Financial freedom
means that the family’s income mainly comes from active investment rather than passive work. It is a state that allows you to work hard for money without having to pay for living expenses. At this time, the passive income generated by your assets is at least equal to or exceeds your daily expenses. Your investment income can cover all household expenses, which means you can have more choices, retire early or do a job you like. ; Have more time to relax or travel around the world. When you are familiar with your money, your money has its own character like you, you are completely competent with your money, and you are free.
Standard Principles
1. You don’t have to work for money
Most people work to “make a living”, that is, to provide for themselves or their families. Buy a house, maintain a car, and work to maintain a decent "successful person" life. If jobs disappear, a "decent" life will become "undignified." Most people still work for "money", even though sometimes the boss looks ugly and can only swallow his anger. If you can work for fun instead of money, then you have taken an important step on the road to financial freedom.
2. Maintain net cash inflow from property income
In addition to salary income, property income is a very important indicator of achieving financial freedom. Property income generally refers to the income obtained from movable properties (such as bank deposits, securities, etc.) and real estate (such as houses, vehicles, land, etc.) owned by individuals. It includes interest, rent, patent income, etc. obtained from the transfer of property use rights, as well as dividend income, property appreciation income, etc. obtained from property operations.
Property income has an important concept - net cash inflow. Some people may own a lot of real estate, but the monthly rent income is not enough to pay the bank loan, and the cash flow at this time is negative. An asset like this can only be considered a "net liability" on your balance sheet, not an "asset" in the true sense. Therefore, maintaining net cash inflow from property income is very important in financial investment. When an investment does not bring you a net cash inflow, it is likely to be a "liability."
3. Increase passive income
To achieve true financial freedom, you must increase passive income, preferably more than active income. For example, a person's monthly salary is 30,000 yuan and he has no other income. Even if he is surrounded by unfriendly colleagues every day and suffers arbitrarily criticism from his boss, there is nothing he can do. In order to survive, he cannot lose this job. If he has some savings and investments, and his monthly interest and investment income is about 10,000 yuan, then in addition to his annual active income of 360,000 yuan, he also has some passive income. If these passive incomes can be increased to 15,000 yuan per month, then he does not have to rely entirely on the 30,000 yuan monthly salary. Even if the salary drops to 15,000 yuan per month, the quality of life will not be affected. If these passive incomes increase to 30,000 yuan per month, then he can have the freedom not to work and live solely on passive income. In other words, he gained financial freedom.
For ordinary people, there are two main ways to increase passive income.
First, save. Savings can increase investment capital, but to increase passive income, you must also be good at investing.
Second, investment. Specifically, it includes investing in stocks, real estate, potential companies, etc.
4. Maintain a peaceful mind
Having money may not necessarily make you free, but having no money will definitely not make you free. To achieve financial freedom, you must first maintain a peaceful mind.
Collapse and edit this paragraph channel introduction
1. Rental properties
2. Dividends or fund dividends
3. Bank time deposits and Monthly income plan
4. Income from royalties and patent fees from books or music creations
5. Advertising income from blogs or websites
6. Ex-husband Or the monthly living expenses compensated by the ex-wife, child support or child trust funds
7. Rental professional qualifications or academic qualifications
Among them, renting out properties is the most common channel for people to achieve financial freedom. , however this is also the most expensive way. The advantage is that once you have a property available for rent, it can generate passive income for you and it is usually a quality asset that generates cash flow over the long term. It is usually preferable to own the property outright because you are not burdened with a mortgage during the lease period and can still maintain a level of financial freedom.