Financial Independence

 

Financial independence should be the goal of each and every person that gets up every day and goes to work for a living.


The problem is that most of us are so busy trying to make ends meet that we cannot even begin to think about how we are going to save money or create wealth.


Learning to save money and properly manage your current income is the first key to achieving financial freedom.


If you are not currently saving money on a regular basis and you are deeply in debt then you have some major work to do in terms of becoming financially independent.


Debt Management


When you pay creditors, that money is gone, lost forever but when you pay yourself that money is there working for you and helping you to achieve your ultimate goal of financial freedom. How can you expect to effectively manage more money if you can't manage what you have now? When it comes to debt management your top two goals should be to eliminate credit card debt and automobile payments.


Saving Money


A common mistake that so many people make is that they save money to spend it. When they get a substantial amount of money in their accounts they immediately start thinking about what they can spend it on ... big mistake.


If someone gave you $50,000.00 dollars today what would you do with it?


It is important to understand that you will have a very difficult time achieving financial independence if you don't learn how to systematically save money.


A key personal finance concept to the wealth building process is understanding that having money means having financial power and leverage.


Consider this simple example:


Two people apply for a loan to make a large purchase. One person has $20,000.00 dollars in savings and the other person has nothing in savings. Which of the two will get the best interest rate on the loan?


You guessed it! The person who has no money will actually end up paying the higher interest rate on the loan because they are seen as a higher credit risk because they either do not have money or can't seem to manage the money that they do have.


Financial independence begins with eliminating debt and systematically saving money. You start this process by simply paying yourself first. The amount that you pay yourself initially is not important because the goal is to develop the habit of saving money. You work hard and you are worth it!


Once you have mastered the process of saving you can then move to the next goal which is putting your money to work so that it builds wealth.


Develop the discipline to manage your money wisely so that you do not have to make bad financial decisions out of desperation. 


 

Money And Finance

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