Financial independence is the idea of having enough money or income to pay for all your living costs for the rest of your life without having to work or be dependent on others. This is a state which most of us want to achieve some time in our life.
A person once said, Work hard for the money, then let your money work for you. This is exactly the motto I live my life by. I am currently 25 years old and working my ass off. I try to live extremely frugal and invest every sent I possibly can to be able to achieve early financial independence.
There is a whole movement of people living this lifestyle. They call themselves the #FIRE movement. FIRE stands for Financially Independent Retire Early. The theory is that once you have saved 25 times your annual spending you are considered to be financially independent. In other words, if you only withdraw 4% of your total savings each year you should never run out of money. This means that you don’t have to work to be able to carry on with your life as normal. You are then free to spend your time on the things that matter the most to you. Your family, friends, hobbies or whatever else you care about that you would otherwise not have an abundance of time for.
In order to achieve this, you have to save a lot of your income. There is no exact amount of money or time in which to save it. This will be different for each and every person. Some #FIRE movement followers manage to achieve a saving rate of 95% of their income. For most of us, this is not really possible as we earn too little and our expenses are just too high. Most people have areas in their budget where they can cut back a little every month. There is a saying that goes like this: “a penny saved is a penny earned”. I like to give it another twist: “a penny saved is a penny earned, and two pennies after-tax”.
Living frugally has its downsides. You don’t get to have all the newest stuff. You don’t get to go eat out as much as you used to. But do you really need all those things? Ask your self that question next time you want to buy the newest iPhone.
I consider having the freedom and not having to work as a much higher value than having the newest iPhone in my hand. When you think about it, living frugally also means you are not impacting the environment as much as others do as you keep on using the same phone for longer. Not having the stress of knowing how you will be able to pay your bills the next month is a dream most people will never reach. If you start early with this mindset and actually do something about it then that stress can be eliminated early on in your life. You have to choose for yourself.
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