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 The Genius Guide to Achieve Financial independence in Your 30s

Meet Kyle. At 35 years old, he's achieved something most people only dream of, which is financial independence. Kyle lives in the Midwest and hit a net worth of one million dollars at 35. He credits his financial success to his ability to save money and invest it wisely. He typically saves about 67% of his salary and has been investing since the age of 15. His investment gains account for about 75% of his current assets. But how did he do it? How did he go from working a 9-5 job to having the freedom to live life on his own terms? In this article, we'll explore the steps Kyle took to achieve financial independence and how you can do it too. No boring lectures here!

What is Financial Independence & financial independence number?

So what exactly is financial independence? Well, it's the state of having enough wealth to live without having to work for a living. This means that your passive income from investments or other sources is enough to cover your expenses. In other words, it's like being retired, but without the grey hair and bingo nights.

Your financial independence number is an estimate of how much money you need to have saved in order to achieve financial independence. There are different ways to calculate this number, but one common method is to multiply your annual expenses by 25. Another way is to divide your annual expenses by a safe withdrawal rate.

Here is a step-by-step guide on how to calculate your financial independence number:

1. Calculate your annual spending: This is the first step in determining your financial independence number. You need to know how much you are spending each year. If you have a budget and have been monitoring your cash flow, you can take your monthly budget and multiply it by 12 to get your annual spending.

2. Choose a safe withdrawal rate: A safe withdrawal rate is the percentage of your savings that you can withdraw each year without running out of money. The most commonly used safe withdrawal rate is 4%, but this can vary depending on your personal situation.

3. Calculate your financial independence number: Once you have determined your annual spending and chosen a safe withdrawal rate, you can calculate your financial independence number by dividing your annual spending by the safe withdrawal rate.

Some financial institutions have their own calculators that take into account factors such as investment asset allocation, taxes, and penalties. You may want to use one of these calculators to get a more accurate estimate of your financial independence number.

Financial Freedom vs. Financial Independence

Let's use a toddler's journey to walking as an analogy for your finances. Remember when you were a kid and learned to walk? At first, you needed help getting around. But soon enough, you were knocking over cups and making a mess all by yourself. However, you still couldn't go on long walks without getting tired and whining.

It's the same with your finances. Are you just starting out, needing help to get by? Or have you graduated to knocking over financial cups on your own? But even if you're mobile, are you financially free to go wherever you want?

To achieve financial independence, you need more than just savings. You need passive income, the kind that keeps rolling in even while you sleep. It's a process, but with milestones along the way. So let's start toddling towards financial freedom, one step at a time.

How to Achieve Financial Independence?

Now, I know what you're thinking - "That sounds great and all, but how do I actually achieve financial independence?" Well, it's not easy, but it's definitely possible. Here are some basic steps you can take:

1. Save and invest: The first step towards financial independence is to save as much money as possible and invest it wisely. This means living below your means and putting your money into investments that will grow over time. Think of it like planting a money tree - it takes time and care, but eventually it will bear fruit.

How to Invest?

- Set up automatic savings plans to regularly invest a portion of your income.

- Choose low-cost index funds or ETFs to diversify your investments.

- Consider investing in real estate through rental properties or REITs.

- Consult with a financial advisor to create an investment plan that aligns with your goals and risk tolerance.

2. Reduce expenses: Another important step is to reduce your expenses as much as possible. This means cutting out unnecessary spending and finding ways to save money on the things you need. It's like going on a financial diet - but don't worry, you can still have the occasional treat.

How to Reduce expenses?

- Create a budget and track your spending to identify areas where you can cut back.

- Negotiate bills such as cable, internet, and phone to get a better rate.

- Use coupons and shop sales to save money on groceries and household items.

- Consider downsizing your home or car to reduce monthly expenses.

3. Increase income: Of course, increasing your income is also important. This could mean asking for a raise at work, starting a side hustle, or finding other ways to make more money. It's like giving your bank account a promotion.

Howto Increase Income?

- Ask for a raise or promotion at work.

- Start a side hustle or freelance work.

- Rent out a spare room on Airbnb.

- Sell items you no longer need or use.

There are many side hustles that can help you reach financial independence. Here are some ideas:

1. Translation and Transcription: If you have language skills, you can offer translation or transcription services to clients.

2. Freelance Writing: If you have a talent for writing, you can offer your services as a freelance writer.

3. Coaching and Consultation: If you have expertise in a particular area, you can offer coaching or consultation services to clients.

4. Photography and Videography: If you have a talent for photography or videography, you can offer your services to clients for events or projects.

5. Social Media Marketing: If you have experience with social media, you can offer your services to businesses to help them with their social media marketing.

6. Start an E-commerce Business: If you have a product idea or are skilled at finding deals on products, you can start an e-commerce business and sell products online.

7. Virtual Assistant: If you are organized and have good communication skills, you can offer your services as a virtual assistant to help businesses with administrative tasks.

Be patient: Achieving financial independence takes time and patience. It's not something that will happen overnight, so be prepared to work hard and stay focused on your goal. Remember, Rome wasn't built in a day - and neither is financial independence.

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