Today I am delighted to introduce my new friend Good Nelly from the popular blog MyWayofViewing. Good Nelly is a very talented financial writer and it is a honor to have her with us on our site. In this post she will share a little bit about financial independence.
What is financial independence?
You can say that you are financially independent when you don’t have to work anymore to meet your daily necessities. You can still continue working for your pleasure or for job satisfaction, but it can be a part-time job or what you like to do.
Before going into the discussion of what work could be like after you become economically independent, first let’s discuss when you can declare that you’re financially independent.
You have multiple sources of income
Apart from social security income, you should have a good investment portfolio with interests and dividends. Do you have any part-time work or a monthly pension? Then also, you can be financially independent at retirement.
You have paid off your mortgage loan
You shouldn’t declare yourself economically independent if you’re making payments on your mortgage loan. So, if you’re close to your retirement, try to repay your mortgage loan. However, check out whether or not there’s any prepayment penalty on your home loan; if yes, then talk to your lender that you want to repay your loan fast.
You have reached your FI number
You need to calculate your Financial Independence (FI) number to know how much you require to consider yourself financially independent.
The first part of the formula is:
Financial Independence number = Yearly how much you spend / Safely how much you can withdraw
Next, calculate how many years it’ll take to attain your FI:
Years remaining to achieve FI = (FI number – How much you’ve already saved) / Amount you’re able to save per year
It is advisable you save at least 20% of your gross monthly income to attain financial independence.
And, also, you need to calculate your net worth.
How is work after attaining economic independence?
You can continue working fearlessly
When you’re doing a job, you always have the fear of getting laid off. However, when you attain your FI number, working becomes fun! You are no longer afraid of having to continue your job and adjusting yourself to the workplace. If required, you can put down your papers any time and may get a lump sum amount as well.
Working becomes fun
You attain more job satisfaction when you work on your own terms. Even you can continue a part-time job as per your wish. You look forward to do your work instead of motivating yourself on a Monday morning. You look forward to Monday since you’ll do what you like.
You are much more confident than before
When you become confident in what you’re doing, you don’t have to strive hard for the results and success comes to you without much try. A confident person can make more good decisions.
You can select your own peer group
We all know that we have to be around with people to make connections due to your business or you’re compelled to because they are your seniors in your job. However, when you become financially independent, you can spend time with people you want to.
You don’t hesitate to say “what’s right”
Just think once – How many times have you wanted to speak what is right but you couldn’t because it was a question of your reputation, irrespective of whether you have a business or a job? However, when your reputation doesn’t matter anymore, you can raise your voice against injustice.
You can do something new without the fear of failing
Since you’re not afraid to fail, you can do whatever you want to do. You can learn from your mistakes and start successful ventures – like investing in more profitable returns.
Whether or not you will continue working after achieving financial independence is exclusively your decision, but you should try to achieve your FI number. If required, you can consult with a financial advisor to set practical goals to attain financial freedom within a definite time period.
Author Bio – Good Nelly is a financial writer and a blogger as well. She writes regularly on her personal blog MyWayofViewing on a variety of topics and she also contributes her valuable posts to different financial communities, blogs and websites too. You can also check out her social media profile at GP for more information. Besides writing, she enjoys reading and loves to travel a lot. For any query, you can email her at email@example.com.