The term economic independence is employed usually to describe the situation of getting sufficient personal wealth to be able to reside indefinitely without having working actively all the time for the fundamental necessities. Numerous folks have monetary situations that will be appropriate to this description because the revenue generated by their assets is greater than the expenses created by them. When such circumstances exist, then the person is stated to become financially independent.
Liabilities and assets of a person are vital in order to determine their financial independence. Liability is something that is related to debt and the person possessing it is responsible for providing compensation. An asset is a thing that has value and can be liquidated in case of any debt for example; automobiles and homes without any mortgages or liens can be referred to as common assets.
Financial Independence - Approaches
Saving sufficient liquid assets in order to then continue all liability or living future expenses
Collect assets that will create income until the revenue generated exceeds the liability or living expenditures
The above mentioned approaches is usually followed as a way to accomplish this independence
Who might be financially independent?
There is no age restriction for being financially independent. Being young or old or the amount of money they make or have does not matter or restrict any individual to attain the status of being financially independent. It is enough if they make enough money in order to meet all their basic and other needs from sources excluding their primary occupation. When it comes to financial independence, age is completely irrelevant, for instance, if a person is in his/her early 20's and the expenses made are only $80 per month and $81 or more is generated by his/her assets per month, then it can be said that he/she have achieved financial independence and can enjoy the freedom of doing thing without worrying about any other aspects like buying grocery or next meal.
Then again, an individual in his early 50's with an income of a million dollars per month have expenses, which exceeds the million dollars per month then he/she isn't financially independent as that particular person demands to earn the difference every single month in order to stay even. Nevertheless, it really is expected to take into account the inflation effects inside the above instance of the young individual. Every single year there is going to be a 5% improve within the rate of annual inflation even whilst adopting the same lifestyle. For that reason, at a point of time the particular person will lose his/her monetary independence due to inflation while receiving the passive revenue from the perpetuity.
Ideas for reaching financial independence
Investing
Getting out of debt
Cutting expenses
Budgeting
Growing the income
Pay yourself
Loan consolidation
Stop saving (until all the debts are cleared)
Shop with plan
Stick to your investments
A few of the passive sources that results in financial independence are:
Company ownership
Pensions
Rental property
Life annuity
Patent licensing
Monthly income schemes
Fixed deposits (bank)
Interest from loans, deposits or funds markets
Trust deed
Royalty from patents, books, etc.,
Liabilities and assets of a person are vital in order to determine their financial independence. Liability is something that is related to debt and the person possessing it is responsible for providing compensation. An asset is a thing that has value and can be liquidated in case of any debt for example; automobiles and homes without any mortgages or liens can be referred to as common assets.
Financial Independence - Approaches
Saving sufficient liquid assets in order to then continue all liability or living future expenses
Collect assets that will create income until the revenue generated exceeds the liability or living expenditures
The above mentioned approaches is usually followed as a way to accomplish this independence
Who might be financially independent?
There is no age restriction for being financially independent. Being young or old or the amount of money they make or have does not matter or restrict any individual to attain the status of being financially independent. It is enough if they make enough money in order to meet all their basic and other needs from sources excluding their primary occupation. When it comes to financial independence, age is completely irrelevant, for instance, if a person is in his/her early 20's and the expenses made are only $80 per month and $81 or more is generated by his/her assets per month, then it can be said that he/she have achieved financial independence and can enjoy the freedom of doing thing without worrying about any other aspects like buying grocery or next meal.
Then again, an individual in his early 50's with an income of a million dollars per month have expenses, which exceeds the million dollars per month then he/she isn't financially independent as that particular person demands to earn the difference every single month in order to stay even. Nevertheless, it really is expected to take into account the inflation effects inside the above instance of the young individual. Every single year there is going to be a 5% improve within the rate of annual inflation even whilst adopting the same lifestyle. For that reason, at a point of time the particular person will lose his/her monetary independence due to inflation while receiving the passive revenue from the perpetuity.
Ideas for reaching financial independence
Investing
Getting out of debt
Cutting expenses
Budgeting
Growing the income
Pay yourself
Loan consolidation
Stop saving (until all the debts are cleared)
Shop with plan
Stick to your investments
A few of the passive sources that results in financial independence are:
Company ownership
Pensions
Rental property
Life annuity
Patent licensing
Monthly income schemes
Fixed deposits (bank)
Interest from loans, deposits or funds markets
Trust deed
Royalty from patents, books, etc.,
About the Author:
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