How to Achieve Financial Independence

Achieving financial independence should be the goal of every working adult, employee, or self-employed. Your primary responsibility is to convert your income into assets and ultimately into wealth. Your mindset determines what you convert your income into. A consumer (hunter) primarily converts his income into liabilities while a producer (farmer) converts her income into assets. These are two opposing mindsets. While the hunter mindset produces lack, the farmer mindset produces abundance.

What is Financial Independence?

You are said to have achieved financial independence when returns from your fixed-income assets are sufficient to support your desired standard of living. This means your money is working for you until you no longer have to work for money again. You only work for love.

Your wages or salary cannot make you rich. It is what you do with it that makes you poor, rich, or middle class. Consequently, a high-income earner may appear affluent on the outside but have the cash flow pattern of the poor, turning your cash into trash.

Very few ever stop and consider the questions:

1) How long would you last before you run out of cash after losing your job?

2) How low would you last if your business begins to run at a loss?

For many good folks, the answer is months. If you can last indefinitely, you have achieved financial independence.
You are the one that decides what works for you. A good example of fixed-income assets is money market instruments like high-yield savings accounts, fixed deposits, treasury bills, bonds, tenor funds, commercial papers, etc. The interest rate is fixed and known at the point of entry. No surprises. You can then roll over or move your funds into another money market instrument with more favorable rates.

Starting point to achieving financial independence

Making up your mind to change your mindset is the starting point in your journey to achieving financial independence. If the road you are traveling is not taking you to the destination you desire, you have to decide to keep going and hope for a miracle, or pull over and head in a different direction. You cannot keep doing the same thing over and over again, and expect different results. The moment you decide enough is enough, you are ready to change.

Achieving something we have not achieved before starts with change on the inside. Hence in the next article, we will examine how to change your mindset.