How To Become Independently Wealthy
Many of us dream of having enough wealth to walk into work one day, tell our boss, â€œI quit!â€ and walk out the door never to return. To not rely on anyone else financially, or on employment to support yourself is commonly called being independently wealthy. Becoming independently wealthy doesn’t usually just happen in an instant, unless you win the lottery or have a rich family member leave you their riches in their will. It takes hard work and very specific actions.
Step 1 To Becoming Independently Wealthy: Create Financial Surplus
The first step to becoming independently wealthy is to create some cash within your current budget to work with. You’ll want to evaluate each of your expenses, and cut anything unnecessary or that doesn’t give you enough value to make it worth it. You might also look to increase your income by working overtime or a second part-time job. Through a combination of reducing expenses and increasing income the goal is to give yourself funds to work with to get the process going.
Step 2 To Becoming Independently Wealthy: Create Passive Income
A person working to become independently wealthy will use the funds generated in step one to generate passive income. Passive income is money earned by a person not having to put in any effort. In other words, it’s putting your money somewhere that it grows on it’s own. There are many popular ways to do this:
- Invest In The Stock Market : As the stock market goes up, your initial investment will grow. There is, of course, some risk as the stock market could go down. However, over the long term, the stock market trends upwards providing a return higher than a simple savings account.
- Invest in a Business : Maybe your best friend is starting what you believe will become the hottest new place in town. All he needs to get started is some capital. You can invest your money for a slice of the profits.
- Invest in Property : Over time property values go up. While you’re waiting you might even be able to rent it out generating rental income generating additional income.
Step 3 To Becoming Independently Wealthy: Diversify
To reduce risk, someone working to become independently will put their money into several different wealth building techniques to protect their wealth should one of them not work out. For example, if your friend’s business doesn’t turn out as expected, you would still have your stock portfolio and your rental property.
Becoming independently wealthy is not a get rich quick scheme. It takes hard work, and time to let your money grow. When the income generated from these activities exceeds your cost of living, then you no longer need to get up in the morning and go to work. You have become independently wealthy!
Check out these articles:
Top things to remember when applying for a loan
Thinking of becoming a member of the National Consumer Panel?
A review of Blue Apron
Saving on water utilities if you have a pool
Which is Cheaper: Keg or Canned Beer?
Brought to you courtesy of Brock
Brock is a software engineer by day and personal finance blogger at night. He is a fitness junkie and enjoys grilling and smoking meat. Married with two children, Brock strives to improve his skills as a husband and father, and is always on the lookout to stretch his family’s budget as far as he can.