Earlier this month, Nigeria marked its 55 years anniversary, stimulating thoughts and discussions at every corner on how the entity called Nigeria has fared all these years. People has looked back to access the country’s achievement as nation, giving it either a pass mark or otherwise. Now, while we sit to access Nigeria, let us also as individuals access our achievements particularly financial health and how far we have fared in our planning.
Financial independence is a term generally used to describe the state of having sufficient personal wealth to live indefinitely without having to work actively for basic necessities. In the case of many individuals whose financial circumstances fit this description, their assets generate income that is greater than their expenses. This is about making investment that takes care of tomorrow’s expenses.
According to financial experts, most people believe the key to wealth is a high-paying job. Yes, it’s easier to amass assets if you have more money coming in each month, but the true secret to increasing your net worth is to spend less than you make. It is a cliche; but it is the fundamental, absolute, non-negotiable reality of money. To escape this trap, you need to understand that income is not wealth. So, what is wealth? Wealth is the part of your net worth (assets minus liabilities) that generates capital gains, income, and dividends without your labour.
Again, being financially independent implies that you take advantage of investment opportunities by having enough to invest by spending less on consumables. The reality of successful investing is that there is a certain point where you reach critical mass and the returns generated on your assets can change your life.
Now amassing wealth and becoming financially independent is a slow process that takes time. You do small things every day such as cut your expenses, generate extra income, and put the money into brokerage and tax-deferred retirement accounts. With time, it begins to amount to something. As each new opportunity appears, you can react on a larger scale than your previous investments.
Note that all income is not equal. Where and how you hold your assets can mean the difference between being somewhat well off and obscenely rich. So look at your tax strategy with respect to asset placement – lowering your tax liability through intelligent allocation means much to your bottom line.
Nobody can attain financial independent without consideration for his spouse. No matter how successful you are, unless your spouse is equally disciplined, frugal, and investment-oriented, your efforts toward a better, financially independent life are going to be like struggling in quicksand.
Marry the wrong person, and the emotional, financial, and social toll it can take on your life will overwhelm almost any progress you can make in your career or pocketbook. As you try to build a life, he or she will be out spending your money on status symbols, making it nearly impossible for you to achieve financial independence.
