Are you one of those who dream of making money without working? Here are the first steps you should take towards financial independence. For many is simple fantasy, while for others may sound like a scam. We have already identified that a university degree does not guarantee success.
Let’s start by defining what making money without working is all about. Financial Independence is the moment when we earn enough money to stay alive and comfortable, without the need to work for it. A person is financially independent when he or she;
- lives in good health
- has clothing
- has food,
- can afford transportation
- and cover daily expenses without having to work.
Earning money without working is a real and attainable goal for anyone; however, to achieve it you must take into account the following:
- You must be a responsible person and have mental discipline.
- Living comfortably without having to work is going to require all your effort.
- All assets that generate a passive income (that do not require our work to be generated) must have maintenance and attention.
- You will have to be willing to sacrifice things.
- Contrary to what many people believe, this goal does not mean that you will spend the entire day sleeping or wasting time.
There is a guaranteed way to achieve Financial Independence, and start earning money without working. The problem is that it has a high cost. Your time and willingness to postpone the comfort of the moment for a future benefit. These are two things we are naturally accustomed to avoid.
The media, family, friends and, in general, all our environment incites us to seek immediate gratification. However, this goes against our goal of financial independence. Patience is quickly exhausted when the money we earn does not reach us.
The ideal formula for living comfortably begins by
- Increasing your extra income through remunerated activities in which you do not depend on the payment of a boss’s salary.
- Minimize your expenses and save as much as possible.
- Invest the money on your bank account and let the compound interest take care of the rest.
The operation of this formula is simple. If you maximize your income, you will have more money month by month.
But that’s just the first step. The important thing is that then you must learn how to manage this money. That’s where the second step becomes vital, minimizing expenses. Keeping an exhaustive accounting of your expenses avoids wasting money on unnecessary things.
Once you minimize expenses, you’ll learn how to save and save a good portion of your income each month. At this point, you’ll feel better than most people you know, who live on salary payments to pay off debts and pay for their basic needs.
Before you know it, your savings account will begin to have more funds and that’s where you’ll need to gain financial intelligence. That’s when you need to learn to invest your money the right way, minimizing risks and maximizing profits.
Once you reach this level, all you need is the most expensive ingredient in the world, and one that many people waste, time.
If you save monthly, for example, $900, after one year you will have $10,800. If you save that amount for 10 years you will have $108,000. Now think further, big, if you save this amount for about 30 years? You could have $324,000. With that amount invested correctly, you could already live the dream of having money without working and being financially independent.
Therefore, it is possible to achieve financial independence ahead of time, with investments and compound interest.
If we approach the same scenario with an annual saving of $10,800 and a return on investment of 12% per year, after 23 years we will have more than 1 million dollars.
Instead of waiting 30 years and obtaining only 324 thousand dollars, in only 23 years we would obtain one million dollars and we could retire calmly investing it and living of our returns like kings.
If getting a quarter of a million dollars is enough for the lifestyle we want to lead, doing the same accounts with compound interest and the proposed return on our investments would only take 12 years.
There are many formulas you can use to multiply your money. Some of those options are
- Buy stocks of good companies in the stock exchange
- Buying and selling of vehicles
- Buying properties to rent offices or apartments
- Make a blog to give advertising or brand recognition to small and medium enterprises
- Invest the money in money markets and mutual funds
- Buy government bonds
- Put money in a fixed deposit account.
In this way, it is possible to get a variable amount of money each month. The idea of financial independence is to know how to take advantage of moments and be patient.
If you manage to accumulate enough capital to buy a house on the beach or a luxury car, think about buying two apartments in the city center that you can rent or more than one car that you can sell at a higher price.This is how most successful people have achieved financial independence. The goal is to have enough money to live comfortably without having to work.