How To Achieve Financial Independence – 5 Easy Ways (Updated Guide for 2022)

In this guide, we will show you everything you need to know about how to achieve financial independence, so keep reading!

Below you can find out 5 different methods to achieve financial independence,

Method 1 – How To Live Frugally And Achieve Financial Independence

Whats of you guys its graham here so this is a really interesting topic how to live frugally and achieve. Financial independence this is something were at its core is really really simple its not at all complicated in fact. I could sum up everything you need to know about financial independence and give you the entire blueprint in this. One single video and that would be all you would ever need to know and in fact i intend to.

Do that but its also not that simple at the same time see if these concepts are so basic and. Easy to understand then why is it that financial independence becomes like this elusive goal for 99.9% of the population. Why does financial independence need to be this pipe dream of all retire when im 65 after ive worked 40. Straight years and then ill finally be able to enjoy the golden years i have spent so hard working towards. Because i dont believe it has to be like that so ill share my journey about achieving financial independence by.

The age of 28 and some really simple steps that you can do as well and follow along with when. It comes to me i believe my financial independence journey started at the age of 18 because this was the. First aha moment i had with really a definitive goal in mind now at that time i worked a very. Brief job doing data entry from 8 a.m. To 5 p.m.

Monday through friday and working that job felt like. An absolute prison i felt completely trapped i saw the dead blaze looks of everyone working in their cubicle waiting. For the day to end just so that they can go home watch tv and then do the same monotonous. Repetitive tasks the next day and then they do that for 40 years maybe they retire then they enjoy the. Last remaining years of their life and then they die and they say that as people were more motivated by.

Avoiding pain than we are by seeking pleasure and to me there was nothing more painful than the idea of. Doing that i knew at that exact moment i would do anything possible that i needed to do to avoid. Ever going back into a job that i absolutely hated so i ended up switching careers and beginning work as. A real estate agent but because i instinctually wanted to avoid that job so badly i saved everything that i. Made i knew this the more i saved the more options i would have in the future and i would.

Just think to myself if i could just save up enough and then invest this money at the very least. I would have something to fall back on should something ever happen and this is where we come to the. First step of financial independence and that is saving in order to achieve financial independence you must save your money. And live below your means and how long its going to take you to achieve financial independence relies entirely on. These two things how much money do you spend and how much money do you save this is what mister.

Money mustache a financial independence blogger calls the shockingly simple truth behind early retirement and based on right now your. Own income and expenses you could just do the calculation really within a few minutes to see how long its. Going to take you to achieve financial independence for example if you spend 100% of your income well then youre. Never going to retire because you never have anything left over however if you start saving 25% of your income. Youll be able to retire in about 32 years and maintain your current standard of living today and if you.

Start saving 50 percent of your income you should be able to retire in about 17 years and if you. Start saving 70 percent of your income well you should be able to retire in about eight and a half. Years you get the idea now before i even found out about early retirement or financial independence i was naturally. A saver and just a very frugal person it was just instilled in me at a really young age that. You dont waste money you dont buy things you dont need and i prefer just having the mobility of having.

All of this money saved up in case of an emergency than buying all of these fancy things that i. Would never actually use so i did my best to save every single dollar i could starting at a young. Age doing that for over three and a half years straight saving as much money as i could led me. To buying my first rental property at the age of 21 years old and it was also around that same. Time that i just randomly discovered a community on reddit called fire which stands for financially independent retired early this.

Was an entire community of people just like me who loved talking about their savings rates who loved talking about. Their investments who left talking about living frugally all for the unified goal of being able to retire early and. When i found this community i finally felt understood i finally was no longer the single crazy person who loves. Saving money for the goal of investing it and growing the whole nest egg i finally found a whole community. Of other crazy people who like to do this as much as i do and i swear people thought i.

Was absolutely crazy for being involved in the whole retire early community ill never forget when i was 23 years. Old somebody asked me what my plan was and i told them that i wanted to work as a real. Estate agent and then be able to retire by the age of 30 i literally had people laugh at the. Idea they would joke and they would say oh ha ha ha you know you got a lot to learn. About life maybe try more like 50 if youre lucky meanwhile these were people spending a hundred percent of their.

