“There is no future in any job. The future lies in the man who holds the job” George W. Crane
So as far back as I can remember, The earliest understanding of financial independence I had was “work hard, make enough money & retire early”. So retiring early was pretty much the goal back then, I even remember a book written by a lady who retired in her 20s, I never got to read it but the title was enough. Later when I was in my teenage years I realized that there was a difference between being rich and being financially Independent, I think what brought clarity to the difference was the constant examples in the society of rich people who are in debt- most got bankrupt and never recovered, so they were “rich but not financially independent” so my goal changed to wanting to rich and financially independent.
I got final clarity on the issue when I began reading Robert Kiyosaki’s books starting with Rich Dad, Poor Dad in the last quarter of 2012, then the whole rationale behind “Go to school, Study hard to get good grades, Get a good job…” story became clear to me & I wasn’t interested in it again. Of course, that narrative still holds some level of appeal and truth but it doesn’t guarantee financial independence.
The concepts of Active Income and Passive Income best explain financial independence,
Active income is income for which services have been performed.This includes wages, tips, salaries, commissions and income from businesses.
Passive income is an income received on a regular basis, with little effort required to maintain it. This includes Income from rent, dividends, royalty from works e.g books, song
Most people in need of more money would resort to getting an extra job or doing overtime (active income) which might bring immediate income but in the long run, the most effective and sustainable way is investing in asset(s) that would bring regular passive income. Be like Bill Gates, it’s reported that he earns $42.83 per second, $171.34 per minute. $2,570.24 per hour, $154,214.69 per day… that’s the power of passive income.
When your passive income can take care of your expenses then you are financially independent. All you have to do is to maintain or expand the streams of passive income. So the goal shouldn’t be to have enough money stacked up somewhere to spend when you’re old (Theft or Inflation can mess you up) but to have different streams of passive income that would fund your expenses forever.
“Instead of saying “I cannot afford it”, ask “How can I afford it?” Robert Kiyosaki