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What is Financial Independence?
In essence, financial independence describes a freedom from the conventional work-life balance experienced by the vast majority of the UK’s adult population: working full time to secure a wage or salary, and spending that income on the household.
Financial independence can mean different things to different people; popular circles online discuss working hard and living frugally to secure an early retirement at the age of 40, while others discuss methods of maximising income in the shorter term.
Ways to Achieve Financial Independence
With financial independence representing different things for different people, there are several ways to approach it. The first step many take on this journey is reviewing their current expenditure and drawing up a budget in order to plan for a more frugal lifestyle and hence increase savings.
A comprehensive examination of your monthly income and expenditure can yield interesting results regarding your spending habits, and gives you an opportunity to interrogate those habits. This budget might also include your long-term goal, whether you’re looking to save up a specific sum of money on which to retire or to hit a specific monthly savings minimum.
Of course, living frugally can only save so much of a finite income. For those hoping to fast-track their saving, or at least to boost their short-term income in order to continue a quality of life, there are methods of earning income passively or semi-passively. Retail trading in the stock market has become a phenomenon in recent years, and UK futures brokers represent an easy way for someone new to trading to get involved. Trading comes with an inherent level of risk but can offer returns on investment significantly higher than bank interest rates.
The Importance of Education
One of the main overall barriers to achieving financial independence is poor knowledge of the UK’s financial systems, and the methods and resources available to the average UK citizen to assist in achieving it. For example, while the number of UK citizens owning stock is as high as 33%, that number has only risen so significantly in the last two years.
Also, somewhat anecdotally, a common refrain amongst young graduates from secondary education is the question: “Why were we taught calculus, when we could have been learning about taxes/savings/how to apply for a mortgage?” This rings true for many, and, while learning calculus has its benefits with regard to lateral thinking and application of logic, early adoption of principles and ideas regarding the management of assets and money can embolden people into involving themselves actively.