Income living in huge houses buying the newest cars getting the newest gadgets and here i was saving almost everything. That i made living on like $5 subway footlong sandwiches not going to buy drinks at bars because i felt. That was too expensive and i was buying rental properties instead and this is saying out there that i found. To be so true the rich stay rich because they live like theyre poor and the poor stay poor because. They live like theyre rich this is basically what i ended up doing and that just brings me to my.

Second point of financial independence and that is cutting back expenses now for the sake of financial independence and retiring. Early you must do what you can to save more money you must do it you can just to live. Below your means see im the type where i like living in los angeles i like driving a lotus exige. I like being able to travel anywhere i want but the thing is these things dont need to be expensive. These are a few ways that i have found to cut back on expenses without cutting back on experiences now.

The first and biggest expense we all have is housing and its estimated that as americans we spend between 30. And 50 percent of our incomes on housing and to me this is just way too high see i believe. Theres a better option there i know a way where you can live entirely for free and cut down your. Housing expenses to absolutely zero and this is what im doing as well and its called house hacking this is. Where you buy a multi-family home lets say a duplex triplex or four plex you live in one of the.

Units and you rent out the other units you can also do this by buying a single-family home with a. Guest house on it or buying a single-family home that maybe has a detached basement or something that you can. Rent out separately to bring down your cost of living no typically when you do this right renting out the. Other units are going to cover your entire ownership cost of owning that building and there you go all of. A sudden youve found a free place to live entirely for free now to actually do this it requires that.

You save up about ten to twenty percent as a down payment on the cost of the building but when. You do that you can leverage that money for pretty much the rest of your life for free housing now. If you dont have the down payment to buy something right now no worries you can also do whats called. Rent hacking this is where you rent a house and then you rent out a few of the other rooms. To cover your cost of the house or you could just go and live with roommates this way you just.

End up splitting the cost for all of the common areas that you barely end up using anyway and the. Only real cost is a smaller amount for the room that you use now besides housing another large expense that. We tend to have is our car now all be the first to admit that depending on the industry youre. Working in sometimes image can matter and it cant help to drive a nicer car but this doesnt need to. Be expensive for instance when i was 19 years old i went and bought a used 2006 lotus elise for.

$30,000 that car probably gave me the same enjoyment as they would have gotten from a $500,000 ferrari i ended. Up driving that car for two years and ended up selling it for $30,000 the same price i bought it. For i lost absolutely zero money for the car and if anything that car ended up making me way more. Money than i spent on it from meeting new clients going to car meets as a real estate agent but. Really my entire point is this you dont have to spend a fortune to get a car and if youre.

A car guy like me you want to drive something cool and fancy and rare or maybe exotic totally understand. That but that also doesnt need to be expensive because you could do what i like to call car hacking. This is where you buy an exotic car or really any car at the bottom of its depreciation curve drive. It for a few years and with that usually if you buy the car correctly youll be able to sell. It for about the price you paid for it or if youre not a car guy pretty much any five.

To eight year old honda or toyota pretty much keeps its value they rarely depreciate and this is something you. Could pretty much drive to the ground for just a fraction of the price of just about any other car. Now besides cars lets then focus on entertainment and when it comes to financial independence theres really a fine balance. That comes with this now im in the type of mindset where you should go out and enjoy yourself you. Dont need to be huddled up inside all day just for the sake of saving money but its important to.

Know that you spend your money on things that matter the most to you for example as a young 20-something. I saw my friends easily blowing like a hundred bucks on a friday or saturday night just for going out. Between ubers and buying drinks and buying food and then an uber back easily a hundred bucks like it just. Completely boggled the mind for me how anyone could go to a bar order five drinks at like 13 dollars. Each when they could just go to the grocery store buy the entire bottle themselves for like $18 pre-game beforehand.

And then go to the bar and order water its the same thing basically what im saying though is that. I found a way where i can go out and have the same experience as all of my friends are. Having without missing out except i found a way to do it for 10% of the price were also when. It comes to buying food like those 15 to $20 lunches every day at work start to add up really. Really quickly so instead i just made the decision to go and make food at home and bring it into.

