Most people believe that to become independently wealthy; you need to inherit a fortune or have a high-paying job. But this is not the case. All you need is discipline and willingness to learn and put in the hard work.
What does it mean to be independently wealthy?
Being Independently wealthy means having enough money to support yourself without relying on others. It also means having the financial freedom to do what you want, when you want.
What's The Difference Between Being Independently Wealthy And Becoming Financially Independent?
Financial independence means having enough passive income to cover your living expenses. That means you could live off of investments, rental income, or other forms of passive income.
Being independently wealthy goes one step further. It means having enough money to live the lifestyle you want without having to work.
How Much Money Do You Need To Be Independently Wealthy?
It depends on your lifestyle and what you consider a comfortable standard of living. For some, it means fancy sports cars, expensive shoes, high-end purses, and a 9-bathroom house. For others, it means to travel and stability. It's being able to help family, friends, and the community. That looks different for everyone.
Do You Need To Have Millions Of Dollars?
Not necessarily. It's important to remember that your lifestyle will dictate how much money you need. If you're content with a modest lifestyle, then you won't need as much money as someone who wants to live a luxurious lifestyle.
Why Strive To Be Independently Wealthy?
There are many benefits. For starters, it gives you the financial freedom to do what you want, when you want. A 9-to-5 job doesn't own you, and you don't have to worry about money.
Another benefit is that it allows you to focus on your passions. If you have the financial means to support yourself, you can spend your time doing what you love instead of working a job you hate to pay the bills.
Are You Already Independently Wealthy?
Here are some of the signs that you might be:
- You have multiple streams of income.
- You invest in assets that generate passive income.
- You live below your means.
- You have a side hustle.
- You're debt-free.
- You are living the life you want.
Unless you're hit it rich by winning the lottery or receiving a gift of inheritance, time is what separates the wealthy from everyone else. It takes time to become rich, but it's not impossible if you're willing and able to work hard enough for your goal to be independently wealthy in future years.
What's The Fastest Way To Becoming Independently Wealthy?
Setting goals, being disciplined, and keeping your eye on the prize make the path to independent wealth attainable.
Here are 15 easy tips to help you get there:
1. Live Below Your Means
That may seem obvious, but it's important to reiterate. Living below your means is the key to accumulating wealth. You need to spend less money than you earn and invest the difference. That will help you build up your savings, which you can then use to invest in assets such as property or stocks and shares.
2. Invest In Yourself
Investing in yourself is one of the best investments you can make. By improving your skill set and increasing your knowledge, you make yourself more valuable to potential employers. That can lead to a better job and a higher salary, which will, in turn, help you to save more money.
Financial education is a must. Learn every day. Read books and personal finance blogs about finance and self-improvement. Overcome any mindset blocks you have about money. Learning new skills or taking a course to advance your career will put you ahead of the game.
3. Invest In Assets, Not Liabilities
An asset is something that puts money in your pocket, whereas a liability is something that takes money out of your pocket. So, investing in assets like property or stocks is wise rather than liabilities such as cars or holidays. That will help you to build up your wealth over time.
Purchasing the home next door and using it as a rental property is a great way to get your toes wet. Consider a duplex you can live in and rent the other side out. The rent may cover the majority of your mortgage.
4. Make Your Money Work For You
Don't just let your money sit in a savings account, gathering dust. Invest it in assets such as property or stocks and shares so that it can start working for you. The more you can make your money work for you, the faster you'll become independently wealthy.
Consider adding money each paycheck to your company's 401K or 403B. Bonus points if your employer will give you a percentage match.
5. Have Multiple Streams Of Income
Don't rely on just one source of income. Have multiple income streams, so you still have others to fall back on if one dries up. That will help to insulate you from economic downturns and help you to build up your wealth over time.
Rental property or consulting in your area of expertise are excellent ideas. Start a side hustle to increase cash flow.
6. Be Disciplined With Your Spending
It's essential to be disciplined when it comes to your spending. Track where your money is going and cut out unnecessary expenses. That will help you to save more money, which you can then use to invest in assets such as property or stocks and shares.
