There is no better feeling than financial security. When you know that you have enough money to take care of your financial needs for the rest of your life, you have peace of mind and, more importantly, you have much more options.
So why are there not more people who are actually financially independent? The majority of people have trouble making ends meet and are living from paycheck to paycheck.
It is not that difficult to build your financial security through saving with discipline and investing your saving wisely. Virtually anybody can become financially independent by using the following well-tested principles:
- Live within your financial means.
This means that you can’t spend more than you are earning. You can’t rent a big house for $2,400.00 per month when you earn $3,000.00 per month. You need money to buy groceries, pay for your utilities, and travel to your work. Rather, rent a more modest apartment for $1,200.00 per month.
- Pay yourself first.
Develop the habit and have the discipline to pay yourself first. Before you pay your bills, save at least 10% of your paycheck regularly. If you can afford it, try to save more. Of course, this depends on your earning capacity and personal circumstances.
- Make your money work hard for you.
Invest your saving in a mutual fund or in an investment like real estate that would make your money grow more than the inflation rate. If you need to, get professional advice from a reliable financial advisor. It’s paramount that you educate yourself about wise investments.
These three steps are proven and guaranteed pathways to financial security and independence. Of course, there are many other worthwhile financial strategies you can use to increase your wealth. However, having the strict discipline to use these three simple principles on a regular basis is not easy, but will definitely grow your financial assets significantly over time. The secret is time leveraging and the compounding effect, so start as early as possible to realize your financial freedom.
What principles and strategies are you using to build your financial security? Your views and comments would be appreciated.