Defining Financial Independence
So What is Financial Independence?
Financial independence is simply defined as having the means to maintain the lifestyle you choose without having to actively work. It is a state of economic well-being where the passive income generated by investment assets is sufficient enough to cover your expenses consistent with the type of your lifestyle.
Stated in much simpler terms, you are financially independent when you are capable of having to no longer work to provide for your basic needs.
What is wealth and when is a person wealthy?
Most define wealth as having lots and lots of cash and assets. This is clearly not the case. Wealth is a condition where your present financial resources are capable of supporting your lifestyle over a period of time without the need to generate more income.
Wealth is also based on how much time you have left living. If you are in retirement and approximately have 15 years to go, and you have the financial assets good enough to support your lifestyle for the rest of the 15 years, then basically you are wealthy. If you however, only have financial assets good for 10 years, then you are not wealthy enough.
How do I attain financial independence and success?
Contrary to popular beliefs, financial independence and success can be achieved at any age. Generating sufficient passive income is the key. Also remember that saving and accumulating financial investments takes time. This is why it is important to recognize the importance of financial independence early.
And the benefits of attaining financial independence early?
Achieving financial independence early in your life simply grants you the ability to live your life fully and share your bounty to family and community. Being able to share is no doubt one of the greatest sources of satisfaction. Attaining financial independence can simply give the most fulfilling experience you can ever have in your life.
Do I have allies that can help attain financial independence?
You do have allies; they can help you in reaching your goals.
- Compound interest
What can be my obstacles to attaining financial independence?
There are many, and most include personal traits. The most important ones are as follow:
Fear of failure
Poor spending habits
Lack of discipline
Lack of financial literacy
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