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Financial independence means different things to different people. Some people might define it as winning hundreds of millions from reality TV or being able to fund the lifestyle they want without assistance from their family. And to others, financial independence is breaking free from capitalism before clocking 40.
But, regardless of how you define it, it’s important to make informed decisions when it comes to your finances. In this post, we will walk you through some tips on gaining financial independence at an early age.
Having the financial discipline to spend less than you have or receive is critical to ensuring you gain financial independence faster as a young person. And while this is easier said than done, especially in a world driven by consumerism, developing good financial habits early is crucial.
You must be fully aware of your financial situation while considering current economic realities. Therefore, you should carefully plan your expenses and understand that saving towards luxury products is sometimes better than impulse buying.
Financial literacy is understanding financial concepts such as budgeting, investing, debt management, saving, and managing personal finances. This allows you to be adequately prepared for difficulties and helps you make sound financial or investment decisions.
If you’re wondering if “good debt” exists, the answer is yes. Good debt is simply money borrowed for reasons that significantly improve your life and yield enough returns to clear the debt. Some examples of good debt include:
Other examples of good debt are mortgages and real-estate loans, but they might not apply to you yet.
On the other hand, bad debt only worsens a person’s financial situation, as it’s almost impossible to repay the money owed. And unfortunately, young people are often targeted by predatory loan apps and companies, trapping them in a cycle of debt.
You are your greatest financial asset. And gen-z’s have the advantage of having the greatest ally on their side — time. Therefore, you should acquire the proper education, knowledge, and experience to increase your value. Look for ways to improve your professional skills while also not ignoring your physical and mental well-being. Self-development is the only type of investment that yields zero losses, and that’s on period.
Read also: Tips for building a personal brand.
Of course, one of the ways to achieve financial independence is by making more money, and with passive income, you can make money while also focusing on other activities.
Passive income can be defined as money earned without needing back-breaking work aside from the initial effort. It’s important to note that passive income doesn’t refer to a regular 9-5 or even a second job.
Examples of passive income ideas that you can try as a young person are:
Financial independence is possible with careful planning and execution, but you must be patient and consistent. Hopefully, with this information, you can achieve your financial goals and live the life you want.
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