Work and i got my cost of lunches down to about $5 and then again i would just save the. Rest and come on lets be real here im a guy in is 20s i dont just sit around doing. Nothing all day if all my friends are going out to dinner one night i dont just say no to. That of course i always say yes i think its important to live life but when it comes to me. I honestly dont care about food it sounds weird but i get the same enjoyment eating like a petit filet.

It mastro steakhouse as they do scrambling eggs and cheese at home so if i end up going out to. Dinner with a whole bunch of friends i just usually end up eating an appetizer instead of ordering an entree. So i can get the same experience as everyone else except the appetizer is 1/3 of the cost as an. Entree and again as usual i just save the rest where the same could also be said about travel and. Some people absolutely love to travel and i have family up in canada that i like to see twice a.

Year and at $700 per roundtrip ticket that adds up and that gets pretty expensive but i found it does. Not need to be this way you can learn the art of credit card churning which is basically you could. Sign up for credit cards to get the reward points and then redeem those for free travel and all of. A sudden all of your travel is free when it comes to me i havent paid for a plane ticket. Or hotel and probably like three or maybe even four years and right now i have easily over half a.

Million points and i can fly first-class multiple round trips anywhere id like to go stay in any hotels they. Want to stay at all for free and clothing can be another really big one and i think a lot. Of people are shocked when they figure out just how little i spend on clothing most of the stuff i. Buy is from h&m all the jackets i buy are usually from zara and they all cost for the most. Part under $100 and most of the clothing i have ive owned for years and i bought them on sales.

Or clearances or black fridays this is a shirt i kid you not ive had this shirt this same shirt. For about 10 years and i bought it at a ralph lauren outlet 10 years and i just keep it. In good condition i guess not even kidding fun fact but for real though and most of my videos no. One knows whether or not im wearing a $50 shirt or two dollar and fifty cent shirt from h&m plus. Styles just go in and out every other year or so and i dont want to be stuck spending like.

500 bucks on thing that is going to make me look ridiculous two years from now its just really important. Not to get caught up in the cycle of buying new things just because you can and really focus on. Spending your money in the areas where it really matters the most to you see i dont care about buying. Drinks i dont care about spending a hundred dollars on a steak i dont care about buying expensive luxury designer. Clothing i care about having the freedom to be able to pursue whatever i want in the moment without money.

Getting in the way to me that is true enjoyment but with that said that then brings me to the. Third step of achieving financial independence and that is staying out of high interest debt this is really pretty much. The kryptonite to financial independence most people dont realize just how much high interest credit card debt high interest medical. Bills or student loans really tie up your income and set you back years or even decades throughout my entire. Life i made sure to stay out of any debt that isnt a low interest fixed-rate mortgage thats it i.

Also make sure to never carry a credit card balance also make sure to never finance anything i cannot afford. Of course i still leverage my money if that debt just ends up making me even more money like with. Real estate but i also believe that if youre paying more than a 5 percent interest rate then its probably. In your best interest pun intended just to pay that off early now besides cutting back and saving which is. Really the foundation of financial independence its then important to go on to the fourth step and that is investing.

Now this is another very very simple one and the concepts are as easy as this number one take advantage. Of all of your taxed advantage accounts such as a roth ira 401k or hsa this saves you money on. Taxes and theres absolutely no reason why you shouldnt be taking advantage of these now the second thing is invest. Consistently and invest long-term take a percentage of your paycheck that automatically goes into your investments without even thinking about. It no matter what ideally this should probably be 20 percent of your paycheck preferably more but my recommendation is.

Minimum 20 percent if you can now the third thing is time the market just invest consistently no matter what. The prices the fourth thing is that you should be investing in a well diversified low fee index fund vanguard. And fidelity both have amazing options when it comes to this and then the fifth thing you have to do. Is just let the markets do their thing and stay consistent now for the majority of people out there watching. This is it thats all you need to do some people might want to throw real estate into the mix.

