Financial Freedom: Things to know
Attaining financial freedom must be a dream for anybody. People toil taking up unpleasant jobs only to be at peace with life eventually. It is this longing for stress free life that tempts even younger ones to go on planning their retirement. But it’s not the retirement but the financial stability that they should aim at. So, when do you achieve financial freedom and what can be done to accelerate it. Let us discuss in brief here about financial freedom and the steps that can be taken to speed up the process.
All of us will have lifestyle expenses or necessity expenses. When money earned from investments or returns from accumulated assets on a monthly basis becomes sufficient to meet one’s necessity expenses then one has attained Financial Freedom.
The point to be noted here is to attain this financial freedom, apart from having a passive income, one’s active income should exceed the necessity expenses or the lump sum money must be more so that he/she will not be dependent on active income.
Focus on Passive Income
Most people focus on active income which includes remunerations, rates etc. or any money you generate from a job or from selling a commodity in business. However, apart from this, if people are able to generate money from passive income on a monthly basis, they will be able to lead a stress free life. The various ways in which passive income is generated is
- Rental from your house or property
- Returns from a YouTube video you uploaded; an amount which you receive on a recurring basis
- Royalty from a book you wrote
- Investments from stock or mutual fund
- Returns from fixed deposit in a bank
- Profit from a franchisee of your business
Also, paying attention to various do’s and don’t’s with the money you’ve earned can take you several steps closer to the ultimate aim in finance- financial freedom
The biggest takeaway is that one doesn’t have to wait till retirement to attain freedom from finance.