7 habits to help you reach financial independence

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7 Habits to Help You Reach Financial Independence

How to manage your career and investments so that you nev to work again.

When your assets generate enough income to cover your expenses you have achieved ďŹ independence.

By Joe Udo July 10, 2014 | 2:15 p.m. EDTFinancial

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independence typically means having enough income to pay your living expenses for the rest of your life without having to work full ti people achieve this through saving and investing over many years, while others build su businesses that can generate income without daily supervision. There are many ﬁnancial independence, and it’s not just for the wealthy. Here are some wealth generati that can make ﬁnancial independence a part of your future:

Avoid consumer debt. Consumer debt is the bane of financial independence. If you use cards to buy consumable goods and carry a balance, then you are enriching the banks a yourself. Credit cards, payday loans and car loans are all examples of money-generating for creditors. The first step toward financial independence is to get rid of high interest d free your money to work for you instead of the banks.

Ignore the Joneses. One of the many reasons we spend so much money on stuff is to k our friends and neighbors. Is accumulating stuff really the reason we get up every morn to work? Most of us don’t need a 3,000 square foot McMansion and luxury cars. and car will work just as well. Car commercials on TV make life into a competition to bu expensive vehicle, but you don’t have to fall for that. Ignore the Joneses to build up you instead, and you will leave your neighbors behind financially.

Spend much less than you earn. The real key to ﬁnancial independence is to spend less earn. Avoiding consumer debt and ignoring the Joneses will get you most of the way the takes a lot of diligence to spend much less than you earn. First, you need to track your e

and see what you spend money on. Then you can cut the things you don’t need and inﬂation to a minimum. Of course, it’s equally as important to generate more income. Re work both sides of the equation to widen the gap between spending and income.

Pay yourself first. This might sound selfish, but to reach financial independence you wil put yourself first. You need to prioritize saving ahead of everything else. Save before yo

utility bills, buy groceries or even pay the rent. Paying yourself ﬁrst encourages you to l smaller budget and it’s a powerful saving habit. Funding an employer-sponsored 401(k great way to get started. The contribution will be deducted right out of your paycheck, s won’t even miss it. Living with what’s left after paying yourself is a great way to build we

Buy income generating assets. Once you start saving you have to invest the money in a will generate income and appreciate. The stock market has a good long-term track reco many investors build wealth that way. Investment properties, art and collectibles are all will help you move toward ﬁnancial independence. Focus on buying assets that will mak money instead of depreciating into a pile of electronic junk.

Keep investing. It’s equally important to keep investing over the long term. You have to the stock market though the good and bad years. It can be diﬃcult to buy stocks when

going down, but if you don’t, then you will probably miss out on the recovery. It’s much keep buying no matter what the market is doing. That way you’re accumulating wealth o long haul. As you near retirement, then you will need to adjust your asset allocation and volatility.

Be flexible. Be flexible and adjust your spending accordingly. Some years are bound to financially difficult than others, and you need to be able to deal with them. If you’re laid cut expenses and adjust quickly. Don’t wait until you’ve used up your savings before you spending. The stock market could plunge 40 percent and reduce your net worth by a hu next year. Instead of withdrawing money as usual, another option is to get a part-time j

through the rough patch. Being ﬂexible means you’ll always land on your feet and live a stressful life.

You don't need millions to achieve basic ﬁnancial independence for yourself. Anyone ca these steps to reach ﬁnancial independence. Having enough income to cover your living without having to work full time can free you up to actually enjoy your life instead of rem a treadmill of working and spending.

TAGS: consumers, savings, investing, personal budgets, personal ﬁnance, retirement + More

Joe Udo blogs at Retire By 40 where he writes about passive income, frug retirement investing and the challenges of early retirement. He recently le corporate job to be a stay at home dad and blogger and is having the time

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