But for all of those that just want to take a very lazy approach and not be involved in any. Of that for probably 90% of people out there this is probably just all you need to do and heres. How you find out when youre financially independent this is when your portfolio value becomes 25 times what you spend. Annually so this means if you spend $50,000 a year you are considered financially independent when you have 1 million. Two hundred and fifty thousand dollars invested or if you spend eighty thousand dollars per year you will need two.

Million dollars invested or if you spend two hundred thousand dollars a year youll need five million dollars invested this. Is based on whats called the trinity study which suggests that you can withdraw 4% of your portfolio every single. Year for life without running out of money and that is the very simple math behind early retirement its just. A simple function of how much money you spend how much money you invest and then just waiting until you. Hit that number where your portfolio is 25 times your annual expenses and that is exactly how i was able.

To achieve financial independence at the age of 28 years old and yes you know ill be the first to. Admit that doing this by the age of 28 years old is by no means normal and i had several. Things working dramatically in my favor that helped contribute to that for instance i was working as a real estate. Agent in a very high cost of living area where the average home was worth about two to two and. A half million dollars and that translated into very substantial commissions i also invested from the bottom of one of.

The longest bull markets actually the longest bull market we have seen in our entire history so im not going. To be naive and think that those two things didnt have a huge factor in where i am today because. They absolutely did but one of the things i did have control of throughout the entire process was that i. Never increased my spending i continue to keep my personal expenses as though i am making a minimum-wage job i. Can make a hundred thousand dollars a month i wont spend a single penny of that instead i will take.

All of it i will save it and i will invest 100% now going after early retirement and financial independence. Is going to be different for everybody no one needs to be as extreme as i am in some of. These places it really just comes down to recognizing whats the most important to you spending money on that and. Then cutting out the things that really dont add as much value to your life and basically the entire blueprint. Of this entire video in the entire financial independence retire early community is just this save your money by cutting.

Down on your expenses just so that you can invest and you can retire when your investment portfolio reaches 25. Times your annual expenses smash that like button so with that said you guys thank you so much for watching. I really appreciate it if you guys enjoy videos like this before you click out if you wouldnt mind just. Hitting the like button it does how about dramatically if you also havent subscribed already love to ask if you. Wouldnt mind subscribing and definitely all of this stuff really helps out tremendously in terms of the youtube algorithm and.

Engagement so if you wouldnt mind one of those that would be great also feel free to add me on. Instagram i post there pretty much daily so if you want to be a part of it there feel free. To add me there thank you again for watching and until next time.

Method 2 – Achieve Financial Independence In 10 Years Or Less (10 Easy Steps!)

Note – This section will be updated soon.

Method 3 – How Did I Achieve Financial Independence At Age 54?

Hey friends out there another rogue video from joe here going off topic of reliability and maintenance leadership and best. Practices ive been avoiding a question ive been getting for months on emails and comments and and calls and just. Live discussions weve had uh i just been avoiding it trying to stay on topic uh but uh you wore. Me down so the question is uh how were you able to afford to retire at 54 years old um.

So im going to tackle that in this video im not going to go into specifics but i will talk. About some philosophies some levers and some lesson learned and some things i stumbled into that allowed me to retire. Be financially independent at 54. First thing i left my career i had a nice career as a location manager. I retired to something and i got that advice a couple years ago dont retire from something retired to something.

And i wanted to spend more time educating people coaching people um around a technique that you can drive reliability. Drive and make a reliability culture you could start that in just weeks folks you dont have to do the. Traditional deployment huge investment years of sustained sponsorship you can get results a lot faster than that using the techniques. That ive been talking about on this channel you know retirement is is risky theres a lot of fear going. From being a saver to being a spender um so maybe perhaps more on that uh sometime in the future.

But i i really wanted to start a business and start this new phase of my life while i was. Young and had a lot of energy healthy wanted to spend time with friends spend time traveling spend time educating. I love this channel and love you viewers out there hey this is joe kuhn of lean driven reliability bridging. The gap between best practices that you know you should be doing just cant quite figure out how to get. Them done in your culture and trying to help you out with a couple videos a week on that topic.

