CANADA (Commonwealth Union)_According to a 2021 Statistics Canada research, approximately 30.5 percent of Canadian households are financially robust enough to weather a sudden financial loss. However, being financially robust is not the same as being financially independent.
Today, I intend to explain what it means to be completely financially independent and provide a few pointers on how to get there.
To various people, financial independence can mean different things. When most individuals think about financial independence, they see a life of financial freedom where they don’t have to worry about how they’ll pay their bills. This is a somewhat accurate statement, however the true definition is a little clearer.
Financial independence is achieved when a person has amassed enough wealth or has a passive income stream to meet all of their living expenditures for the remainder of their natural life without the need for a paycheque or salary.
It is essentially the same as being able to retire without having to work again. A select few are born into financial independence as a result of automatic income streams, investments, and assets passed down through inheritance. Most financially independent Canadians, on the other hand, can only succeed via hard effort, preparation, and regular action.
While this may appear to many to be a pipe dream, it is totally doable. To do so, you’ll need to make wise financial decisions, establish clear objectives and make a success road map. A few other guidelines may also assist you in reaching this goal.
Boost your savings rate
The percentage of your total after-tax income that you save is referred to as your savings rate. Conduct an audit of your present spending to identify areas where you may be overspending. Concentrate on the primary three expenses of shelter, transportation, and food to see if there is one major area where you can save money. You will increase your savings rate by saving more money.
Make an early investment
One of the most popular strategies for achieving financial freedom is investing your money. Investments do include risk on your behalf, and it’s unlikely that you’ll become wealthy overnight. Exchange-traded funds (ETFs), equities, mutual funds, and real estate are a few common investments for Canadians. Due to the magic of compounding returns, the earlier you start, the better.
Depending on your level of commitment, there are numerous ways to get started. If you are new to investing or wish to spend less time doing it, you may choose to start by using a robo-advisor or seeking the advice of a financial professional. You can also choose to purchase investments from a bargain brokerage after learning how to invest on your own.
