35 of 37

Write now Article Tools

Financial independence is given a lot of lip service, but in reality, most individuals do not know how to manage their money. In fact, most individuals work hard for their money instead of realizing they can make their money work hard for them. But - it does take a change in how we view money.

Imagine this: you drive past your neighbor's house. They just added a swimming pool and bought a new car. They probably make a lot of money and are rich - right? The answer is, unfortunately, no. Most individuals in this circumstance are in debt up to their eyeballs and live paycheck to paycheck. In addition, they have very little financial freedom because they are working to pay for their "stuff."

When trying to become financially independent, remember that one lesson to learn is how to tell an asset from a liability. Basically - an asset will appreciate in value over its life and a liability will lose money over its life. About 99.99999% of the time, a vehicle is always a liability. You can purchase a new vehicle for $30,000, put money into oil changes, tire rotations, gas, insurance and more and after five years of driving the vehicle, will own something that may be worth $5000. Owning a house, on the other hand, may be worth more after 30 years, especially if you purchase in a growing area where real estate prices slowly climb higher.

So - when spending money, remember than liabilities should be treated as such. Find the most cost-conscious manner while gaining the tool you need. Do you need a vehicle for your five children? Buy a larger van, but look for ways to cut down on the overall cost instead of being sucked in by that new car smell.

The best way to achieve financial independence is to pattern yourself after many self-made millionaires. Many of these individuals recognize that the key to becoming wealthy is to save or increase your monetary holdings. This means buying used vehicles, clipping coupons or severely limiting credit card purchases while at the same time starting new businesses, investing in real estate (for the long term) or investing in the stock or bond market.

Learn more about this author, Linda J Banks.
Click here to send this author comments or questions.

Add your voice

Know something about Steps to financial independence?
We want to hear your view. Write now!