It is everyone’s wish that they become financially independent, sadly, not most of them have been able to do this. The reason behind this is…
It is everyone’s wish that they become financially independent, sadly, not most of them have been able to do this. The reason behind this is that people do not really understand what it means to become financially independent. It is good to note that there is a difference between being financially independent and being rich. For a person to be rich, they must first be financially independent. Financial independence means that one is able to meet their financial obligations without relying on external help like taking a loan. Achieving financial independence is not easy; it requires dedication, hard work, and discipline for one to break the chains of financial slavery. Understanding what it takes to become financially independent will go a long way in helping you achieve it. Below are some tips that may help you become financially independent:
Live within your means
One of the reasons why people are unable to achieve financial independence is that they like living beyond their means. What this means is that they are prone to spending more than they make in a month. This is usually the case with credit cards. Since one is spending money that doesn’t belong to them, they are usually likely to spend more than they make. When this is the case, they will eventually find the debts too overwhelming and this will lead to financial slavery.
Settle your debts promptly
Another reason why people are financially dependent is the inability to settle their debts in time. Most people who are not financially disciplined have a tendency of procrastinating settlement of debts till a day in future where the debts pile up becoming too much to handle. It is always advisable to settle one’s debt as and when it falls due. Failure to do this means that there will be difficulty in paying it, especially if it attracts interest. Some credit advances may also affect your credit rating making it harder for you to access other credit facilities.
Having alternative sources of livelihood
One of the best ways of achieving financial independence is having an extra source of livelihood to sustain the main one. If for instance you are employed, you may want to consider investing in some other business, no matter how small it is to supplement your income. By so doing, you will ensure that you always have an extra coin that you can spend instead of taking a loan. You may also use the business to settle your other financial obligations.
Bankruptcy is a great problem that is affecting most people today. There are so many people who a few years ago had a lot to live on but now, they struggle to meet their most basic needs. Bankruptcy is a problem that can be greatly attributed to a person’s financial choices. What one does with their money on a daily basis will greatly affect what becomes of them in a few months or years. Bankruptcy by a very basic definition is the inability of a person to meet their financial obligations as and when they fall due. There are several reasons why one may fall into the trap of bankruptcy; some of the reasons are by one’s own making while others are beyond their control. Some of the reasons why one may become bankrupt include a failed business, living beyond one’s means and being highly geared. Below are some of the tips through which one can stay away from bankruptcy:
Living within your means
With the invention of plastic money, people are nowadays spending more and more on things that they probably don’t need or can do without. In particular, credit cards have are a major cause of bankruptcy where one uses more money than they ought to just because they can easily access it. One of the reasons why one should not over-rely on a credit card is that you spend money than you don’t own. This means that along the way, you will have to pay this money. If the money is not paid in time, it attracts interest which exacerbates the situation. To avoid this, it is important to live within your means and only use your credit card when it is absolutely necessary to do so. It is also good to always ensure that you pay your debts promptly.
Being highly geared
A person who has a tendency of spending money that belongs to others if they are not careful will always face difficulties repaying it. It is advisable that if possible, one should avoiding taking so many credit advances especially when they are not being put in income generating activities. Loaned money should be placed in an investment such that it will have some returns to help you offset the interest on the loan from the creditor.
Have several sources of income
It is always advisable that in investment, no to have all your eggs in one basket. It is always recommended that one gets several income streams to support them preferably in different lines of business. The reason behind this is that sometimes, a force beyond your control may affect the industry where you have invested your money. If the industry goes down, chances are that you will too.