Potentially every person should dream about the financial independence that they can achieve. Especially entrepreneurs who won’t just have to stop at being financially independent but also rich and wealthy. Follow these 7 steps to ensure financial independence as entrepreneur.
Define and Plan Goals
First step towards ensuring your financial independence is to define what financial freedom means to you. For some people, having enough funds to strike off every destination in their travel bucket list and for some money for comfortable retirement.
Define what financially being independent means to you and make plans on how long you have to fulfill your goals. As an Entrepreneur you have to take into account the risk that your business not doing well. Make plans to ensure your financial growth is secure?
Duh! Isn’t that Obvious you ask?
Even though earn money sounds obvious, entrepreneurs do not have steady income like salaried people.
As an entrepreneur, we all know, how tough making profit is when there is no adequate working capital. One tends to burn out of cash soon, if the product lineup hits any snag. If the sales do not go ask expected, we have face loss. Not all entrepreneurs out there are making profits to consider it as income.
So, it’s essential as entrepreneurs to earn money either through business or working part time to keep the money flowing in.
Pay your Debts ASAP!
If you want to be financially independent, you have to pay the debts before you can start building wealth. Debt in any form will pull you down, be it EMI’s, home loans, credit cards, mortgages, etc… Because the loans that you take have an interest attached to it. The more time you take, the larger your debt becomes and harder to achieve financial freedom.
One of the most important point to achieving financial independence is to pay all your debts ASAP.
Here is what Wikipedia defines Financial Independence as,
Financial independence is the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income and/or cash flow from dipping into the assets that is at least as great as their expenses.
Save your Earnings
Now that you have paid all your debts, all that you earn after paying your bills can be potentially saved.
Save your earnings first, before you spend it on anything. Make a budget, see if it is necessary for you to make that buy, before you buy it. Postponing instant gratification will help you achieve financial independence sooner than you think.
Start Investing Now
If your own business is thriving and needs to expand, go ahead and invest in it. It is only logical to put money where your mouth is.
The only way to grow your money is to start a successful business or to start investing in ones that are. Look at the capital markets, being an entrepreneur it is easy for you to understand other businesses. Reading balance sheets, understanding cash flow and other stuff should come naturally to you. If you don’t have the time, choose mutual funds and bonds.
Don’t keep your money idle. Growing money will soon compound into multi fold returns on your investment making you financially independent.
Focus on Sustainability
The difference between being rich vs wealthy is why you have to focus on sustainability to achieve financial independence. The rich are people with a large sum of money. Wealthy are those who have enough.
Confusing? Let me clear you.
To be wealthy, you don’t need to be rich. You have to be sustainable. Imagine you have a bank account that keeps refilling after you cash small amounts of money from it. At the end of the day, you have the same amount of money making you wealthy person. But, being rich, your account does not grow as you spent your money instead of being sustainable.
So, always focus on spending sustainably to keep your money compounding to ensure financial independence.
Constantly Educate Yourself
Purpose of constantly educating yourself to achieve financial independence is to make your money work for you generating cash sustainably and make you wealthy. Keep looking for new opportunities, to compound your money.
Educating yourself will keep giving you dividends for a long time. This passive income doesn’t require you to actively be involved to earn a living, freeing you up to focus on more important things, such as your family and your leisure.
Do you know any other steps to ensure financial independence as entrepreneur? Share them on Trdinoo for others to learn and please share us with your friends and network.