Everyone has something important to life, but we are always limited by reality. So we are unlikely to live completely for what we love. The income and financial problems are the biggest obstacles. After solving the financial problems, many problems that seem to be annoying will be solved easier.
For personal life, financial freedom is an advanced solution to financial problems. Moreover, for most working-class people, as long as they plan are ahead, they can achieve financial freedom and early retirement in about ten years through their own efforts.
There are many expressions of financial freedom. First of all, I found a more precise expression - F.I.R.E (Financial Independence and Early Retirement), which represents the life as below:
1. Passive income, sufficient principal and investment capacity, and passive income covers daily life easily;
2. Simple and rich, without great wealth, but at least have dignity;
3. Living for yourself. Financial freedom does not mean living a lazy life, but put your life into what you love.
In order to achieve FIRE, capabilities we need are very quantitative and deterministic:
1. Make a clear plan and quantified schedule.
2. Increase income includes active income and passive income.
3. The first step of saving is to start saving, consume rationally and control expenditure.
4. Cultivate our own investment awareness and maximize the income.
5. Make rational decisions. Our life is actually decided by our own choices.
At the beginning of the plan, we need a clear plan or reason: "What kind of life do I want to have after achieving FIRE?". Answer the following questions first:
1. How much passive income does we need?
2. How much principal should be accumulated?
3. How long will it take?
Without a clear plan and goal, we don't know where we are going, nor how far we are going.
The specific answer is different from person to person. Here are my answers for your reference.
I don't have much pursuit of luxury life, and just one room and two cars are enough for me. My goal is to accumulate the principal of 5 million. My expected future income is 10% annualized yield, and the passive income is about 5 million. The original plan time is 10 years.
Now the question is, if I start from scratch, how can I ensure that the fund will accumulate to 5 million in 10 years? We need a calculator.
If the current situation cannot meet the goal, there are three options to improve:
1. Improve your income, which is also one of the five elements of FIRE;
2. Lower your level of consumption,because your potential is more than what you think;
3. Lower your goals and expectations that do not match your abilities.
Achieving financial freedom is a protracted war. First of all, you need to have a clear financial plan, and then firmly implement it. When you achieve financial freedom one day, you will be grateful for your efforts. From now on, write down your financial plan and start your fight.