So hey folks uh you know uh im gonna talk about five levers uh that delivered a personal finance victory. For me victory so far lets say that most of these were on purpose some of them were you know. I was just brought up with so first of all my starting point uh 22 years old in 1987. You. Know my first apartment after graduating college i had a borrowed black and white 13-inch tv my living room had.

A borrowed piece of lawn furniture thats outdoor furniture that was given to me that was given to me one. Barrel i had a borrowed bed from my parents i had a a card table a folding card table with. Four chairs that i borrowed from my mom and dad uh to eat at um i basically had nothing but. What was between my ears i mean i had no debt that was great but i started off with nothing. I started off at zero okay not minus but definitely not plus okay so im gonna talk about seven levers.

Okay and im just going to touch on its not gonna be a two length of a video everyone knows. Live below your means okay and im gonna talk about thats topic number one live below your means seven specifics. Education hey folks i got a bachelor of science in mechanical engineering but i co-opt and lived at home okay. Co-op is where i worked the semester and then i studied a semester worked a semester study this semester so. I was working half of the year and i was making 25 an hour back in you know 1980 84.

85 86 i was making 25 an hour worth overtime um virtually every every other weekend id said worked overtime. At a ge plastics plant in the area co-opting allowed me to make money and to graduate debt-free huge okay. The second thing cars and i kind of got these in order okay um some logic order cars transportation to. Me is not a stat status symbol i drive currently i drive a 2005 camry toyota camry my wife drives. A 2012 toyota senate sienna both of them have about 150 000 miles on it for the first about five.

Years of my employment i drove a stick shift uh toyota starlet with that did not have air conditioning and. I live here in southern indiana the summers could get over 100 pretty easily and ive worked in an aluminum. Plant a foundry type environment it was hot and i did that for about five years but im just looking. For transportation i finally encaped into pressure and bought a used car um you know its not just a monthly. Payment on a new car people you know so many people that graduate from college buy a new car okay.

Uh but its its not just a monthly payment its the insurance you get a dent in that car you. Get a scratch in that car you know you get it fixed okay folks easily easily uh buying used cars. Driving them until theyre unreliable i want a reliable car i dont drive until they drop i drive until i. Cannot depend on them for me to drive you know cross country you know and either both of my cars. I drive i i drove my van uh 5 000 miles three years ago out to yellowstone didnt even not.

Thought in the world about it but all those other expenses that come along with it with an with a. New car a new f-150 a new as uh suburban whatever um can easily be 500 a month over the. Uh full cost of operating a used car a reliable used car five hundred dollars a month okay now lets. Take that five hundred dollars a month lets put that in a ten percent growth um in the growth index. Fund for 35 years 1.5 million dollars if you do only this one thing you have the rest of your.

Lifestyle the exact same and you drive reliable used cars in 35 years youll have 1.5 million dollars just do. That one thing big deal folks um i almost made this video in my garage i can prove to you. I drive a its my car is actually my personal car is a hand-me-down my kids they drove it through. High school and then i now i have it uh saving in my 401k this is a big part of. What i did i saved 12 and then i got a six percent company match so i was saving 18.

Large uh cap you know growth mutual funds just take the long view just put them in there set it. And forget it when the stock market went down in 2000 and 2009 i didnt even sweat it just just. Keep keep investing it didnt move my funds around nothing bonuses this is another important one uh bonuses i did. Not spend my bonuses any bonus that i would get uh i invested that okay uh some of that i. Invested in my kids college i had four adult children all went to college all paid for graduated uh all.

Of them debt-free uh and also invested that in paying off my house uh so bonuses i didnt go out. And buy new cars go on big trips didnt do anything unusual i used took the long view on those. Pay with cash youve heard this before um you know i use credit cards but i always paid them off. You know when you pay with cash you get the um the thrill of saving the thrill its saving for. Something uh in the anticipation of you know being able to afford that tv and you know wait to three.

Months so you can save up enough money that that can actually be thrilling think about when you got a. Vacation coming up youre going to california or something uh you think about that a month ahead of time two. Weeks ahead of time you get real excited half the fun of vacation is thinking about it and i think. The same thing occurs at least for me on new purchases.

Conclusion – How To Achieve Financial Independence

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