At the core, we look for freedom, the freedom to arrange our life the way we want, to focus on what matters. To be free from any limitation, imposed by a job, mortgage or the norm. We could then decide to work on projects in line with our values, travel the world or do nothing. That is the goal. The journey is long. So, we also make the journey as fun as possible.It took some time. We now know it is not about the money alone.
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How to become Financially Independent?
You are financially independent when your investments generate enough income to cover your spending. According to the Trinity study, you become financially independent as soon as your assets are 25 times your spending. Imagine you need 40 000€ per year to live, then you would need 1 000 000€ (40 000€ * 25). Alternatives are rental income or dividend income that generate more cash than you spend.
That is a lot of money. How do you get there?
Life below your means: spend less than you earn and invest the rest. I do realise this is not possible for everybody, especially those living on a minimal income. For others, when you make some intentional choices, it should be possible.
Start to invest
Once you know your budget, have an emergency fund, decide where and how you should invest. Historical data suggests that investing is the best way to accumulate and preserve wealth. Nobody has a crystal ball, it is sure that saving in 2017 yields less than inflation.
Define your own journey
Personal finance is personal…! It means you need to find out what is important to you, what is it that you value most. And do not look to much at others for that.