Financial freedom is something almost everyone wants but few seem to achieve. This is not because of lack of desire, intellect , or ability, but because of a general lack of knowledge about the topic in our culture.
Financial freedom can be defined as adequate or surplus income to meet your needs, even if you physically stopped working for any reason. In America, the average working-age person does not have this ability for longer than a few days to a couple of months. With jobs, we are trading our time in exchange for money and therefore are limited by our time. A person can only work so many hours on a constant basis before reaching exhaustion.
If that’s the case, what are the 1-2% of our population (based on figures from the Social Security Administration), who are achieving financial freedom, doing? Most have used some form of passive income.
The word passive income is often confusing to some people-it does not mean money for nothing. It is the repetitive payment for a single effort. Examples of this can be found in the investing world (initial money earned elsewhere gains interest), the arts (a writer paid for multiple copies for a single book), and in business (a developed business that does not require the owner’s physical presence). The secret to passive income is it involves work in the front end but pays over the long term. After the initial work is done, your physical presence is not required to make money and you can move on to another project. People who develop passive income to match or exceed their expenses find financial freedom-not overnight but over time.
In addition to increasing their income, people can accelerate their path to financial freedom by paying off debt. There are many great authors who have ways of doing this, my personal favorite being Dave Ramsey. Debt is like anti-passive income-it steals your freedom over time.
Usually the hardest step for people to take toward financial freedom is the first one. They may believe that they can’t achieve it because no one else they know has done it. They may feel trapped in a paycheck to paycheck cycle with nothing changing. Financial education is the way of finding a way out-and it’s not necessarily in the form of getting a business or finance degree. An education through books in the business section of your local bookstore or library may be the best place to start. The important thing to realize is that no matter where you’re at right now, you can change it. Best wishes to you.