How to Achieve Financial Independence and Experience True Freedom
Not everyone understands the distinction between financial freedom and independence. Even if they comprehend financial abilities, many people don’t consider the possibility that achieving these goals are within their reach. But what if there are ways you can work toward them?
The path won’t be easy – any endeavor worth doing is rarely easy. You will need to make a series of critical decisions and some significant sacrifices. Still, experiencing true freedom and independence will be worth the hard work that will be required to arrive in this coveted space.
The U.S. Federal Reserve conducts an annual Economic Well-Being of U.S. Households survey. Results released in May 2022 indicated that 78% of households reported they were “doing okay” or “living comfortably.” But what if you want to do better than okay?
Financial independence means that passive income pays for your expenses to maintain your normal standard of living. Financial freedom takes the passive income criterion one step further. Income earned passively is enough to pay for your expenses and cover the lifestyle you want, not merely the one you have now.
If you want to experience true financial independence and freedom, the time to start is now. Here are some steps you can take to go beyond earned income to passive income. The mountaintop is waiting for you – go for it!
Make Friends With the Right People
It would be difficult to make this journey completely on your own. You need to read about the journey – and hear from others who have succeeded in gaining this freedom. Even better, find spaces where you can discuss strategies, successes, and failures with like-minded people who share your goals, especially those who have traveled the rough road and made it.
“You will always hear me speak about mentors. I can’t emphasize that enough, says LifestyleInvestor Justin Donald. “Find mentors – those who are willing to teach you what they know.”
However, not all investment advisors and bankers understand financial freedom and independence, let alone how to achieve them. Make friends with people who aren’t just trying to sell you something. True mentors want to help you – and you want to be a person worthy of that help. An experienced mentor will guide you and help you explore your options, and you will find that many will remove the obstacles in your path.
Associating with individuals with the right knowledge and experience will be time well spent. Learn from them, collaborate with them, and even go into business with them if that makes sense. You can pay it forward down the road.
Use Investments to Make Major Purchases
Financial freedom means using only cash, investments, and savings to fund your lifestyle. It’s easy to stick to that mantra when you’re making small purchases. But you need to make sure you also comply when making pricier ones.
For example, say you want to buy a new home or invest in real estate. You’ll want to skip the typical route of the conventional loan. Instead, you’ll want to figure out how to pay for your home with an investment.
For example, if you own stocks, you might sell them to buy real property. You’ll need to consider the implications of capital gains–related factors, though. The timing of the stock sale, the type of stock, and its performance over the past year will determine the wisdom of this move.
In this example, you’re essentially swapping one type of investment – stocks – for another: real estate. Over time, real estate is generally a more sound, predictable, and stable investment anyway. So if you make this investment with wisdom, you’ll be making a really savvy move.
You can’t achieve financial independence or freedom by moving in and out of debt. The whole idea is to make what you have pay for what you want. And to do it without worrying about what will happen to your paycheck.
Build Your Passive Income
Financial freedom is rooted in passive income. You invest your money in the right places, and it earns money for you. Then all you have to do is enjoy the lifestyle the passive income provides. This doesn’t just happen on its own – passive income takes years, prodigious effort, and learning how to make it happen.
Most people live paycheck to paycheck. And we all know that paychecks these days can’t keep up with the cost of living. Certainly, a paycheck can’t keep pace with the lifestyle you are dreaming of.
Real estate provides enormous opportunities for you to earn passive income. Investing in multi-family properties begins to pay dividends immediately – particularly if you buy them with an existing investment. However, that income isn’t truly passive as long as you’re moving your own money and managing your own property.
Let someone else do the work for you. A multi-family office can manage all your investments, including your real property. After you have done everything to set up your passive income, you’ll want to leave the day-to-day management, new investments, and money moves to a trusted team of experts under one roof.
If you’re using separate companies for investments, property management, and banking, you won’t have time to enjoy your life. Working with a multi-family office does require an investment of its own. But the dividends will be well worth it.
Live to Live
You’ve probably heard the saying about choosing to live to work or work to live. In either case, work is involved; consequently, there is no real freedom or independence. The solution is to work your way toward financial independence and freedom. Of course, there will always be work of some kind, but when you’re truly free – this type of work is not drudgery – it’s a joy.
The live-to-live philosophy, outlook on life, and the joy it brings to you, your family, and friends can be done – and you don’t have to get there alone. Once you arrive, enjoy the experience of living the life you thought was only the stuff of dreams. Then it becomes your great pleasure to help and mentor others along this path of achievement.