- True financial independence and security is not easy to achieve but it is possible.
- To get here you need to reduce financial stress by taking certain things out of the equation.
- Business Insider Sub-Saharan Africa has compiled a list of five tested and trusted strategies to help you gain financial independence.
Financial independence means being secure and not having to worry about money. To achieve this, here are five tips to help you achieve financial independence:
Set some money aside before you spend
Once money comes in, avoid the temptation to start spending. Instead set some money aside to save and invest first.
In Warren Buffett's words, "‘Do not save what is left after spending; instead spend what is left after saving."
Start investing your money
The best way to make more money is to make your money work for you.
According to Tomie Balogun, a Nigerian Certified Financial Education Instructor (CFEI), "You’re better off starting small with what you have than waiting to invest when you have a lot of money. Make the best use of time and compound interest by starting small and building up your investment portfolio over time."
She adds, "If we don’t want to keep working for the rest of our lives, we need to make sure our money works as hard as we work."
You can start with 5% or 10% of your income and build up as you go.
Live below your means
To gain financial independence, you need to spend less than you earn.
Figure out what your monthly expenses are, set up a budget to cover everything and save/invest the rest.
Stay out of debt
It is impossible to become financially independent if you are constantly in debt. This is why you need to avoid spending recklessly and stay out of debt.
When you do have to get a loan or something, make sure you get rid of this debt as quickly as possible.
Make more money
At some point, all that is left to do to gain financial independence is to simply increase your income. To do this, you should try putting in the extra work and then asking for a raise.
You could also start looking for a better paying job, gain more skills or have multiple sources of income.