How Important Is Mindset In Reaching Financial Independence?

In order to become financially independent, you first need to fully understand what that means. Financial Independence means that you are not reliant on trading your time for money (that you need to live your life).

Often nowadays, when you hear this term, the goal is more to retire years earlier than the standard age of 65, and have the ability to live out the rest of your life without the need of income from full-time employment.

The F.I.R.E. movement (which stands for financial independence, retire early) really brought this “crazy” idea into popular culture.

But their version means that you’ll need to either save large amounts of your active income and earn more passive income, much earlier than usual, to cover all of your living expenses.

An important step of becoming financially independent is understanding the difference between income and wealth. Income is the amount of money you earn for a specific time period, while wealth is the total amount of money that you’re currently holding.

In order to be able to retire early, you’ll need to amass wealth. Without a steady income from a job, your money will have to come from other sources like savings, investment portfolios, rental properties, etc.

So before beginning your path to financial independence, it’s necessary that you feel secure with your wealth, because it needs to last the rest of your life. The last thing you want to do is run out of money and need to go back to work near retirement age.

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