Five Strategies For Financial Independence

The first strategy is living below your means. Look at what Dave Ramsey tells us about making car payments, rather than investing that money:

“…the average car payment is $378 over 55 months. Most people get a car payment and keep it throughout their lives. As soon as a car is paid off, they get another payment because they ‘need’ a new car. If you keep a $378 car payment throughout your life, which is ‘normal,’ you miss the opportunity to save that money. If you invested $378 per month from age 25 to age 65, a normal working lifetime, in the average mutual fund averaging 12 percent (the 70-year stock market average), you would have $4,447,084.01 at age 65. Hope you like the car!”

Imagine how much you could save, if you cut some of the rest of your expenses, and invested the difference. I would get on it. Remember, through thick and thin, you need to live below your means, and invest the difference.

The second strategy is to work for yourself. Successful self employed entrepreneurs are able to make quite a bit more money than most employees. People do not start companies to make their employees rich, in most instances. Use the jobs you have before launching your own venture to learn the skills you will need in your own business. If you could build a very successful business, you could take it public one day, and then get money for selling shares.

The third strategy, is to get very serious about investing. Start to read, research, take classes, and join an investment club. Look for opportunities that most will miss. Research investments outside of your current area of knowledge, and start to learn. Think outside your country. Think outside of just U.S. stocks, or just real estate, or just gold coins. Read about new, specialized mutual funds, and other investments. Find out what is in other mutual funds, and find out what the manager’s strategy is. Look into individual stocks. Investigate “the buzz”. In short, learn new things about investing from the best financial minds. Expand your knowledge base, and stay on top of the news about your investments.

The fourth strategy is to invest in sources of passive income. If you could own and profit from rental real estate or storage units, while keeping your day job, you could accumulate a lot more money.