Thursday, January 26, 2012
Financial independence is a term that's used a lot today. What does it mean? I define it as having a source of income other than paid employment that covers ALL of your living expenses. This is possible to achieve in a capitalist system. Is it easy? It most certainly is not. I think most of us are taught to get jobs then spend all or more of our earnings on consumption items. This is not the way to build wealth. It's inevitable that we'll all reach a point where we're no longer able or don't want to work anymore. Why not plan for it now? So building capital of some kind comes to the front of the line if you want to be free from the grind. The foundation to all this is to keep expenses lower than income always so your surplus is free to be employed to produce freedom. Remember a consumption spending based lifestyle is a treadmill. I'd rather jog outside. Remember appearances can be deceiving. The person with all the flashy stuff often has little real wealth, and they often are deeply in debt. If you have a source of income today then it's possible for you to get on the path towards financial independence. Start small. Aim to pay a little bill with some sort of recurring income then repeat. That's really all there is to it. Enjoy the process. Always think about ways to make an income that doesn't depend on you being in a particular location or showing up and trading hours for dollars. Even if you never pull it off it's fun to dream. You are only truly financially independent when you don't have to work for survival anymore. Until then enjoy yourself.