how to become independently wealthy
How to Become Independently Wealthy
Being independently wealthy roughly indicates that you are financially self-sufficient and not dependent on anyone. This certainly is an enviable position to be in. Buzzle will shell out some tips on how to become independently wealthy.
Getting Wealthy in a Nutshell
- Increase earnings
- Curtail expenses
- Reduce/Avoid debts
Steps to Become Independently Wealthy
Save, Save, and Save
- Regarded as the oldest rule in the book, this step is the first to become financially stable.
- Save a part of your income/salary (a substantial part), in fact, do not consider it be your income/salary at all, do not touch that money.
- Apart from spending for mandatory household necessities, try to avoid buying something luxurious, something you can do without. Before you purchase anything, weigh the necessity of that object/good at that point of time.
- Again, this depends on the kind of lifestyle you lead, which in turn depends on your family, their monetary requirements, etc.
- For example, if you live alone and have no family obligations (at that point of time), then you can save rather easily. But, if you have extra bills to pay, many mouths to feed, and other expenses to meet (a sick family member, college fees, etc.), then your saving strategies should be carefully thought out.
- Let's say, you are married and have a kid. Your total expenditure per month would include household expenses, your kid's education, taxes, insurance, an outing once in a while, etc. If your spouse also earns, the combined income/salary would help save quite a bit, if not, you have to plan your expenses such that you save a significant amount.
- Ideally, it would be better to start saving as early as possible so that you are in a better prepared financially to tackle any unforeseen expenses that may arise in future.
- That said, do not stop enjoying life. Save enough, spend wise.
Investments
- Irrespective of whatever you do to earn a living, investing wisely is the magic key to a golden future.
- The money you save should not lie idle; remember, no money is good money if it does not fetch an interest. Therefore, read and research on whatever investing strategies there are.
- Another point, always understand the concepts of inflation before investing. If an item is worth USD 100 today, its cost may probably double or triple in a decade.
- Certificates of deposit (CD) are a great way to save a large amount of money, since you are offered a higher interest rate than that of a regular checking account.
- There are many types of CDs, and you need to choose one that you feel is safe for you.
- Again, CDs have their own disadvantages, like higher penalties and lesser risk.
- Stocks and shares are a great investment option, but DO NOT invest in them unless you know how the share market works.
- Investing in stocks can be tricky, and you need to have sufficient experience and capital under your belt. Consider this investment option later in your life, when you can afford to take a higher risk.
- There are different saving accounts, mutual funds, equities, annuities, bonds, insurance policies, and other investment options that can fetch you a decent return after a sufficient period.
- You have to consider a number of factors, like recession, market position, interest rate, etc., while investing in any scheme.
- Another important step is to have a tentative plan in place, as to how much money you intend to have as a safety deposit, depending on your lifestyle, inflation, and other factors. Accordingly, choose a proper investment strategy.
Real Estate
- Investing in real estate is a risky, yet assured way of earning money.
- A piece of advice before proceeding though, always, I mean, always research the market well before investing in this field.
- The property business changes according to the prevalent economic situation.
- However, if the market is favorable, remember that a piece of land is one of those assets that never depreciates in value with the passage of time. Ask any wealthy individual, and he will attest that a property worth, say USD 100,000 today, will be much more in just a few years time.
- This is true with every kind of property―apartments, villas, farms, etc. Unless, of course, the land has some issues, like it is in a marshy area or flood-prone area.
- Beg or borrow, do anything, but buy that piece of real estate without delay.
- You can work out a plan with the bank or any other financial institution to pay off the loan in periodic installments.
- With time, the value of that land is bound to increase, and one day, you will be in a position to lease it out for a substantial amount, or even better, sell it for a much higher price than the original, and reinvest the lump sum.
- Even while you are paying the EMI, you are still the legal owner of the property, which means that you can lease it out the moment you gain possession.
- If you have invested in an apartment, and you already have a place to live in, get the house registered and look out for tenants.
- This will give you a regular extra income every month, help pay your home loan, and leave you with alternative investment strategies.
- Remember though, that real estate investment is not a piece of cake, be very careful with the legalities, conduct a thorough investigation and then proceed. This holds true for the tenants too; look for a decent family to rent out, instead of leasing it out to someone who may have a police record or a dubious past.
A Safety Net
- Always, I mean always, try to create a second source of income. Whether you are an entrepreneur or a food runner or a corporate junkie, have a passive source from where you can generate money.
- The other source may or may not generate much income, but it still is income. It will help you tide over difficult times.
- You could be an independent freelancer, blogger, illustrator, etc., anything that allows you contribute some time from your regular routine.
- Apart from keeping your home fire burning, this will give you the financial strength and the encouragement you need.
- Because you have two sources of income, your boredom will vanish, as you will look forward to working on something else for a change, something you enjoy doing.
Entrepreneurship
- Starting your own business can be another source of income, but here, you have quite a bit at stake.
- To begin with, a business venture requires a worthwhile idea or market, besides running a business/venture/enterprise successfully is a totally different ball game.
- Depending on the type of business, you will need sufficient initial equity. Moreover, you need contacts.
- If you think you can do this, start small, and without initial expectations.
- Begin by planning what you plan to do. That is to say, whether you want to start your own catering business or a chocolate/cake-making business, even scrap dealing, etc.
- Accordingly, begin by advertising your business/service to friends and family and on social networking sites. Supply product samples and record feedback.
- You must know to manage your time extremely well, since you have to contribute a lot of time initially until the venture is stable enough.
- Any business venture always runs the risk of failure and closure; therefore, do not place all your bets on the same.
- Once you have established a loyal clientele and steady stream of customers, you can think of ways to improve your business, as well as learn to wrap up things quicker than before.