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.

1. Live within your means

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.

Here are three ways you can realistically live within your means:

• Think needs, not wants: do you really need subscriptions to four different streaming services? It would be best if you always prioritized your necessities over wants, and while it’s okay to indulge sometimes, it should never be more than what you can afford.
• Embrace budgeting: everyone has moments where they can’t remember how or what they spent money on. This is why budgeting is essential to track and monitor your spending. At the beginning of every month, you can allocate a certain percentage of your income to your expenses, savings, and wants.
• Save: the importance of saving money cannot be overstated, as you can sometimes be one rainy day away from debt. You can save towards a short-term or long-term goal or have an emergency fund. One of the best ways to protect your money against inflation and devaluation is to save in a foreign currency like the USD or GBP. With Grey, you can instantly swap your local currency to USD, GBP, or EUR to help you save or create a virtual foreign account.‍

2. Become financially literate

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.

3. Run away from bad debt

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:

• Student loans
• Business and investment loans

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.

Some ways to avoid bad debt include:

• Do proper research to avoid taking high-interest loans
• Never borrow to fund a lifestyle
• Avoid impulse buying by sticking to a budget

4. Invest in yourself

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.

5. Get a passive income

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:

• Become a social media influencer
• Start a dropshipping business
• Start a blog
• Make and sell your craft
• Sell stock photographs
• Start a YouTube channel
• Start a podcast

Wrapping Up

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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