To some people, financial independence simply means earning enough to pay your bills, so you don’t have to depend on help from your family or the government. To others, it means being free of debt, so you don’t have to rely on credit to make ends meet.
However, when you see the term written with capital letters – as “Financial Independence,” or “FI” – it usually has one very specific meaning: having enough money saved up to support you for the rest of your life. This type of financial independence – also known as being independently wealthy, or having “walk-away-from-it-all money” – means that you don’t have to depend on a salary. Once you reach Financial Independence, you no longer need to work for a living.
So, if you’ve always wanted to give up your job in marketing and become a scuba diving instructor, FI makes it possible to pursue that dream. Even if you don’t make any money from your new job, you can still live off your savings or investments while doing what you love.
The financial freedom planner (View in play store) calculates your Financial Independence number and shows how long it could take you to reach FI at your present rates of spending and saving. However, you don’t have to settle for that. If you can find ways to cut your annual spending or boost your saving – or better yet, do both – you can reach FI a lot faster
The financial freedom planner includes:
• Financial independence calculator: To help calculate your financial independence number
• Budget tracker: This budget tracker will help you calculate your cash surplus after your expenses
• Goal tracker: Write out your goals and understand the obstacles and action needed for the goals
• Net worth Calculator: Understand your current state by calculating your net worth
• Investment Tracker: Track your progress towards financial freedom by using the investment tracker
• Export your financial summary: You can save all the calculations and trackers above on your phone or tablet in .txt format
The road to financial freedom includes increasing your income, reducing your expenses, eliminate debt and save money
Increase your income: The more money you bring in each month, the more you can spare for investing. There are many places to look for extra income, This includes getting additional shifts at work, getting a raise, looking for a second job or starting a side business, selling your belongings and developing a passive income stream.
Reduce expenses: Reducing your expenses actually gives you more bang for your buck than boosting your income. In the short term, both strategies increase the amount you can save each month. However, cutting expenses also helps you in the long term, because it enables you to live on a smaller income for the rest of your life – which, in turn, lowers your FI number and makes it easier to reach. So, every dollar you earn helps you once, but every dollar you save helps you twice. The financial freedom planner helps you understand your income and expenses so that you know how much cash surplus you have to invest and save
Eliminate debt: According to a report by The Pew Charitable Trusts, 80% of all Americans have some kind of debt. About 44% have home mortgages, 39% have credit card debt, 37% have car loans, and 21% have outstanding student loans. All told, a typical household is about $68,000 in the hole.
Most of this debt is just dead weight in your budget. Month after month, you have to pay interest on it without getting anything of value in return. And the longer you take to pay it off, the more interest you end up paying in total.
Paying off your debts frees up more money to put toward your investments. The sooner you can do that, the longer compound interest works for you, and the faster your nest egg grows. The financial freedom planner helps you budget for debt repayment
As your investments grow, you can track your progress toward Financial Independence by using the financial freedom planner(View in play store)