Almost all people dream of achieving the level of well-being at which they don’t have to fight for every penny, that is, gain material stability. But how difficult it is to become independent of money?
According to Natalya Pritchina, a correspondent for LIME, many still have not been able to solve this problem. But if you follow simple strategies, it turns out that understanding how to achieve financial independence is very easy. Experts are sure that every person needs to sort this out.
Step 1. Setting a goal
If there is a clearly formulated task, achieving the desired is much easier. This rule also applies to financial independence. Before you save money or invest, you need to understand why this is done. This is also confirmed by Julia Ivanova, an expert in financial management, saying that it is important to describe from the very beginning what financial independence, expressed in specific figures, means to you. The point in the future where you want to come will be your vision and guiding light. Most often, the vision remains unchanged, but the strategy may change..
“Set clear financial goals: long-term for 5-10 years, medium-term for 2-4 years and short-term for 3-12 months. This, firstly, will help to control the situation, and secondly, it will help you and your brain to see decisions and ways to achieve goals. If you clearly understand the goal, you can make quick decisions and not miss out on the benefits. ” – says Katerina Zhizhina, an independent financial adviser.
• Short-term goals – can be completed in 3-12 months. It will take so much time, for example, to change work to a higher paying one..
• Medium-term goals – 2-4 years are allocated for achievement. During this period, it is quite possible to learn a foreign language or to acquire a new skill that will lead to a significant increase in wages.
• Long-term goals – you can achieve results in 5-10 years, for example, build a stable business.
Step 2. Planning
By setting a goal, the path to achieving financial independence is not limited. To complete any project, you need to make a plan that helps to achieve the desired result. It may look different, but in general terms it represents a certain route map from point A, that is, the person’s starting position, in B – the final goal that needs to be achieved. In this case, financial independence. In addition, the plan also marks intermediate goals (small everyday tasks), the achievement of which is one step closer to the main one and helps to understand how to achieve financial independence.
Coming to the final goal does not mean that planning should be abandoned in the future. According to Aleksey Bryzgalov, a businessman, the head of the public organization “Co – society”, financial independence is not a stable state, not a constant, but a process to achieve or maintain financial independence.
Strategy 3. Cash flow control
After drawing up the plan, it is necessary to take into account all available income and expenses. So believes Katerina Zhizhina, saying that it is boring and boring, but without this significant increase in prosperity there can be no. Any income can be spent quickly and ineptly: both 15 thousand rubles and 15 million rubles. It is not a question of the amount of income per se, but in relation to money. Rockefeller always scrupulously and carefully analyzed all expenses, even when he became a multimillionaire.
Be sure to count the money and carefully keep a budget. Only knowing the current state of affairs, and having planned expenses forward, can we move towards financial independence. Moreover, keeping the budget now has become much easier, according to Leysan Halikova, an expert at VIGTrans, saying that a lot has appeared phone apps, which help to keep track of expenses and income, as well as save a certain amount for your goals. This is a very convenient tool that really works and helps to develop self-discipline..
Natalya Pritchina, LIME: “Budget development is a necessary element in order to adhere to your main goals. Try it yourself: a well-prepared financial plan will become your main assistant in setting priorities. Thanks to him, you can avoid unnecessary impulsive spending. Do not forget about the most important: when money is spent haphazardly, there is always a chance that you will remain aground a few days before your salary ”.
Step 4. Creating a “financial pillow”
Another step in achieving financial independence is the formation of a special “stabilization fund”. It is an accumulation that can be spent exclusively in an emergency. “Money airbag” will allow some time to live in the usual mode with the loss of the main sources of income.
As a rule, the amount of the inviolable fund is calculated on the basis of the amount of monthly expenses. When calculating it, you will need a previously drawn up budget plan. The “financial pillow” should be equal to the amount of expenses per month multiplied by 6. For example, if $ 1,000 is enough to satisfy needs, then the “stash” should be $ 6,000.
“A financial pillow is your confidence in the future. With it, you can not worry much about crises and bankruptcies. A financial pillow is an amount equal to your expenses for 4-6 months. ” – Katerina Zhizhina, financial adviser.
Most likely, it will not work to immediately put the money necessary for the formation of the fund. Accumulation should be done gradually, replenishing the account every month. At the same time, it is better to save not a fixed amount, but a certain percentage of income.
“You must admit that troubles most often occur precisely at the moment when you are least prepared for them: a car broke down, a wallet with a bank card was stolen, a pipe broke. In such cases, the rainy day fund will be your savior. This is an important part of financial peace for any family. Force majeure situations, of course, happen to everyone, but they should not knock you out of the daily channel and break the usual system of life. ” – Natalya Pritchina, LIME correspondent
Step 5. Investing and additional earnings
Having gotten a “safety cushion”, you need to start achieving the next goal – increasing income.
“An effective way to increase financial independence is to increase sources of income: find a part-time part-time job, invest money, minimize your expenses, avoid credit cards and consumer loans (consumer debt implies that you charge money at a high percentage).” – Leysan Halikova, expert at VIGTrans.
How to achieve financial independence by making income higher:
1. Get a better paid job.
2. Find an extra side job.
3. Get a profitable hobby.
Natalya Pritchina, LIME: “Use your free time to the maximum, find a side job. Learn new professions from scratch using local courses or online schools. Subsequently, this investment will allow you to receive additional funds “.
4. Create your own business.
Alexey Bryzgalov, businessman, head of the public organization “Co-society”: “I would recommend acting in the following sequence:
• Get hired.
• Try to make a career, gain new knowledge, increase your income.
• In parallel, try to implement one of the investment or business strategies.
You may not become a businessman, but by the time you understand this, you will already occupy a high position and have a good salary. And this will allow you to implement other strategies of financial independence, invest in real estate, the stock market or make a bank deposit ”.
4. Invest in securities and the stock market.
5. Invest money in a promising project (venture capital investments).
Julia Ivanova, financial management expert: “Strive to diversify your portfolio – invest in different instruments, in different industries, in different markets. This will help reduce the risk of losses in the event that a recession or crisis has occurred in any of the directions. ”.
It’s worth choosing the method that is right for you, remembering the words of Alexei Bryzgalov, that it’s impossible to predict whether you can succeed as a successful businessman or not. You should not invest the last savings over and over again, trying to open your own business. Maybe it’s not about the money.
What prevents financial independence
There are several pitfalls that lay in the way of anyone who seeks to understand how to achieve financial independence. People make, according to Avetis Vartanov, head of the QBF training department, typical mistakes. The expert says that many Russians are not allowed to find prosperity bad financial habits.
Firstly, often our fellow citizens spend money impulsively, however, occasional purchases are not always successful and profitable. It’s better to plan your purchases in advance, and try not to succumb to marketing tricks..
Secondly, living exclusively today without trying to create a “safety cushion” is another bad habit of Russians. Only those who save money will be able to secure financial independence and get out of the difficult situations that may arise for everyone.
Thirdly, the inability to save money makes many Russians take rash loans. Making loans that will be difficult, or even more impossible to repay, is one of the worst financial habits.
Only by avoiding such situations will it be possible to figure out how to achieve financial independence, cease to exist and begin to live.
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