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Whats-financial-independence-and-how-to-get-started

What's financial independence and how to get started?

We all heard the talks about managing our finances and saving for our future. We also heard finance gurus’ talking about the importance of being financially independent. So, what does it mean to be financially independent?

In simple terms, financial independence is the ability to live off your investments and savings, without having to rely on a regular paycheck. That means you’re not tied down to a 9-to-5 job, and you have the freedom to pursue your passions and live life on your own terms.

There are a lot of benefits that come with financial independence, such as the ability to retire early, travel the world, or quit your job and start your own business. But before you can enjoy these benefits, you need to have a plan in place to achieve financial independence.

So where does it start?

It all starts with saving. You need to start putting away money now so that you can have enough to live on later. The earlier you start saving, the better off you will be.

How to find out your financial independence number?

The first step is to calculate your annual expenses. This includes everything from your mortgage or rent payments to your grocery bills and entertainment costs. Once you have a good idea of your annual expenses, you can start working on a savings plan.

Next, you need to figure out how much money you will need to have saved up in order to cover your expenses. This is known as your financial independence number.

There are a few different ways to calculate your financial independence number. One way is to multiply your annual expenses by 25. This will give you a good estimate of how much money you will need to have saved up.

Another way to calculate your financial independence number is to use the 4% rule. This rule states that you will need to have saved up enough money so that you can withdraw 4% of your savings each year and still have enough left over to cover your expenses.

For example, if your annual expenses are $50,000, you will need to have saved up at least $1.25 million in order to withdraw $50,000 each year and still have enough left over to cover your expenses.

Once you have a good idea of how much money you will need to have saved up, you can start working on a plan to reach your financial independence number.

There are a few different ways to save for financial independence.

One way is to invest in stocks, bonds, and other investments that will provide you with an income later on. Another way is to save up cash in a savings account or retirement account.

The best way to save for financial independence is to start early and to invest in a mix of stocks, bonds, and other investments. By doing this, you’ll ensure that you have enough money saved up so that you can live comfortably later on.

About the Author

Devesh Chawla is the Founder & CEO of Chatur Wealth & Chatur Ideas