Financial independence means different things to different people, but it can generally be known as reaching a state where you don’t have to rely on anyone else but your passive income for your living expenses.
Members of the “FIRE Movement,” which stands for Financially Independent, Retire Early, have even adopted financial independence to another level. The group is comprised of individuals who retire in their 30s to travel the world by catamaran or start social-impact enterprises.
Those who accomplish financial independence didn’t hit early retirement by pure chance, luck, or inheritance. They did it by mastering the pillars of personal finance and focusing on the principles of wealth-building.
What they’ve achieved is entirely within your grasp, too. If you’re an ambitious young professional expat or resident of Dubai are interested in financial independence, here are three steps to help you achieve it:
Slash expenses
Figure out how you can save money in all spending areas. The more you save, the more you have to squirrel away. Learn to save money like an expert.
Focus on big wins, such as saving on housing, transportation, and food. But don’t forget the easy wins either, which include cutting back on recurring costs — think subscriptions, bills, and streaming video services.
Other ways to save money in Dubai? Shop sales, or use an app to hunt for discounts on entertainment or eating out.
Avoid: Cutting costs so drastically that you feel deprived — or need to live in a van (unless you’re into that). It’s about striking a balance between reaching financial independence and being happy.
Earn more money
Whether it’s putting in extra hours at your current job, asking for a raise, or job-hopping for a higher salary, focus on earning more money.
As you know, you can only cut back on living expenses so much. But your earning potential is limitless. You can also rake in extra cash by coming up with multiple streams of income or by taking on side hustles. If you’re successful at earning more money, just remember to sock that cash away, rather than expanding your lifestyle to fit it.
Don’t: Work so hard that you run ragged.
Eliminate debt
Nip existing debt in the bud, and try to avoid taking on more “bad debt” in the future. Bad debt includes high-interest credit cards, payday loans, and personal loans used for discretionary purchases, like vacations.
If you have multiple forms of debt, focus on paying off accounts with the highest interest first. That will, in turn, save you interest fees, which means freeing up more money to invest.
Don’t: Forgo all debt. Not all debt is bad debt. For instance, taking on a mortgage means you’ll be a homeowner. A home is something that can potentially build wealth by appreciating in equity.
Make a habit of investing
Investing is an important, powerful part of wealth-building. The earlier you can get started, the better (behold, the magic of compound interest). You’ll want to invest consistently and focus on your long-term goal of reaching financial independence.
While you can invest on your own, it can be time-consuming and overwhelming to start.
Sarwa can help. Sarwa’s low-fee platform lets you start with as little as $2,500 and has an annual fee of only 0.85% of your account. With our low fees, you can save a lot of time and money compared to working with a traditional advisor.
Ready to invest in your future?