickstart your money-saving journey the right way, you need to budget your cash properly. This especially applies to two areas in your life; food and recreation.

Eating out too often can wreak havoc on your budget, but so can making your own meals if you don’t plan your budget. The same applies to recreational activities, so make sure to have your budget planned at the beginning of each month, and don’t forget to spare some cash for unexpected events.

Eliminate unnecessary expenses

Are you REALLY hitting that golden-membership club every Sunday? Do you REALLY need that cable TV subscription? Is that online shopping membership REALLY beneficial for your budget?

Get a piece of paper, write down all of your recurring expenses, then start determining what’s REALLY needed and what isn’t. Finally, cut out any unnecessary expenses that you don’t need. When you do that, you’ll notice that you’ve been basically wasting a big chunk of your budget on things that you’re not even using. The end result will be quite satisfying and relieving.

Say “no” more often

Let’s go through a hypothetical. One second you’re reading a book on your bed, the next you’re opening a Rombauer Chardonnay bottle with your friends, all because you couldn’t simply say no and turn off the lights.

Does that sound familiar? If so, know that learning to say no when you need to can be a really beneficial skill and save you a lot of money, so make sure to practice it more often.

Don’t forget your taxes

Taxes are often ignored by many people while planning their way towards financial independence, but the matter of fact is that they do matter.

If you really want to be a financially-independent individual rather than just someone hardly getting by, you need a stable tax strategy. Start by determining which account is the most tax-advantaged for you, and make sure to do everything you can to fund your retirement plan fully.

Also, remember, the devil’s in the details, so make sure that even the smallest of your decisions won’t result in a taxation catastrophe.

2.Start Saving the Right Way

The secret to effective saving is to put as much as you reasonably can into high-interest saving accounts.

If you save one percent of your income, you’ll need to work 99 years to save enough for one year of expenses. If you save ten percent, you can do it in 9 years. If you save 50 percent, you’ll be able to do it in a single year, which would be quite the achievement.

It’s simple math. The more you save, the sooner you’ll reach financial independence to be able to spend more time working on your passion projects and enjoying life with your family and friends.

As mentioned above, don’t forget to do your thorough research before choosing your saving account. Find one with high interest, but that’s also tax-advantaged for your situation.

3.Find New Streams of Income

Sure, cutting down on expenses can save you some money, but the road towards financial independence is tough, and pinching pennies each month won’t allow you to live comfortably in Bali. You need surplus funds that you can invest in different investment opportunities.

So, what can you do besides adjusting your lifestyle and asking your boss for a raise or promotion?

You need a new stream (or streams) of income, of course.

Mind you; we’re not talking about get-rich-quick schemes here. Instead, you need to find a sustainable second source of income through which you can get rewarded for the efforts you’re making.

Take a look at your interests, talents, and strengths, and find a way to monetize them. You know what they say; “If you’re good at something, don’t do it for free.”

Are you a good guitar player? Perfect, we’re sure many neighbors would be interested in learning how to strum power cords properly.

Do you speak a second language? Start teaching people French or Spanish! Nothing’s better than a foreign language tutor in the neighborhood.

Do you know your way around electronics? Maybe it’s time to turn that garage into a local repair shop!

Do you believe in your Shakespearean writing gift? Become a freelancer and start writing masterpieces for cash!

The choices are endless, and the gigs and opportunities that can make you good extra cash are everywhere. You just have to look hard enough, determine your own strengths and weaknesses, and never, ever, should you sell yourself cheap.

4.Network with Like-Minded People

For successful entrepreneurs, networking is everything. A businessman may even delve into a multi-million trade just to get into a meeting with a specific person.

Now, we’re not asking you to start contacting rich people hoping you’d get to the same level overnight. Instead, you need to apply the same principle in your life and surround yourself with like-minded people. After all, you are whom you spend most of your time with.

Your friends and spouse should be equally frugal, disciplined, and investment-oriented if you don’t want to get overwhelmed by the financial and social toll that going out with the wrong friends or marrying the wrong person would take on your life. Avoid people who like to spend their cash on useless stuff, as you’re most likely to adopt that lifestyle if you spend your time around such individuals.

5.Take Control of Your Time

Financial independence isn’t only about money management, but also time management. Time is money after all, isn’t it?

There’s a world of difference between hitting the office every morning full of enthusiasm and doing so while you’re cursing the day you were born.

If you’re in the first situation, congrats, you’ve already achieved financial independence, or a part of it, since your time is your own and you like what you’re doing. Believe it or not, economic freedom isn’t only achieved by spending your days in hotels and nights in bars. That’s what social media and fake entrepreneurs are teaching us. The reality is, financial independence is doing what you really want to do, whether it be traveling and drinking, spending time with family and friends, or working in an office with people that you like.

If, on the other hand, your current situation isn’t really satisfactory for you, you have two choices:

Do you have a well-paying job? Can you withstand continuing to see your boss’s face every morning for a few more years? If so, then by all means, don’t quit until you’ve managed to save enough money to cover your expenses (unless you’re having psychological problems. In that case, seek help and find something that wouldn’t’ destroy you from the inside).

If you’re just scraping by through your job, consider switching careers and finding something that can really get you on track towards financial freedom.

Verdict: Is Financial Independence Really Possible?

Yes, financial freedom isn’t an impossible dream, but a reality that can be achieved through proper management and planning. The thing is; it’s not for the faint of heart, as the road can be tough. It starts with small changes and details, but they do add up in the long run, so don’t neglect anything if you really want to be raking in the dough and sipping champagne in Greece without having to worry about your income.

Have you tried achieving financial independence before? What challenges did you face or are you currently facing? Share your experience in the comments; we’re eager to hear it!

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