Learn to say no to impulsive overspending. Saying no to those cute pillows in Target or the fancy golf balls at the driving range will make a difference over time. Every little bit helps build wealth, and this is the one thing that separates independently wealthy people from the rest of the population.
7. Increase Your Cash Flow
One of the best ways to become independently wealthy is to increase your cash flow. You can do this by increasing your income or reducing your outgoings. The more money you have coming in each month, the faster you'll be able to save and invest, and the closer you'll get to becoming independently wealthy.
Work toward the next promotion at the office or consider applying for other higher-paying jobs.
8. Have A Positive Mindset About Money
Your mindset is vital when it comes to money. If you have a positive attitude towards money, you're more likely to make sound financial decisions and become independently wealthy. So, think positively about money and your ability to save and invest.
Repeating those cliche mantras will guide you toward more positive money thoughts.
Understanding that you get what you think about. You must create a positive abundance in your checking account if you want more money. Money flows easily to you.
9. Take Advantage Of Compound Interest
Compound interest is one of the most powerful wealth-building tools available. You can quickly build up a small fortune by investing your money and letting it grow. So, take advantage of compound interest and let your money work for you.
Here's how compound interest works:
You invest $100 at a 10% rate of return.
After one year, you will have made $10 in interest, and your total investment will be worth $110.
In the second year, you will make 10% on the new total of $110, which is $11. Your investment is now worth $121.
In the third year, you will make 10% on the new total of $121, which is $12.10. Your investment is now worth $133.10.
That will continue indefinitely. The earlier you start investing, the more time your money has to grow.
The sooner you start saving and investing, the sooner you'll become independently wealthy. So, don't wait until you're in your 40s or 50s to start thinking about becoming wealthy. Start as early as possible and let your money grow over time.
Time is your friend when it comes to building wealth. Starting early is the most important advice on the list. The earlier you start saving, the easier it becomes to save more and more.
10. Invest In Assets
Investing in real estate is a great starting point to becoming independently wealthy. Not only can you profit from renting out your property, but you can also benefit from capital gains when you sell it. So, don't hesitate to invest in real estate if you want to become wealthy.
11. Don't Let Your Emotions Control Your Finances
Your emotions can often lead you astray when it comes to money. So, keeping them in check is essential and ensuring they don't control your financial decisions. That will help you stay disciplined with your spending and investing and make sound financial decisions that will help you become wealthy.
This thinking is critical when your investments and the market start to dip. Don't make any irrational decisions based on fear. Buckle up and hold tight. This, too, shall pass.
12. Surround Yourself With Likeminded People
One of the best things you can do for your finances is to surround yourself with like-minded people. So, make sure to associate with people who have similar financial goals to you and who are also working towards becoming wealthy.
That will help you to stay motivated and focused on your financial goals and make it more likely that you'll achieve them.
13. Create A Budget And Stick To It
To become independently wealthy, you need to be disciplined with your spending. One of the best ways to do this is to create a budget and stick to it. A budget will help you track your expenses and ensure you're not overspending. Know your weekly, monthly, and annual living expenses.
A budget is not just for people living paycheck to paycheck. It's a plan for your money. It doesn't matter if you're below the poverty line, living middle class, or financially independent. Everyone needs a budget.
14. Have An Emergency Fund
It's essential to have an emergency fund in place in case you lose your job or face unexpected expenses. An emergency fund will help keep you from going into debt and give you the financial security you need to weather any storms coming your way.
It will rain. Something will break down. Give yourself and your family the stability and peace of mind that comes with six to twelve months of expenses.
15. Avoid Debt
Debt is one of the biggest obstacles to becoming independently wealthy. So, it's important to avoid it if at all possible. If you are in debt, plan to pay it off quickly. Debt freedom will help you free up more money to save and invest and get you one step closer to financial independence.
Pay yourself instead of paying someone else. Know that you owe no one anything, and it's your choice to do what you wish with your money. Credit card debt is a dream killer and will keep you from achieving those long-term financial goals.
Final Thoughts On How To Become Independently Wealthy
Becoming independently wealthy is not as difficult as you may think. There's an entire movement dedicated to this caller FIRE (financial independence retire early). You can achieve financial freedom with a bit of discipline and hard work. By following the tips we've provided, you'll be well on your way to reach financial independence.